IKEA's Competitive Strategies: A Focus on Marketing and Operations Management

[Course title]
B207A- Shaping Business Opportunities I

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Essay
Introduction
Almost every country has a strategic business unit of IKEA and they all remain as a
part of the core organisational strategy, performing distinctively than their competitors. From
the case, it is evident that IKEA employs effective management, focussing majorly upon its
operation management areas along with combining other core activities that offer best
chances for achieving competitive edge. However, there are few debates documented in
literature where authors argue that low-cost leadership and differentiation in marketing
management cannot always prove beneficial for IKEA. This essay will focus upon IKEA’s
competitive strategies and how marketing and operations management contributes in bringing
IKEA’s competitive advantage as per given case example and other credible sources.
Body
Minimising cost of finished products has been one of the prime tactical decision seen
in IKEA’s competitive strategies. Modern furniture manufacturing sector have developed low
cost operations and supply chain through outsourcing few of its services. Similarly, IKEA
works with more than 1,800 suppliers who manufactures firm’s products at a reasonable price
thereby helping company reduce its overall production cost (Harapiak, 2013). The firm has
gained much prominence in marketplace as per given case study and uniqueness seen in
IKEA store product design as well as quality makes target demographics achievable along
with gaining advantage over its competitors (Sandybayev, 2017). Moreover, IKEA also
provides with optimised furniture designs to its consumers along with providing catalogues
and design advisory from where they can easily opt for suitable product for fulfilling their
core needs. Such complimentary marketing tactics along with efficient operation
management helps the company gain competitive advantage significantly (Chu, et al., 2013).

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Targeting and positioning segment in IKEA involves set of consequent decisions
related to marketing strategies that constitutes in fulfilling core business objectives and
gaining competitive edge. IKEA always anticipates the national economic development of the
countries it operates in. For instance, in US or in European countries, the strategic marketing
of IKEA mainly focusses upon lower income group along with middle income families who
can afford IKEA’s product easily. However, in Asian country, IKEA targets middle and
upper-middle section consumers as the company believes that such targeted groups can help
in gaining competitive environment in Asian region. This shows that company utilises mono-
segment positioning under which it offers such products that can fulfil demands of single
customer segment who basically prefers buying value added products and shows cost-
consciousness (Burt, et al., 2011).
Marketing mix strategy of IKEA elaborates its pricing, promotion, and distribution
strategies which helps the company support its overall competitive strategy. Products of
IKEA makes it a leading global company across the world where it successfully offers wider
range of furniture satisfying different demands of customers. Pricing policy of IKEA
competes other competitors in global retail chains along with super markets (Harapiak, 2013).
As seen in the case study, the company adopts low prices strategy that constitutes its core
vision and mission along with business idea and concept of IKE, the company also focuses on
efficient and cost controlling operations that has allowed the firm to be successful since past
20-30 years. IKEA has got effective distribution strategy that is supported by the company’s
placing strategy in marketing mix. Products manufactured are usually supplied to company
stores directly that helps in reducing cost of middle agents along with reducing transportation
costs and warehouse expenses. Even promotions in marketing mix of the company
establishes strong relationship with IKEA customers by offering solutions to the issues faced
by them in the campaigns held regularly. IKEA uses various promotional tools like