IKEA India: Market Analysis and Marketing Strategy

This report examines IKEA's market expansion in India, analyzing its product offerings, corporate strategy, segmentation approach, and marketing mix. It explores how IKEA has tailored its operations to cater to the Indian market, focusing on factors like customer values, pricing strategies, and distribution channels. The report also discusses the company's positioning strategy and its efforts to build brand value and customer trust in the Indian context.

HI6006- Assessment 2
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Executive summary
This report is based on the Ikea India which is a Swedish company and expanded its business
India since 30 years. It has been analysed by this report that it is a leading furniture retailer in the
world. The company has believed to work on the needs and demands of the target market. This
report has been analysed products and services provided by the company in India. Current
corporate and company strategy, market segmentation, positioning and 4P’s of marketing has
been defined in this report.
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Table of Contents
Introduction......................................................................................................................................4
Products and services.......................................................................................................................5
Current Corporate strategy..............................................................................................................7
Ikea’s segmentation strategy............................................................................................................9
Geographic Segmentation............................................................................................................9
Demographic Segmentation.........................................................................................................9
Psychographic segmentation.....................................................................................................10
Behavioural segmentation.........................................................................................................10
Positioning strategy.......................................................................................................................11
Ikea’s customer values...............................................................................................................11
4P’s of marketing...........................................................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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Introduction
Business expansion is prime need of any organisation to enhance their scope of work on which
this report will focus. Most of the companies which are working in the domestic market has a
focus on foreign expansion. This report will be based on IKEA which is a Swedish company
working in different countries. The company deals in the furniture, home and kitchen appliance,
and other home accessories. The company has a retaining top position in the furniture retailers of
the world since 2008. Ready to assemble and attractive design is the unique selling point of the
products designed and sold by the company. IKEA is also working in India for 30 years and it
has approximately 50 suppliers and 45000 direct co-workers in India. The company wants to
expand their setup and business in various parts of the country on which this report will focus.
This report will contain a description of products and services, current corporate strategy,
segmentation strategy and marketing strategy used by the company to develop its business in
various parts of the country.
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Products and services
Figure 1: Kitchen appliance of IKEA
Source: IKEA, 2017.
IKEA is mainly dealing in the furniture market to provide ready to assemble large range of
furniture. Unique design and attraction is the USP of the products designed by the IKEA. The
company is focused to provide a quality assurance to its target market. Plastic, wooden and steel
are the different material which is used by the company to design and develop furniture for
customers. The company is focused on the customers’ needs and desires which reflects in their
product design and quality (So, et. al. 2012). Most of the products contains detachable to carry
easily anywhere and fit them in the targeted space. Another thing is that customer’s wants ready
product to buy that why company has developed a large range of products which are ready to
sale. Kitchen appliance is the key market segment of the company in which they have large sales.
Microwave ovens, hobs, extractor hoods, filters, dishwashers etc. comes in the kitchen appliance
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of the company. The company also provides a service in which they will design the whole
kitchen of customers according to their demands. Luxury and comfort both are attached with the
services and products designed and developed by the company (Gaiardelli, et. al. 2014). IKEA
India is working on the customer’s needs and demands in which durability and effective pricing
are the key factors. The company has expert mechanics and engineer which helps to develop
better products and design in furniture and fixtures. Washroom, kitchen, living room, outdoor,
office etc. is the key areas where for company designs furniture and fixtures to provide a
relaxation to its targeted customers.
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Current Corporate strategy
IKEA is focused to expand its business and market in different countries and places of the world.
It is a multinational company and has a positive brand image in the targeted market. IKEA has
used FDI to enter in the Indian market to expand their business that’s why the company does not
have developed any partnership, licencing and franchisees model in the INDIA. It is the first
company which has entered in the Indian market by the use of FDI. Foreign Direct Investment
helps to the company to make a direct entry in the market which helps them to start their
business by their own stores (Hrelja, et. al. 2012). IKEA is one of the largest retailers of the
furniture market segment which shows that it contains different strategies by which they have
developed their market in different countries. First of all company has targeted on the desires of
the customers which helps them to succeed in the sales targets. The company has developed a
large range of products in their showcase which compels to customers once visit their outlets to
buy a furniture. IKEA India has worked on the customers’ demands and needs by market survey.
The company has developed a proper survey before the market expansion in the INDIA which
has helped them to analyse the customers expectation, uses and tendencies regarding to furniture.
The organisation has worked on the findings and outcomes of the market survey by which they
have combined designs, functions, quality and values with suitability of furniture related to the
targeted market.
The company has different outlets in the India which is used by the company to sell its products
in the targeted market. In India, the company has around 50 suppliers and more than 45,000 co-
workers which are engaged in the accomplishment of the market needs. IKEA has used
competitive pricing strategy in which they are providing high customer-valued products at
competitive prices (Cornelissen and Cornelissen, 2017). This a customer-centric approach used
by the company to develop its market. It is an effective strategy used by the company which has
supported to develop market share and customer database in newly launched sites. The company
has used cost-effectiveness factor in their product pricing which has helped them to attract
customers towards then which are interested to buy furniture. The company has used dealership
model to develop their business in the Indian market in which they have specifically mentioned
the need for a place, depositary amount etc. to develop dealership in the targeted market. Many
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of the businessmen which are interested to work with a brand name are used this opportunity
which helped to the company to develop its market in the country.
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Ikea’s segmentation strategy
It is essential for divide market in the segments which supports to develop and design marketing,
sales and products according to the market segments. The company has used four basic market
segmentation factors to divide their target market. According to these market Segments
Company has developed products, pricing, and promotions, marketing and sales strategies to
enhance their proficiency for the targeted customers. All of the market segments are given below
which are used by
Geographic Segmentation
It is based on the geographical conditions of the particular market on the basis of which market
can be divided. IKEA India has used this market segmentation to expand their business Indian
market. Population density, climate zone, regions are the prime factors on the basis of which a
company can develop market segmentation (Wilkinson, 2013). IKEA India has used regions and
population density factor in developing market segments. The company has divided the Indian
furniture market into four regions north, west, east and south which has helped to the company to
develop their business in all of the four regions. After that, the company has developed sub-
segments by dividing these regions in those cities which has large population density.
Demographic Segmentation
In this section, age, gender, occupation, family size, income, social economic, education,
religion, marital status etc. are considered which has helped to the company to develop its market
segment (Armstrong, et. al. 2015). IKEA India has used this market segment also to develop its
product accordingly. According to the income, factor company has developed a range of the
product in the outlets by which they can sell their products in each and every purchasing power
category. It is an effective segmentation for the company which has helped them to develop the
initial market and attract the customers. Family size is another factor which is used by the
company to develop market segmentation in the target market.
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Psychographic segmentation
Lifestyle, interest is the prime factor which is used in this market segmentation. IKEA has used
this market segmentation also to accomplish the needs of those people which are intended to get
a luxurious feel by designing their home accordingly. Stylish and unique designs are the concept
which is developed for this market segment which has helped the company to develop and
design new products. Psychographic segmentation is directly related to the customers’ demands
and needs with the product. Trendy features, attractive colours and uniquely designed are
developed by this company under this market segment which has developed the market of the
company in India.
Behavioural segmentation
This market segment is related to the behaviours of customers regarding the purchase of the
products (Johnson, 2016). Under this market segmentation IKEA has used attitude to the
product, adopter status, purchase usage, user status etc. to develop product and strategy. Under
the purchase occasion company has developed different selling strategy which is related to the
festive and wedding seasons in India. Demands are increased for furniture in the festive and
wedding season which is used by the company to develop its market. The Company is also
developed a different strategy for first time user and regular users of the products.
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Positioning strategy
It is essential to effectively represent the product in front of customers which can help to the
company to develop a positive image in targeted customers (Weinstein, 2013). In this section,
the company has developed a positive image in the targeted market by providing product
ineffective pricing. Pricing is the key factor which is considered by the company to deal with the
Indian customers. It has enhanced the company’s position in the targeted market. The company
has developed market survey in which it has analysed that Indian customers are focused to get
better quality products in the competitive pricing. IKEA India is already working in this strategy
which has positioned effectively in the targeted market.
Ikea’s customer values
The company has used signature products in sales which have supported to enhance customers
trust on the company. This has developed brand image and value in the targeted market.
Unbeatable price is used by the company to target the market effectively by the pricing strategy.
Deliverables are lower in the price which has developed the market for the company. Trust is the
significant element which has to be developed by the company in their trust in which Ikea has to
succeed effectively in India.
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4P’s of marketing
Ikea India has developed product, price, place and promotion strategies according to the Indian
market which has helped them to work on Indian customers’ needs and demands. Consideration
of product, price, place and promotions are given below:
 Product: All of the products are developed according to Indian customers’ needs and
demands. Ikea has developed a proper market survey to analyse the needs of designs and
durability in the furniture and appliance.
 Price: The Company has used competitive pricing strategy in which they have provided
better products in quality terms within effective prices. This pricing strategy is also based
on the customers’ needs and demands related to the Indian market (Khan, 2014).
 Place: Ikea India has developed dealership for distribution of products in the targeted
market. The area which is easy to reach and located in the high-density population is
considered by the company to sell its products.
 Promotion: Print media is most considered and trustable media in India so that IKEA has
used it for promotions purposes for its products and services. Product range, price and
distribution centres are promoted by the company by newspaper and magazines.
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Conclusion
On the basis of above report, it has been concluded that market analysis is a prime subject for
any company which is intended to develop its market. The market analysis supports to analyse
market trends, competitors and trends on which company works and develop its strategies.
Market segmentation is significant in the market expansion to accomplish the needs of the
different market segment. Age, usage, population density are the prime factor to consider in the
market segmentation. It has been analysed that product, price, promotion and place factors are
developed and considered according to the market segments.
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References
 Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an
introduction. Pearson Education.
 Cornelissen, J., & Cornelissen, J. P. (2017). Corporate communication: A guide to theory
and practice. Sage.
 Gaiardelli, P., Resta, B., Martinez, V., Pinto, R., & Albores, P. (2014). A classification
model for product-service offerings. Journal of cleaner production, 66, 507-519.
 Hrelja, R., Isaksson, K., & Richardson, T. (2012). IKEA and small city development in
Sweden: planning myths, realities, and unsustainable mobilities. International Planning
Studies, 17(2), 125-145.
 IKEA, (2017). Kitchen Appliance, [Online]. Available at:
https://m.ikea.com/au/en/pages/category/IKEA-Kitchen-Appliances/ [Accessed on 26 May
2018].
 Johnson, G. (2016). Exploring strategy: text and cases. Pearson Education.
 Khan, M. T. (2014). The concept of'marketing mix'and its elements (a conceptual review
paper). International journal of information, business and management, 6(2), 95.
 So, S., Parker, D., & Xu, H. (2012). A conceptual framework for adopting sustainability
in the supply chain. In ANZAM operations, supply chain and services management
symposium (pp. 397-413). ANZAM.
 Solomon, M. R., Dahl, D. W., White, K., Zaichkowsky, J. L., & Polegato, R.
(2014). Consumer behavior: Buying, having, and being (Vol. 10). Pearson.
 Weinstein, A. (2013). Handbook of market segmentation: Strategic targeting for business
and technology firms. Routledge.
 Wilkinson, F. (Ed.). (2013). The dynamics of labour market segmentation. Elsevier.
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