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IKEA in India

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IKEA in India

  1. 1. IKEA – Entering India Marketing Plan Group H
  2. 2. Ikea’s plans to enter India arebecoming a reality
  3. 3. Ikea plans to enter India • Part of expansion strategy in emerging markets • Entering in about 1-2 years. • Two-phase program = 25 stores. • Total investment of 1.5 billion EUR • Commit to 30% of local sourcing
  4. 4. Why do we shop in IKEA?
  5. 5. IKEA in a glanceRevenues Bn EUR 9.0 % 338 Stores Founded in 1943 776 Million visits First flagship Store 1958 Best employer for 26 Countries working moms 1,018 Suppliers 100% manufacturing outsourced
  6. 6. Ikea in emerging markets Challenges Takeaways• Corruption • Non-market strategy• Bureaucracy • Adjust products offering to local• Competitor with low prices taste• No brand recognition • Important marketing efforts• No culture of “Do-it-yourself” • Opening small stores before flagships• Scandinavian design • Educating in “Do-it-yourself”
  7. 7. The Indian Market2nd world largest population World Largest democracyLargest Open market economy 400 MM people in the middle class +7% Annual growth rate By 2025 middle class will be world’s 5th largest consumer economy
  8. 8. Ikea’s Challenges in India• No “Do-it-yourself” culture
  9. 9. Ikea’s Challenges in India• Needs to change sourcing strategy
  10. 10. Ikea’s Challenges in India• Store Format – Low % of car ownership
  11. 11. Ikea’s Challenges in India• Competitors with very low prices
  12. 12. Ikea’s Challenges in India• Low Home and Garden expenditure • US: US$2,000 • China: $300 • India <$50
  13. 13. Ikea’s Challenges in India• Scandinavian design too plain
  14. 14. Ikea’s Challenges in India• No brand awareness
  15. 15. MARKETING PLAN
  16. 16. Competition Analysis Organized Branded Retailers  Operate branded retail stores in Prime Locations  Range of offering  High Quality, High Price  Serves High-End and Upper middle-class customers Low-end Braded Retailers  Operate in shopping malls  Low quality, Low Price  Basic Designs  Serves Middle-class customers
  17. 17. Competition Analysis Local Unorganized Players  Operate mom n pop stores  Basic Designs  Low Quality, Low Price  Serves Middle-class and lower middle-class customers Customized Furniture Makers  Customized Designs  High/Low quality – depends on customer preferences  Serves all kinds of customers  Time consuming
  18. 18. Competition Analysis
  19. 19. Segmenting the market by income levels, we aretargeting the Strivers and SeekersGlobals 6.3% 21.7%Strivers 3.8 % 20.9 %Seekers 15.2% 30.6%Aspirers 14.6% 13.7%Deprived 3.8% 2.6% 2015 2025
  20. 20. Target Market
  21. 21. Target Market Loves to Shop Uniqueness = Status Symbol Loves unique imported designs Changes her furniture frequently
  22. 22. Target Market Young Software Engineer Lives in small apartments Moves to new cities for jobs in 3- Loves Modular, 5 years easy-to-carry furniture Traveled Abroad 0-1 kid
  23. 23. Target Market Student moved to Metro for higher education Functional Designs Compact study table to fit in the room Looking for budget furniture having resell value
  24. 24. Target Market Quick furniture Just got married One-stop shop for her new home
  25. 25. Ikea needs a different positioning statementto attract this target market“Your Partner in better living. We do our part, youdo yours. Together, we save money”. More emotional“Made for all, IKEA is the world’s most loved furniture andmaker of quality home design solutions, which will makeyour home unique, and most importantly – yours!Due to our passion for making your home, a better placeto live in.”
  26. 26. Blueprint Expansion• Location: Mumbai • Location: Mumbai + Delhi • Location: Mumbai + Delhi +• Store Format: In (New) Bangalore (New) + Mumbai shopping mall • Store Format: In Shopping (Flagship) mall • Store Format: In Shopping mall + New store as Flagship store in Mall or City.
  27. 27. MARKETING MIX
  28. 28. PRODUCT PLACE PRICE PROMOTION
  29. 29. PRODUCT PLACE PRICE PROMOTIONIn the Indian Market IKEA will define itsproduct offering according to the Heat Map STYLE Scandinavian Modern Country Young Swede (sleek wood) (Minimalist) (Neo-traditional) (bare bones) HighPRICE Medium Low STYLE Scandinavian Modern Country Young Swede (sleek wood) (Minimalist) (Neo-traditional) (bare bones) HighPRICE Medium Low
  30. 30. PRODUCT PLACE PRICE PROMOTIONThe Inorbit malls offer the activities andservices that attract high traffic of customers • First store in Mumbai • Offers easy access to target population • Offers movies, restaurants, playgrounds and shows and offers that attract potential customers. • It is common activity for leisure time to go to the shopping centers.
  31. 31. PRODUCT PLACE PRICE PROMOTIONThe price IKEA establishes has to be parityor lower to branded competitors Bedroom Products • Mantain it’s value Pull out storage unit proposition of low Multi-storage… prices Eight wall storage cabin • In India offering Cushions competitive prices with branded competitors Bed Comforters Bed spread and cushion… • Internationally IKEA prices 30%-50% lower Basic Wardrobes than competitors but Queen Bed in India given intensive competition in price €- € 100 € 200 € 300 € 400 € 500 € 600 IKEA could maintain a IKEA Price Competitors Price 10% - 15%
  32. 32. PRODUCT PLACE PRICE PROMOTIONIKEA will use traditional and non-traditionalmarketing strategies in India • Magazines Traditional • Billboards • Increasing brand Marketing • TV Ads awareness • Product placement in Tv • Communicate the value proposition • Educate in the DIY concept • Digital Marketing • Attract customers to Non - Traditional • Social Media Campaign the store Marketing • Special Campaigns
  33. 33. Digital Marketing
  34. 34. Digital Marketing
  35. 35. Print Ad 1
  36. 36. Print Ad 2
  37. 37. Social Media Campaign
  38. 38. In the first year we are projecting sales forEUR 53.3 MM increasing 56% CAGR Year 1 Year 2 Year 3 Year 4 Year 5 Mumbai + Mumbai + Mumbai + Delhi + Mumbai MumbaiCity Delhi Delhi BangalorePenetration/ City:Mumbai 25% 30% 35% 40% 50%Delhi 25% 30% 35%Bangalore 30%Target Market: 623,922 748,707 1,711,153 2,003,470 2,926,129Avg Expenditure EUR 85 90 90 95 107.5Number of Stores 1 1 2 2 4Indian Suppliers 10% 15% 20% 25% 30% Revenue 53,033,400 67,383,614 154,003,774 190,329,637 314,558,905 COGS 29,161,449 37,144,364 85,103,282 105,437,481 174,687,407 Gross Profit 23,871,951 30,239,250 68,900,492 84,892,156 139,871,498 Operating Cost 26,516,700 30,322,626 77,001,887 85,648,337 157,279,453 Operating Income (2,644,749) (83,376) (8,101,395) (756,181) (17,407,954) Total Financial income and expence - - - - - EBITDA (2,644,749) (83,376) (8,101,395) (756,181) (17,407,954) Tax (1,057,900) (33,351) (3,240,558) (302,472) (6,963,182) EBT (1,586,850) (50,026) (4,860,837) (453,709) (10,444,773) Minority Interest - - - - - Net Income (1,586,850) (50,026) (4,860,837) (453,709) (10,444,773) -3% 0% -3% 0% -3%
  39. 39. Timeline: The marketing activities are taken place months before the opening 2013 2014 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Design Print Ads Billboards MagazinesPre-Launch Develop Digital Media Develop Social Media Campaign Develop and roll-out the website Develop TV Ads Design catalog Design Prerolls for Theaters Establish Sponsorships and Partnerships Execute the Sponsorships for famous events (IPL 2013) Air the TV Ads Put the Print Ads - Billboards and MagazinesLaunch Product Placement in TV shows Do the Social Media Campaign Special Launch Events - Public Launch Catalog Show the pre-rolls in theaters Special Festive Season Events Sepcial Wedding Season Events
  40. 40. Q&A

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