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Plan_EverSpring
- 1. EVERSPRING Final Marketing Plan Presentation Managing Marketing Processes Fall 2012 EverSpring
- 2. What is • World’s biggest home furnishing retailer • 70 years’ experience • Mission: to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them. • Vision: affordable solutions for better living Final_EverSpring 27/9/2012 Page 2
- 3. CURRENT CURRENT CUSTOMER OFFERING • Well-designed & functional products, low prices • Price: extremely price/cost conscious • Distribution: 28 distribution centers, 11 customer distribution centers, 16 countries • Promotion and communication: direct marketing, IKEA food services, the internet, interior design, and public relations 27/9/2012 Final_EverSpring Page 3
- 4. CUSTOMER LOYALTY • IKEA- kiosk based • Flat packaging – loyalty program easiness • Products come • High quality and with accessories updated design • Buys in bulk – & low price obvious low price Final_EverSpring 27/9/2012 Page 4
- 5. CAPABILITIES ANALYSIS price features designers packing • Over 2000 suppliers, Swedwood • Strong and positive brand identity • 40.6% of Swedish market • Cash on hand • Privately-owned • Cutting down on all unnecessary expenses Final_EverSpring 27/9/2012 Page 5
- 6. Final_EverSpring 27/9/2012 Page 6
- 7. Helpful Harmful Internal Strength: Weakness: -Biggest in Swedish home furnishing -Weak in multi- -Strong customer loyalty 120 channel -Unique business model 100 -Store location -Vertical integration 80 -Hard to reach small 亚洲区 60 town 欧洲区 北美区 40 20 External Opportunity 0 一月 二月 三月 四月 Threat: -Growing concern over -Pressure from other sustainability retailing channels -Customer price-consciousness -Bleak economic -Low-cost manufacturing and environment material in Asia Final_EverSpring 27/9/2012 7
- 8. Meet The LOHAS Lifestyles $550 Billion Of Global Health Market And Sustainability Don’t Greenwash me! Consumerism is OK, guilt is not! Final_EverSpring 27/9/2012 8
- 9. IKEA has trendy, functional IKEA says it is sustainable design for low prices – it let’s me but it is not. update my apartment every year! Final_EverSpring 27/9/2012 9
- 10. “Trasmatta” – or rag rug in Swedish MEET THE “TRAS” A warm, cotton, guilt-free sock 53% Would buy clothes from IKEA Made of sustainable and recycled cotton A patchwork, random design reinforces it’s recycled vibe. vibe Final_EverSpring 27/9/2012 10
- 11. THE HOSIERY MARKET 2008 2009 2010 2011 Lindex 20.0 19.9 19.8 19.8 Hosiery 2011 H&M 9.4 9.1 9.6 9.5 Lindex KappAhl 4.5 4.5 4.3 4.3 H&M Gina KappAhl Tricot 2.6 3.0 2.8 2.9 Gina Tricot adidas 2.1 1.9 1.8 1.8 adidas Björn Borg 1.5 1.7 1.8 1.8 Björn Borg Twilfit Twilfit 2.0 1.7 1.7 1.8 Wolford Wolford 1.3 1.3 1.4 1.4 MQ MQ 1.1 1.0 1.0 1.0 Hosiery industry in Sweden Others 55.5 55.9 55.8 55.7 (% Retail Value) Total 100 100 100 100 Final_EverSpring 27/9/2012 Page 11
- 12. THE COMPETITION Product Generic Competition Brand Competition Competition Final_EverSpring 27/9/2012 Page 12
- 13. KEY COMPETITORS’ KEY COMPETENCIES • Björn Borg – Niche/Design – Brand/Loyalty – 79SEK per pair • MQ – Appeals to fashion- conscious adult consumers – 59SEK per pair • Lindex and H&M – Wide and varied product portfolio – 79SEK (H&M), 4pack for 79SEK (Lindex) – Lindex - not for men Final_EverSpring 27/9/2012 Page 13
- 14. SUBSTITUTES Final_EverSpring 27/9/2012 Page 14
- 15. increase IKEA’s home maintain IKEA’s clothing presence image and mission meet increased everyday consumer sustainability demand Whe re? !!! I K EA customer attitude comfy & good-looking Final_EverSpring 27/9/2012 Page 15
- 16. At IKEA, we start designing with the price. "We look at the competition, take their price, and then slash it in half“1 29.50 SEK H&M: Similar sock for 79.50 Final_EverSpring 27/9/2012 16
- 17. BY THE NUMBERS – IN SWEDEN 16M pairs is the market for socks in 2012 1.7 pairs purchased per person in 2012 OBJECTIVE 29.50:- 18.5M 3.9% SEK Revenue 1/62 Price/pair 9.4M visits need 15:- SEK Cost 9.1M of the market by the Cost/pair end of Year 1 for IKEA to result in purchase 14.5:- Profit/pair 627,000 SEK Profit pairs sold by IKEA Final_EverSpring 27/9/2012 Page 17
- 18. WHERE WE’LL SELL IT Bargain bins 70% say they buy more than planned on 50% buying on a trip buy from these to IKEA bins Final_EverSpring 27/9/2012 18
- 19. SOCKS SOCK SOC ! S ! KS ! Promotions: C KS - Bring in old cotton products, get a pair of socks - In Store Experience: The Great Sock Hunt! SO - Sock design competition ! - Instagram competition SOCKS Advertising: ! - Catalogue Featured Page - Socks placed in the catalogue photos with other sustainable offerings SO CK ! S Final_EverSpring 27/9/2012 19
- 20. Dependent on raw LOW material, recycling 29,50 SEK as period, compared to manufacturing competitors & shipping PRODUCT PRICING PROMOTION DISTRIBUTION Monthly basis Minimal (Dependent Promotion upon where (catalogues manufactured, & exhibitions at packaging & stores) delivery time ) Final_EverSpring 27/9/2012 Page 20
- 21. • Ensuring quality & • Rules for import • Controlling quality & amount of raw quantity of recycling & materials (specially • Control distribution lines production Recyclable) • Packaging & delivery • Step by step procedure • Machinery and labor requirement • Good packaging Initial sales & promotional offers In case of less Survey after a month recyclable raw material availability use organic Check loyalty cards cotton to compensate information Keeping huge storage If sales too low, reduce capacities to reduce prices 27/9/2012 reliability on production Final_EverSpring Page 21
- 22. THANK YOU! ANY QUESTIONS? Final_EverSpring 27/9/2012 Page 22
Editor's Notes
- Name, Department
- History : As world’s largest privately held furnishing retailer, IKEA was founded in 1943 by Ingvar Kamprad. The first store Möbel-IKÉA was opened in Älmhult in 1953 and the first brochure IKÉA-nytt was published in 1948. The company is known for its modern-designed and ready-to-assemble furniture. With its headquarter in Netherlands, IKEA was controlled by INGKA holding, a Dunch corporation, which also own the industrial group Swedwood. Name, Department
- Who: General: everyone in the households Socioeconomics: rising global middle class, people with higher incomes like to purchase small things Current and potential customers:New family entrants, Renovators, Interior designers, Empty nesters People who want to decorate their homes What: Furnish & decorate fashion & comfortability Recycle Heavy users: style & function Where: In the stores in remote areas (12000 articles) - In the bins, on the shelves, at check-outs From the e-shop (3000 articles) When: New homes, Sale seasons, Cater to the satisfaction, Replace daily used items, Any time Why: Price & design, Impulse, DIY, One-stop-shop, Basic need for daily commodities. Why do people not buy? -quality, DIY, time commitment- too far and too big, brand loyalty with other brands Current Products Products: designed & functional Price: extremely price/cost conscious Distribution: 28 distribution centers, 11 customer distribution centers, 16 countries Promotion and communication: direct marketing, IKEA food services, the internet, communication and interior design, and public relations Name, Department
- Name, Department
- Design : start with the price - the consumer need - give designers (work with suppliers to design) all the parameters if there is something that can be mined for parts or design inspiration - find the smartest way to flat-pack it and minimize the space IKEA of Sweden, located in Älmhult, Sweden, employs the designers that design and develop the IKEA range of products that are sold in IKEA stores. IKEA designers work on the original principle, "to create a better everyday life for the many people.” Produce : suppliers who can produce products of good function and design at the lowest possible price, with concerns about working conditions and natural environment. Swedwood: Swedwood has more than 33 production units and offices in 10 countries in three continents. To ensure production capacity for IKEA. Finance : Financed by the Stichting INGKA Foundation, controlled by Kamprad family. The propose "To promote and support innovation in the field of architectural and interior design.” Cutting down on all unnecessary expenses that don’t lower the price. They never borrowed any money and finance everything with cash.Will never be on the market and concentrations of capitals. Promotion: consume 70% of the marketing budget annually1. More than 208 million copies annually. 30 languages, 59 editions2 Name, Department
- 1.Economic Growth and Stability : IKEA is hurt by the crisis, not as much due to low pricing strategy (GMID Euromonitor International, Inter IKEA Systems BV in retailing) Inflation decreases Swedish people’s purchasing power- The average inflation rate is 1.26% this year ( http://www.inflation.eu/inflation-rates/sweden/historic-inflation/cpi-inflation-sweden-2012.aspx ) Consumer Price Index (CPI) August 2012 : Consumer price index covers the consumption of the entire population of the country. Swedish (CPI) increased by 0.1 percent from July to August 2012 ( "Consumer Price Index - Frequently Asked Questions (FAQs)" . Bureau of Labor Statistics . Accessed September 10, 2010 , http://www.scb.se/Pages/Product____33783.aspx ) Low consumer confidence and purchasing ability for non essential items The 15-64 age group currently makes up nearly two-thirds of the Swedish population. The 65+ group increased to 17.6%, while the 0-14 group decreased to 16.7%. More younger generation more into design ( CBI MARKET SURVEY ,The bodywear market in Sweden , July 2009 CBI Market Information Database,marketinfo@cbi.eu ) 2. Legal and Regulatory Factors : Import rules and quotas, EU regulations for importing products being manufactured in China ( Jerison, Amalia. "Lecture 21,Eco 110 (6963) Introduction to Microeconomics“, European Commission, "The European Economic Area (EEA)". Europa web portal. Retrieved 10 February 2010.) 3. Technology Issues : -Use of internet for selling -3D printing ( "3D Printer Technology - Animation of layering". Create It Real. Retrieved 2012-01-31.) - Use of smart apps for shopping which is still missing with IKEA ( Consumer Lifestyles, 17 March 2010, Passport GMID) 4. Cultural Trends/ Environmental Concerns: Fashion Consciousness- young people in Sweden - Advertisements, films and music affect behaviour & demand – quick to pick up trends (Swedish Chamber of Commerce; www.swedishchambers.se, info@chambertrade.com) Sustainability Consciousness-Environmental concerns ->key factor influencing consumer decisions specially in home furnishing departments Consumers are worried about hazardous and toxic material, against deforestation.(Home furnishing Sweden, Euromonitor International), IKEA taking sustainable measures (Welcome Inside 2011 IKEA) Corporate Social Responsibility: Scandinavian consumers are quite conscious about codes of conduct and related issues like conditions of work place, workers safety and child labor ( Swedish Chamber of Commerce; www.swedishchambers.se, info@chambertrade.com) 5. Limited resources: Going for sustainable products helps in boost of value sales, as they can be expensive (Home Furnishing Sweden, Euromonitor International) Name, Department
- -S World's biggest player in home furnishing, definitely biggest in Sweden ( IKEA Svenska Försäljnings AB in Retailing, Euromonitor ) strong customer loyalty low price and decent quality appeals to the growing number of price-conscious customers in current economic environment ( IKEA Svenska Försäljnings AB in Retailing, Euromonitor ) continual focus on sustainabilit focus on customer experience strong expansion pace into asia numerous products unique business model ensures low level of competition vertically integrated attractive foodservice "swedish" image privately held -W stores away from city center weaker presence outside eu (or rather too much focus on eu) perhaps providing weaker customer service lack of free delivery multi-channel retailing not yet mature huge store model is easy to reach saturation but hard to reach small towns -O huge potential market in asia (Inter IKEA Systems BV in Retailing (World), Euromonitor) market reviving in us customers continue to be more price-conscious in eu low-cost manufacturing nations in asia low-cost raw material in china growing concern over environmental issues progress into internet retailing -T local big retail stores in other countries (Walmart, Tesco) may try to enter bleak economic environment in eu is likely to continue pressure from other channels, for example mature internet retailing
- a. The Target Market Segment/Customer group are the LOHAS. Even though it is not a well-known term in Sweden, globally, LOHAS represent a $550 billion market opportunity. b. Rabid internet Users (RIU) (LOHAS, Euromonitor) c. LOHAS stands for Lifestyles of Health and Sustainability – a young, affluent, educated demographic that is aware of IKEA but maybe turned off in the coming years with concerns about global warming and sustainability issues. LOHAS are extremely active on social media and can quickly turn against products that they perceive as trying to “greenwash.” More important than the green label are the deeper notions of “negative waste” and consumption through anti-consumption: choosing smaller shops and farmer’s markets over large grocery stores, vintage over H&M, and most importantly – flea markets over IKEA. d. An important take-away is that LOHAS do not shy away from consumption – in fact they “have no problem with consumerism, as long as the product does not invoke guilt feelings.” (LOHAS, Euromonitor) Photo Source: http://www.hollywoodfarmersmarket.net/ http://g.virbcdn.com/_f/files/1a/FileItem-6004-yoga.png
- But there is a risk – If your product is shown to be inauthentic, there will be a backlash. As of today, IKEA does well with it’s present market, the young, urban and rising middle class. But as the LOHAS continue to grow, sustainability will grow in importance for IKEA’s market. Photo Source: http://www.homeimprovementpages.com.au/connect/ikea/ Name, Department
- 53% of respondents in our market research said they would consider buying clothing options from IKEA Photo Source: www.hickorees.com/images/Daffodil_L2.jpg (accessed: 2010-05-02 07:44:25)
- Table only shows brands with at least 1% market share. About 20 other brands had a percentage below 1 totaling about 4% with the remaining 48.5% to other/unknown retailers. Table from GMID. Based on the Others category, one can see that there are a number of smaller companies that represent the majority of Hosiery sales. This implies that entry into the hosiery market is fairly easy. But this includes enterprises like smaller start-ups that may hand-make their own socks. The ability for a mass-producer to enter is much more difficult as establishing the funds/capital, relationships, distribution channels are increasingly challenging. IKEA’s current competitors (within the furniture industry) would not be interested in pursuing the hosiery industry as it strays too far from their current products and offerings. Also, most of the competitors consist of smaller furniture shops, which would not pose a large threat within socks if they were to enter the market. Name, Department
- 1. Brand Competition (involves products of the same type; very similar attributes) Bj örn Borg 79kr, MQ 59kr (these are stylish socks, but not as thick/warm as ours. H&M offers a thicker sock for 79kr, but it is not stylish) 2. Product Competition (relates to products in same general category) General/plain socks and dress socks from larger retailers like Lindex and H&M 3. Generic Competition (fulfills same general need/want) Other types of hosieries such as leggings, stockings, tights, and toe socks Name, Department
- (From GMID) Bjorn Borg operates an upper standard to premium pricing strategy. With a primary focus on underwear sales. Increased brand recognition and loyalty. MQ’s positioning strategy is to appeal to fashion-conscious adult consumers. Lindex wide and varied product portfolio for women and children. H&M wide and varied product portfolio Name, Department
- 4. Total Budget Competition (competes for same consumer dollar) Substitutes which make it unnecessary to wear socks include items such as slippers, sandals, toe shoes, and other types of footwear which eliminate the need for socks. Substitutes also include homemade socks. Competitor loyalty The main challenge will be establishing a clothing image/reputation. This is where IKEA’s competitors have an advantage or at least a head-start Name, Department
- “ A noticeable trend within socks was the growing consumer for demand for socks with bright colouring schemes and designs. Previously, socks were dominated by neutral, dark colours but the growing availability of designed, colourful socks demonstrates that this is changing. Björn Borg AB is a player within this segment, for instance, that actively uses colour and design to differentiate its socks offering.” (GMID) “ At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional socks at prices so low that as many people as possible will be able to afford them.” Mission statement from ikea.com GOALS: Affordable quality. Everyone, Everyday, Every Occasion Offer an affordable range of trendy, homey socks that can be used every day by everyone for every occasion. Increase the customers’ view that IKEA is a one stop shop for anything related to the home and establish the fashion home clothing image label of IKEA Sustainable, “everyday”, Quality in line with IKEA’s other offerings – value quality “ Where did you get those cool socks?!” “IKEA actually!” Want the socks to be something you put on at home and find so comfy and look so good that you forget to take them off when you leave the home. Meet the recent trend/demand Pic source: http://www.iconpng.com/icon/3866 Name, Department
- 1 http://www.businessweek.com/stories/2005-11-13/ikea IKEA will use penetration pricing to penetrate the new market, keeping a low profit margin. The price will help drive awareness to the product, as we aim to offer the cheapest recycled socks on the planet – aiming to give sustainable products at a price that everyone can afford.
- .99+.475+.215+.145+.09+1+1=1.915+2=3.915 Will take about 5% from each of top 6 retailers current share minus adidas And an additional 1% from other top retailers and 1% from Others Population 9.453 million people How many people visit IKEA stores? 655 million visits across all stores (2011 facts) 287 stores, 17 in sweden = 38.8 million. 0.0161623711340206 = 2/125=1/62 Pricing - 47.78 is average sock price Inventory of 1:6 from 2011 total. Maintain ratio. 100,000 pairs of socks Australia IKEQ 11.7. Annual Revenue 25/3 Income = 12%. Lower to 10% because just entering market. 10% of 29.50 = 2.95 29.50-2.95=26.55kr cost. Goal. Cost is 2kr per pair for production of nylon socks in Ethiopia Average of 26.55+2=28.55/2=15kr cost, profit is 14.50 Name, Department
- The in-store strategy for the the “Tras” sock is in the value bins found in the showroom and near the cash registers. To reach the LOHAS, our target market, we will place the recycled “Tras” socks in the areas where this consumer may be found. First, we will put new bins near the returned items areas of the IKEA stores. This is to attract those LOHAS who may be attracted to the “flea market” type aspect of IKEA – buying old and reused objects. 50% of respondents to our surveys buy from these bins 70% say they buy more than the plan on buying on a trip to IKEA “Tras” bins will also be placed next to all FSC-wood certified sofas or beds on our showroom floor – to increase bin-grabbing behavior by those who are particularly interested in our sustainable offerings. Placement next to our other sustainable offerings will lend credibility to the “Tras” name. Finally, bins with “Tras” socks will be placed in the existing bins near check-out counters - encouraging impulse buying from LOHAS, and other shoppers as well. Packaging – a simple sticker that will keep one pair of socks together – they are meant to be one per person, a la slippers. Source: http://stavangerphotobytanty.blogspot.se/2009/01/children-ikea-department.html
- c. Advertising Activities (paid-for mass communications that support marketing strategy) Advertising activities for this strategy include: the front page of the IKEA app and highlight on IKEA.se. Our target market spends a great deal of time online, so this is where we will find them – not on TV. TV ads will not be made for the socks, but with a focus on catalogue, app and home page real estate for promotion. A full page in the catalogue, highlighting a young couple sitting on a couch, on their computers wearing the socks. - Additional pages in the catalogue showing the socks in bedrooms, and on couches. Customers will be told which page in the catalogue which page to find the socks. Copy idea: “Turn down the heating and stay warm with the Tras socks” d. Sales Promotion Activities (customer and employee incentives that support marketing strategy) Promotion – Bring in old cotton products for an IKEA gift card – at IKEA in Stockholm, there will be a promotion to bring in old cotton socks with holes in them and get four free IKEA socks for a limitied time to build buzz about the product. - Bring in old socks for an IKEA gift card. - A “sock hunt” scavenger hunt through IKEA Stockholm with the winner receiving a 20.000 SEK IKEA gift card. - Sock design competition - Instagram/Facebook competition - where have you worn your socks? - YouTube contest: best sock puppet video using our socks - Sustainable products bonus on receipt (IKEA Family or percentage challenge) - Ikea Family discount for buying the socks Name, Department
- Pricing: Dependent on raw material (both new organic cotton and recyclable material), machinery (specially recycling), labor and distribution costs Distribution: should be brought into the IKEA stores 2 months before sale Name, Department
- PRCOESS: Step by step procedure: ensure that all the various steps to be followed in the recycling of cotton and manufacturing of socks is done in a proper uniform way OUTPUT: Rules of import: certain import rules to be followed for importing material manufactured in other countries e.g. China for IKEA Ensure proper packaging and delivery to IKEA stores Check response on initial sales and promotional offers Survey after a month to check response on sales Check loyalty card information to see response on sock sales Name, Department
- Name, Department