IKEA's Global Marketing Strategy in the US

This assignment examines IKEA's global marketing strategy with a specific focus on its expansion into the US market. It utilizes various analytical frameworks including PESTEL, Porter's Five Forces, SWOT analysis, and STP (Segmentation, Targeting, Positioning) to evaluate the opportunities and challenges IKEA faces in this new market. The report explores factors like demographic trends, competitor landscape, and regulatory environment to provide a comprehensive understanding of IKEA's global marketing approach in the US context.

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Global Marketing
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Table of Contents
Introduction...........................................................................................................................................3
Porter's five forces analysis for Sweden................................................................................................4
New entrance.....................................................................................................................................4
Bargaining Power of Supplier............................................................................................................4
Competitive rivalry............................................................................................................................4
The bargaining power of the buyers..................................................................................................5
Threats of a the substitute..................................................................................................................5
PESTEL for US Market:........................................................................................................................5
Political.............................................................................................................................................5
Economic...........................................................................................................................................6
Social.................................................................................................................................................6
Technology........................................................................................................................................6
Environmental...................................................................................................................................6
Legal..................................................................................................................................................6
SWOT Analysis of US Market..............................................................................................................7
Strengths............................................................................................................................................7
Weakness...........................................................................................................................................7
Opportunities.....................................................................................................................................7
Threats...............................................................................................................................................8
Porter’s diamond analysis for both countries.........................................................................................8
Describe all three marketing theories....................................................................................................9
Choose which one applies to the chosen company............................................................................9
Describe STP and branding for the marketing strategy of the company suggestions for the company’s
marketing strategy...............................................................................................................................10
Segmentation...................................................................................................................................10
Targeting.........................................................................................................................................11
Positioning.......................................................................................................................................12
Conclusion...........................................................................................................................................13
References...........................................................................................................................................14
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Introduction
IKEA is one of the largest furniture retailers which was established in 1943. In addition,
IKEA is offering well-designed and furnishing products at reasonable price to their
customers. One of the main mission of IKEA is to provide good products at a low price to the
customers. On the other hand, in this competitive world, each and every organization requires
proper marketing strategy to sustain. In other sense, the global marketing is one of the major
marketing strategies which is implemented by many companies. There are various types of
theories, and business models will be discussed in this paper for effective global marketing
for IKEA. In addition, these models include the significance of global marketing policies.
Besides that, with the help of effective global marketing, an organization can expand the
business without any conflict situation. Although, how IKEA successfully implement global
marketing strategy through proper digital business perspective will be discussed in this paper.
Moreover, this paper also includes Porter’s five force theory, PESTEL analysis, SWOT
analysis and STP (segmentation, marketing and positioning) for more improved discussion.
Thus, this paper also provides a recommendation for the future objectives and goal
accomplishment for IKEA. Moreover, the management of IKEA will get a clear way to
proceed in the global market with available perspective (Schiavo-Campo and Sundaram,
2007).
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Porter's five forces analysis for Sweden
New entrance
As per the study, IKEA has an exclusive model and brand name. It is very much difficult to
copy the techniques of IKEA. In the furniture industry when other furniture companies start
its journey with a low-cost policy wide-ranging of home delivery conflicting with the non-
home delivery method of IKEA in Sweden. It has no small outlets in the small towns that
make a great opportunity for the newcomer company to open shops in the small towns. A
new competitor tries to enter in those small towns with low-cost plans with setting up small
outlets. A new competitor may attract new consumers.
Bargaining Power of Supplier
Yearly summary suggested that the IKEA had 1074 suppliers among 55 countries in the year
2012. Many of the suppliers are operated by the IKEA and where IKEA compete with others
in the industry of furniture. IKEA group had a unique modest power. Low price is helping to
gain the profit that has an effect on the profit margin. It also affects the price of labour than
the price of raw materials. Bargaining ability of the suppliers could be a matter of threat for
the profit of a specific company. IKEA group is fully aware of these. IKEA enterprise always
tries to maintain a good relation to the suppliers in Sweden. IKEA group guaranteed that the
IKEA benefits and the supplier’s benefits both are interdependent and connected with an
agreement(Royka, 2006).
Competitive rivalry
IKEA is very much comfortable with
its market competitor in Sweden.
IKEA maintain the competitive edge
among rivals. IKEA grew up in the
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very competitive industry. The competitors of IKEA in the world are Galiform of England,
Wal- Mart of United States. IKEA had now competed with too much intelligence and entered
in the world based largest market such as USA and Japan.
The bargaining power of the buyers
IKEA‘s primary customers are the Americans. IKEA‘s shops or outlets are made up for the
people who travel a lot in the abroad, take risks in life and wine, etc. after seeing the
customers demand the IKEA launched some technologies like laptops, Discmans and cell
phones(Akkucuk, 2008). The main motto of IKEA is to satisfy the customer by the quality of
the products as well as the supply. Their main concern of IKEA is too focused on the Sweden
based marketing approach.
Threats of a the substitute
IKEA do not produce any particular product while they have a large variety of products in the
market. IKEA modified their products by improving the qualities and according to the trend
or market demand(Trend Trading, 2007). Most importantly they have to maintain the quality
of the furniture and aware of the style that customer prefer. Wal-Mart, Target, etc. are, the
indirect competitor with the low-cost services. Others substitutes vary in the background
details as they are the general retailer in Sweden.
PESTEL for US Market:
Political
Being a part of the global inclination and up gradation, the IKEA is an example of a
successful firm in domestic as well as international business. IKEA, a Swedish furniture
retailer is founded associated with the Scandinavian style of furniture. That is a blend with
the flat packaging become famous and make a global trendy brand(Trend Trading, 2007).
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Economic
As per the economic changes and the trends IKEA trying to adopt via different strategies that
helps to own their customers loyalty. IKEA is low in price economically. Low cost feature is
a big scope of IKEA to enter in the US market. IKEA had an aim to advertise and campaign
to take the styling of the American furniture.
Social
IKEA offered the facilities like pensions and the insurance for the people or employees.
These are the contribution of IKEA in the society. Goal of IKEA to provide best quality
furniture with the original concept modified with stylish furniture at low price.
Technology: IKEA uses more superior
techniques to produce good quality of
furniture. Technologies and system used for
the accurate scheduled, tracking, staffing and
the trading pattern. IKEA has a specific
system by which company provide right no
of staff in the vacant places of IKEA stores. Proper supply chain create an efficient store
environment by enhancing the workforce that makes customer happy(Koopman, 2012).
Environmental
Environmental factor of IKEA like – air, noise, water are put in a place to confirm the
company’s actions in a particular time.it is consists of legal documents and environmental
authorities.
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Legal
The legal agreement of the IKEA is executed with laws and regulations that affect in the
environment, working situation and social. The company should maintain the lists of the rules
of regulation in the workplace
SWOT Analysis of US Market
Strengths
IKEA is a well-settled company with its internationally recognized brand name. The
company got the success to build it because from the beginning it has consumer loyalty. The
IKEA Company produce good quality furniture, and it is also very affordable for customers
with contemporary designs(Global markets and the law, 2003). The IKEA Company has
many ideas to expand their company to US market. With plans, they also need a pleasant
environment. The IKEA Company has to use the global marketing techniques. For this
reason, they can gain the advantage of the market.
Weakness
The organization IKEA has an international presence which exposes the firm to regional
economic trends as well as stretches the distribution channels of the organization. Moreover,
IKEA has major markets in the Asia and Sweden. Additionally, IKEA exposes themselves to
crucial currency exchange rates instabilities of USA(How Firm Can Hedge from Currency
Risk, 2012).
Opportunities
The company can invest in its strategy by using
plantations as per consumer preference. The company
thinks that the social welfare programs are also
important to develop our nations. According to this,
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the fair trade policies and ethically derived products are also preferred by the consumers. For
IKEA, USA characterized a significant market with the preference of the customers of the
USA for the products of the Western brand name. Every customer wants low price products
with good quality. Therefore, with the current financial environment, there is a demand for
low price furniture. They also have an opportunity to reduce the usage of carbon foot printed
woods(How Firm Can Hedge from Currency Risk, 2012).
Threats
One of the most threaten parts for IKEA is their pricing difficulties. There many companies
who are offering lesser price than IKEA on the same product. However, the main concern for
the organization is governmental regulations of different countries like California, New York.
While maintaining the laws within the organization, they are facing ethical issues among
employees.
Porter’s diamond analysis for both countries
No company can build their business at the starting point. Every success comes step by step.
Therefore, the market of the Sweden growing up their business in a diverse process. The
economic condition of the Sweden in growing up. Mainly growing up the technical matters
such as biotech, telecommunications, and computer equipment. It doesn't matter that the
potential of Sweden is only analyzed by separately, it also has a combined form by using the
portal models. Many companies of other countries engaged themselves with Sweden because
it is very profitable for them to create the best product and give the service. They can earn
71% of the total profits from these sources. The other countries develop themselves in the
different environment, and they also work with the different groups and got success and also
they develop their country with all these things. These things are shown by Porter model. To
increase the profit and growth rate of the country, Sweden has to progress the potential
sources(Tenant Laws, 2001).
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Porter’s diamond model is the strategic model of Michal Porter. This porter’s model helps an
organization to sustain in this competitive world. Some factors of the model which is
influenced by the government are the most connected factors in between the organization.
These are,
 Demand conditions
 Factor condition
 Structure, firm strategy and rivalry
 Related supporting industries.
Describe all three marketing theories
Porter’s five forces- porter's five forces are used to analyze the competition level of an
industry. It also helps to develop a company's strategy level. Porter's five forces reflect the
financial and competitive factors within an industry. The analysis also explains the
competitive advantages of organizations(Thompson and Richardson, 2009).
PESTEL Analysis- external environment factors are used in the PESTAL analysis. They use
it to observe and analyze the factors of external marketing environment. It creates a great
effect on an organization.
SWOT analysis- it is an analysis which represents the internal strengths and weakness of an
organization. Along with this, it also takes the responsibility to represent the external
opportunities and threats.
Choose which one applies to the chosen company
The porter's five forces theory is important for IKEA as the theory reflects upon the market
segmentation and the ways of improvement where the organization can make their mark.
Porter’s five forces analysis helps an organization to identify their rivals. This particular
analysis also helps the company to determine new entrances in the international market.
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Moreover, organizations like IKEA needs to focus on the strategies and plans for tackling
their rivals. Additionally, IKEA a. identify the behavior of their customers regarding the
bargaining powers. At last the organization can identify the changes in the budget and powers
of the suppliers(Thompson and Richardson, 2009).
Describe STP and branding for the marketing strategy of the company suggestions for the
company’s marketing strategy
In order to enter into the new foreign market, STP is playing an essential role in every
organization. In other words, the STP includes three major segments such as segmentation,
targeting and positioning. Each and every part of STM includes individual significance. Thus,
three parts of STP are discussed below for better understanding:
Source : https://www.google.co.in/search?
q=Segmentation&espv=2&biw=1242&bih=580&source=lnms&tbm=isch&sa=X&ved=0ahU
KEwiikd_ilLPSAhUHpI8KHejdA74Q_AUIBigB#tbm=isch&q=segmentation+targeting+pos
itioning+IKEA+&*&imgrc=FMBd1po8G1HJeM:
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Segmentation: in order to satisfy target market, the management of IKEA needs to focus on
segmentation. There are various types of segmentation characteristics located which depends
on sex, gender, occupation, behaviour, attitudes and approaches of individuals. As early
mentioned that IKEA is a world famous furniture retailer and they needs to focus on the
official segment of America for effective global marketing(Fjelstul, 2014). On the other side,
segmentation is one of the critical segment that includes the behaviour of an individual as the
target audience. Thus, the main segment should be the occupation of target people. In other
words, IKEA should target people who have jobs and handsome salary(Weinstein, 2008).
Apart from that, segmentation also includes demographic and psychographic factor. Along
with that, the demographic factors includes gender division such as male and female. In other
words, the furniture items are mainly bought by both male and female people in the world so,
the management of IKEA needs to focus on the demographic factor of segmentation. In
another side, according to psychographic factor, the behaviour of an individual is depended
on lifestyle. The people who are conserving with high lifestyle and indented to expand more
money to purchase furniture should be targeted by the IKEA.
Targeting: the management of IKEA needs to focus on the target population which would be
considered as the target audience. In other words, the targeting is a kind of process which
includes a perfect separation of the target audience. Apart from that, an organisation must
determine their target audience in order to expand the business successfully in the new
foreign market. On the other hand, the targeting process includes four essential parts such as
price, promotion, product and distribution. The customer is basically price-sensitive, and they
want best quality products in low price. Along with that, IKEA needs to focus on price
estimation before entering US market(Fjelstul, 2014). In addition, low price strategy is one of
the effective global marketing strategies which is implemented by many MNC companies.
Besides that, promotional activity is very helpful and effective strategy which attract the mind
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of many customers. In other words, the management of IKEA needs to promote their
products through various media such as newspaper, television, radio and internet. Online
marketing is one of the critical strategies which extends the awareness of the products
through Facebook, Google and Skype. Thus, the target customer of IKEA should be those
people who are looking for good furniture at a low price.
Positioning: after analysing two segments of segmentation, the third factor of STP which
includes distribution process is called positioning. In this segment, the management of IKEA
needs to focus on the appropriate place for targeting the customers. In is very clear that, the
outlet of furniture has always increased demand. Thus, in the supermarket or shopping can be
a more suitable place for entering a new market. IKEA should open a new furniture store in
such areas where there is a huge demand of furniture. Apart from that, the demographic
factor is one of the major element of the positioning marketing strategy. According to
demographic factor, the behavioural approach to the target consumers includes variations like
gender, age, family, occupation, lifestyle and locations(Canizares et al., 2006).
So, STP is playing an essential role in the global marketing of IKEA while expanding the
business in US market to increase the brand value of the organization. In other words, with
the help of STP, IKEA can successfully implement global marketing strategy in US market.
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Conclusion
In this report, there are different types of business models, and theories as porter’s five force
theory, PESTEL analysis, porter’s diamond model and SWOT analysis successfully
explained the significance of global marketing strategy in US market. In other words, with
the help of Porter’s five-force theory model, IKEA can effectively get a clear confidence and
moral support to enter the furniture retailer industry of USA. In order to expand the business
and as well as to sustain in the foreign market, the management of IKEA needs to follow and
implement five different forces of Porter’s Five Force Diamond model. Thus, each and every
factor of SWOT analysis, Porter’s five force theory and PESTEL analysis were clearly
explained, argued and justified through relevant evidence, diagrams and graphs. Moreover,
IKEA can only survive in the foreign US market through satisfying their potential customers
because without customer satisfaction an organization cannot sustain rather it collapsed.
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References
Akkucuk, U. (2008). Ethics and sustainability in global supply chain management. 1st ed.
Canizares, S., Einhorn, K., Williamson, J. and Ostroy, A. (2006). Supermarket. 1st ed. New
York: Scholastic.
Fjelstul, J. (2014). RV Association Members' Profile: A Demographic Segmentation and
Lifestyle Exploration. Journal of Tourism Insights, 5(1).
Global markets and the law. (2003). 1st ed. Minneapolis, Minn: Minnesota Institute of Legal
Education.
How Firm Can Hedge from Currency Risk. (2012). China-USA Business Review, 11(09).
Koopman, M. (2012). Economic analysis of neighbourhood quality, neighbourhood
reputation and the housing market. 1st ed. Amsterdam: IOS Press under the imprint Delft
University Press.
Royka, P. (2006). Mission furniture. 1st ed. Atglen, PA: Schiffer Pub.
Schiavo-Campo, S. and Sundaram, P. (2007). To serve and to preserve. 1st ed. Manila,
Philippines: Asian Development Bank.
Tenant Laws. (2001). 1st ed. Hackensack, N.J.: The Organization.
Thompson, J. and Richardson, B. (2009). Strategic and competitive success: towards a model
of the comprehensively competent organization. Management Decision, 34(2), pp.5-19.
Trend Trading. (2007). 1st ed. John Wiley & Sons.
Weinstein, A. (2008). Segmentation and Relationship Marketing. Journal of Segmentation in
Marketing, 3(2), pp.1-3.
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