1. IKEA’s Business IKEA is an international home product company that designs and sells ready to assemble furniture appliances and home accessories
2. IKEA’s Founded Furniture Introduction Furniture Catalogue 196519581957195619551953194719431926 1951 IKEA designs its own Furniture IKEA introduces Flat packages IKEA stores open at • Almhult • Stockholm IKEA’s Timeline IKEA’s Company History* *Source: www.ikea.com
3. MARKETING ANALYSIS SWOT, PEST and the Marketing Mix
4. INTERNALEXAM EXTERNALEXAM SWOT W O T S STRENGTHS • Wide range of products and styles • Cheap and affordable • One stop shop • Easy shipping and transportation • Eco friendly and recycling of products • Functional design of products • Appealing shopping experience OPPORTUNITIES • Untapped markets like middle east and Asian countries • Better advertisements • Online sales • Demand for greener and environment friendly products WEAKNESSES • Assembly of furniture • Yet to invade upcoming global markets • Products don’t last long • Product dimensions unsuitable for global markets • Advertisements in the form of catalogues mostly THREATS • Organized sectors like Wal Mart, Office Depot, Staples, etc. • Unorganized sectors like local manufacturers and carpentry stores • Competitors opting for similar designs with a contemporary twist to cater to upper class POSITIVE INFLUENCES NEGATIVE INFLUENCES
5. • FDI Policies • Labor laws • Taxes and duties • Environmental LawsFurniture Market Political P • Recession reduces disposable income and hence the demand (Low prices advantage) • Enjoys economies of scale • High barriers of entry for competitors due to low prices offered to consumers EconomicE • Lesser carbon footprints • Ecologically sustainable • Recyclable products • Online tips on reducing environmental impact (CSR) Social S • Flat sized packaging • Innovative designs Technological T PEST Analysis
6. 4P's Marketing Mix Marketing Mix Product Price
7. Product Price Mix STYLE PRICE RANGE Scandinavi an (Sleek Wood) Modern (Minimali st) Country (Neo- traditiona l) Young Swede (bare bones High Medium Low IKEA's Product Price Matrix
8. Finding Smarter ways to make Furniture Strategy followed by IKEA Price Quality
9. Implementation Steps Establish Retail Price Select Manufacturer Determine the material used Design Process
10. Step 1: Establish Retail Price • Using the matrix, IKEA would set the price range. • It would survey the competition to establish a benchmark and then sets its own price point 30-50% lower than rivals.
11. Step 2: Select Manufacturer • More than 1800 manufacturers in more than 50 countries • Build long term relationships • IKEA circulates a description of proposed product's specifications and target cost and encouraged them to compete for the production package • Sometimes it might have different product component from different supplier
12. Step 3: Determine the material used • Done by IKEA engineers • Focus on cost efficiency • Using different types of wood for a single wooden product • Using high quality materials on furniture surfaces that were visible and most likely undergo stress • Using low quality material on surfaces that were low stress and less visible to the customer
13. Step 4: Design Phase • Use internal competition to select a designer • Flat packaged boxes to make it easier for consumers to transport the furniture home + save shipping costs
14. 4P's Marketing Mix Marketing Mix Product Price Placement
15. Customer Experience at IKEA • Bright and inviting experience for customers • Resembles Modern Theme park with childcare centers • Restaurants serving various delicacies
16. IKEA for kids: You shop, kids play • IKEA provides clean feeding and changing rooms for small children • Restaurant has a special menu just for kids
17. 4P's Marketing Mix Marketing Mix Product Promotion Price Placement
18. Communication Strategy for America
19. Perceptual Map
20. Segmentation
21. Video 1
22. Video 2
23. Video 3
24. IKEA INVADES AMERICA 2002200120001999199819971985 Mid 1990’s First store Company’s fortune changes Revenues double ($600 mn to $1.27 bn) 3rd largest store
25. PROMOTION STRATEGIES •Commitment-free approach to furniture – “Unboring” advertisement •Web site advertisement •The Law of Candor : When you admit a negative, the prospect will give you a positive •The Law of the Category: If you can’t be the first in a category, set up a new category that you can be first in •Additional Customer facilities: child-care, restaurants and help desk
26. INDIAN FURNITURE MARKET •As of 2006, the Indian furniture market is estimated to be worth US$ 7.9 billion Source: http://www.ibef.org/download/Furniture_170708.pdf
27. PROBLEMS FACED BY INDIAN FURNITURE INDUSTRY
28. Source: http://online.wsj.com/news/articles/SB100014241278873242669045784 58840277908564 IKEA INVADES INDIA
29. Market Development Diversification Market Penetration Product Development Products & Services Markets Existing New ExistingNew
30. IKEA’S INITIAL COMMUNICATION STRATEGY IN INDIA Integrated Communications Strategy
31. IKEA’s communication strategy* • Media Channels covered – TVC – Print – Digital • Pull Strategy • CSR initiatives Source: http://www.livemint.com/Money/jI27GvmsK5stzTn61yyWUN/Ikeas- consumer-challenge-in-India.html