IKEA's Marketing Strategies: A Comprehensive Analysis

IKEA

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................3
INTRODUCTION............................................................................................................................. 4
INTERNAL AND EXTERNAL ANALYSIS OF IKEA................................................................................5
SWOT ANALYSIS OF IKEA........................................................................................................... 5
PESTEL ANALYSIS OF IKEA..........................................................................................................7
PORTER’S FIVE FORCES ANALYSIS............................................................................................11
PRESENT MARKETING STRATEGY OF IKEA...................................................................................12
OBJECTIVES OF IKEA.................................................................................................................... 13
SEGMENTATION, TARGETING AND POSITIONING.......................................................................14
MARKETING PROGRAMMES........................................................................................................17
NEW MARKET OFFERINGS BY IKEA..............................................................................................20
IKEA Family Card...................................................................................................................... 20
IKEA Place app......................................................................................................................... 20
CONCLUSION............................................................................................................................... 22
REFERENCES.................................................................................................................................23
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EXECUTIVE SUMMARY
Marketing is a process of promoting the products and services of a company so that the
company can attract the potential customers and as a result increase its sale. The current
assignment focuses on the marketing strategies followed by IKEA which is the largest
manufacturing company in the world and carries its operations in a number of countries.The
assignment discusses the stakeholders of the organisation who make an impact on the market
strategies of IKEA (Khan, 2014).These stakeholders include the factors such as employees,
owners and managers and the factors which are external to the organisation such as customers,
suppliers, competitors in the business, society and government. The assignment also highlights
the present marketplace of the IKEA and the strength and weakness of the company in
comparison with the major competitors in the retail furniture market (Kotabe and Helsen,
2014).
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INTRODUCTION
IKEA has maintained its position as the world’s largest furniture retailer for many years. The
company has expanded its operations in 50 countries and has over 400 stores located in various
countries of the world. The company showcases 12,000 products on its website, which shows
the broad product range of the company (Kotler, 2015). The product range of the company
comprises of furniture items such as bed, sofa, wardrobes, dining table and chairs. Smart home
appliances such as smart lighting, automated fans and furniture with wireless charging
facilities.The company got two initial letters ‘I' and ‘K' from the name of the founder of IKEA
groups, Ingvar Kamprad and other two letters are associated with his hometown from where he
started the company in the year 1943.
Figure 1: IKEA
[Source: http://knowledge.wharton.upenn.edu/article/will-ikea-find-home-india/]
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INTERNAL AND EXTERNAL ANALYSIS OF IKEA
IKEA is the most successful brand in the retail furniture market the main selling point of the
company is the excellent quality and low cost of its products, and company’s efforts to reduce
the carbon footprint and lower down the energy consumption in its stores (Bohari, et al. 2017).
The company has committed to reduce the packaging requirements and promote green
transportation plan across all its branches. The micro and macro factors which make an impact
on the strategies of the company are discussed below:
SWOT ANALYSIS OF IKEA
Strengths
 Use of renewable materials for making furniture and active participation in the forest
conservation projects.
 Lower prices due to economies of scale: The company purchases the furniture from
suppliers in large scale and these items are sold all over the world and company
 Good relationships with the suppliers: IKEA has around 1800 suppliers in many countries
and has strong supply chain management systems (Reihanian, et al. 2012).
 Innovative products: The Company always bring new and innovative products to the
market to attract new customers. One such example is the ‘flat pack furniture’; this
furniture gives the customer convenience in logistics.
 The company has a wide range of products from furniture to home appliances which
provide the customer convenience of getting a large number of home care products at a
single place.
 A large number of brick and mortar branches: There is a perception in the customers
that online market is a place for cheap and lower quality products; to break this
perception the company has established a large number of stores in various countries so
that the wide range of products of IKEA can be displayed effectively.
 IKEA has started many big advertising campaigns in the USA and European countries
which has helped the company increase its brand awareness
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Opportunities
 Since starting, the company has the policy to create such products which have minimum
Impact on the environment; this can be an opportunity for the company highlighting
these features in the marketing campaign and take benefit of the increased demand of
sustainable products.
 Emerging economies and the ever-growing middle class in countries like India and China
have huge opportunities for the company.
 The Online selling market has many opportunities for the furniture market due to the
increasing trend of purchasing products online.
Weaknesses
 IKEA does not manufacture any product by itself and all the products are purchased
directly from the suppliers in bulk. This has increased country’s dependence on the
suppliers.
 The company has standard patterns of furniture which are mainly based on the
European style of furniture making, due to which the company is not able to satisfy the
demands of customers who are in search of some exclusive designs; this reduces the
market share of the company (Srdjevic, et al. 2012).
Threats
 The challenge of maintaining the quality of the products while following the company’s
policy of keeping the prices of products as low as possible.
 Reduction in disposable income due to recession in many European countries and
BREXIT effect.
 Many new companies are entering the low-cost furniture market and it has increased
the competition in the market.
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