Marketing Mix of IKEA - PDF

MARKETING
ESSENTIALS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Roles and responsibilities of marketing function...................................................................1
P2 Roles and responsibilities of marketing relate to organisational context..............................3
TASK 2............................................................................................................................................5
P3 Comparison between elements of marketing mix of organisations.......................................5
TASK 3............................................................................................................................................7
P4 Basic marketing plan .............................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Marketing is considered as the key of success of an organisation in this modern scenario,
it is a broad concept which has relatively wider scope as it is interrelated with various
departments and functions of an arranged business firm. Marketing function has different roles
and responsibilities which helps a marketing manager to achieve their ultimate goal of overall
profitability and development. Marketing function includes activities like personal selling,
advertisement campaigns, identifying needs of consumers, development of various promotional
strategies and conducting research in order to effectively promote all the manufactured goods
and services. IKEA is a furniture retail company which designs and produces custom made and
ready to assemble furniture units.
In this project various roles and responsibilities are described which explains importance
of marketing function and a marketing plan for IKEA is developed in order to identify their
opportunities and threats.
TASK 1
P1 Roles and responsibilities of marketing function
Marketing function is the core purpose which helps a company to identify potential in
their products and develop strategies to promote their products in the market. This involves
conducting market research, developing an effective marketing plan and carry out activities like
advertising, public relations and customer service. Primary objective of marketing function is
maximising customer satisfaction and increasing the demands of the produced goods. The
process of marketing function starts from the activities of distinguishing the customer needs and
ends with satisfying those needs ( Anderson, 2012).
IKEA is a furniture retail company which deals in custom made and ready made
furniture, kitchen appliances and home utility appliances. IKEA has effective marketing plans
and policies due to which IKEA is the world's largest furniture retailer and manufacturer.
Marketing function has an significant role in the efficient promotion of an organisation,
few of the roles and responsibilities of marketing function are:
 Product – Product includes goods and services that are either manufactured or delivered
by the organisation, IKEA manufactures their products according to the demand and than
market them. Marketing function includes identification of potential of their products. So
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it is responsibility of marketing and production manager of IKEA to manufacture quality
products so that they can satisfy consumer needs. In order to produce and deliver quality
goods, it is important for IKEA to follow strategies like feedback and understanding the
perception of customers ( Rao, 2012).
 Selling – Marketing function of an organisation is directly proportional to selling
function as an effective marketing plan increases the chances of higher sales. IKEA has
hired a team of marketing professionals who develop plans of promotion which includes
various advertisements, campaigns etc. so that their sales can be increased. Increasing the
sales is the most important role of the marketing function as higher sales results in higher
profit and growth of the organisation.
 Pricing – Pricing is the process of assigning the prices to the goods and it influences the
buying power of customers as higher rate makes the products undesirable and low rates
makes the product affordable for customers. IKEA balances their pricing policy by
effectively marketing their products. They have adapted different marketing strategies for
their different priced commodities, so that every goods can focus on the their target
audience.
 Promotion – The main role of marketing function is to promote or advertise the
products. IKEA promotes their products by developing various plans and policies, they
use various marketing tools and techniques such as sales promotion, public relation,
personal selling for the impressive promotion of their products.
 Marketing Information system – MIS or marketing information system is a systematic
approach which helps an organisation to take impelling decision for the company. With
the of this system, Ikea's marketing team identifies the needs and behaviour of the
organisation by gathering all the information about market trends, customer preferences
and tastes. According to this system, all information is first collected and than analysed
and evaluated for the preparation of marketing plan of action ( Brekke, 2011).
 Financing – Financing refers to the process of allocating finance to various activities or
departments of the organisation. An effective and efficient marketing plan needs financial
resources to carry out their promotional activities, IKEA is a huge brand name which
requires a lot of financial resources in their marketing activities. The financial manager of
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this organisation allocates resources so that all promotional activities can be carried out
and they can have opportunity to capture whole market.
 Distribution – Distribution refers to distributing or delivering the products and services
to several locations so that they can be further transferred to end consumers. IKEA
distributes their products to various stores and end users so that they can get immediate
feedback. Manager of marketing department of IKEA is responsible to make sure that
they are delivering quality products to their customers to satisfy their needs.
Other responsibilities of marketing department includes developing strategic plans,
recruiting effective sales personnel and carrying out all activities related to marketing and
promotion process.
P2 Roles and responsibilities of marketing relate to organisational context
Marketing department is considered as center functional unit of an organisation which is
related to every other function of a business firm either directly or indirectly. IKEA believe that
their marketing department is core for their other activities and it influences their profitability as
well as their brand image. The concept of marketing involves sales promotions, personal selling
and other tools and techniques by which any organisation can make their promotional activities
effective.
Interrelationship between marketing function and other organisational functions of IKEA
is mentioned below:
 Marketing function with operational functions – Operational function includes
production and manufacturing of the goods and other operations related to the production
such as inventory control. Marketing function involves promotional activities of the
goods which are produced in operational function. IKEA is an organisation which deals
in manufacturing of ready made or ready to assemble furniture units. Marketing
department of IKEA is interrelated with operational function as marketing managers of
this organisation conducts various campaigns and advertisement activities for the
products which are manufactured by the production department of this organisation ( Van
den Bossche, 2016).
 Marketing function with finance functions – Finance function is considered to be the
monetary function of an organisation which includes activities like price allocation,
resource allocation etc. finance and marketing department are related to each other as
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finance department decide how much financial resources should be allocated for the
marketing and promotional activities. IKEA is one of the largest retailer of furniture in
the world, which have an effective marketing team with a lot of financial resources and
for that its important for the finance department of IKEA to allot a huge amount of
financial resources to marketing department so that all activities and campaigns can be
carried out.
 Marketing function with HR functions – HR or human resource function involves
recruitment activities, selection activities, training and developmental activities etc. HR
and marketing department are interrelated to each other as marketing activities are human
oriented and not machinery oriented and they requires skilled professionals to carry out
the marketing activities. IKEA is a multi national company which requires an efficient
team of skilled marketers who can promote and advertise their products, in order to
perform these activities marketing department requires employees which are hired by
human resource department, HR department screen all the applicants and then shortlist
them for the recruitment process and after selecting an appropriate candidate they train
them so that they can result to be an asset for the organisation.
 Marketing function with sales function – Sales department involves activities where
products are actually sold to the various stores or customers. Sales and marketing
function interrelate with each other as marketing department promotes and advertise
those products which are sold by sales department. Number of sales are influenced by the
effectiveness of marketing plans and policies. Due to the effective promotional strategies
developed by the marketing department, demand of the products increases and leads to
increased sales of the products produced by IKEA ( Stanfield, 2016).
 Marketing function with R&D function – R&D or research and development
department includes all activities of research about needs of consumers, market trends,
customer's current preferences and tastes which can used for the development of
marketing strategies. Research and development department is related to the marketing
department as marketing department works on the basis of information and data which is
collected from various researches. IKEA deals in retail business which requires ample of
researches in order to identify customer's needs and their current choices according to the
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market trends. Marketing department of IKEA develops their marketing plans according
to the data collected by research and development department.
 Marketing function with IT function – IT department controls all issues related to
information systems and technology. IT department is charged with establishing,
monitoring and maintaining all information services, marketing department is interrelates
with IT department as all IT related issues of marketing department are controlled and
managed by IT department. IKEA uses MIS or marketing information system which
needs to regularly maintained by IT department as it required intensive focus and
consideration.
TASK 2
P3 Comparison between elements of marketing mix of organisations
Marketing mix refers to the set of factors which are controlled by an organisation in order
to promote the brand or product in the market. It includes combination of certain actions and
activities which can influence the customers to buy specified products. Marketing mix comprises
7 elements and they are product, price, place, promotion, physical evidence, process and people.
Comparison in marketing mix of IKEA and Walmart is mentioned below:
Marketing mix of IKEA
 Product – IKEA is the leading retailer chain which manufactures and delivers ready
made and custom made furniture units. Product range of IKEA includes ready to
assemble furniture units, outdoor furniture, children utility products, beds, mirrors,
bathroom stage, chairs. Tables, kitchen utility appliances, lightning equipments, textiles,
sofas, storage boxes, tools, kitchen cabinets and hardware goods. All the above
mentioned products are included in the product range of IKEA which is diversified so
that they can be used by every individual.
 Price – Year 2010 was the expansion phase for IKEA, where they lowered their prices in
order to attract maximum customers. Vision of IKEA is to capture global market and for
the achievement of this aim, they focus on cost control and manufactures low cost
furniture units which are affordable by everyone ( Chong, 2016).
 Place – IKEA delivers their products in multiple countries, they have captured global
market by making low cost furniture units so that they can used by every economy. In
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order to expand their stores, IKEA invites general public in IKEA restaurant for free food
to develop their brand image. This organisation has excellent distribution strategy by
having around 25 distribution centres and business operations spread in over 50
countries. IKEA directly delivers their products to end customers with the help of diverse
distribution schemes.
 Promotion – IKEA has a separate team who carry out functions of marketing and
promotion. IKEA has number of marketing tools and techniques like TV advertisements,
print advertisements, social media advertisements, billboards and many more. IKEA
conducts various campaigns in different countries to expand their market share, one of
the campaigns of IKEA includes an innovative idea about focusing on home furniture as
homes are the most important part of individual's life ( Abwanzo, 2016).
 People – People are the employees who works in an organisation, here IKEA considers
their employees as the most important asset as their effort work together to achieve
organisational goals. There are 150000 employees in total engaged in retail, supply and
production of products. There is strict restrictions in IKEA to discriminate between
employees on the basis of race, ethnicity, gender, religion etc.
 Process – IKEA is involved in various processes like production which has around 40
units distributed across over 10 countries. IKEA follows a unique inventory management
technique and supply chain management.
 Physical evidence – IKEA has a number of stores across the globe, and these stores
includes restaurants and baby handling areas in order to satisfy every need of their
customers. IKEA has physical evidence of around 350 stores spread in 50 countries.
Marketing mix of Walmart
 Product – Walmart deals in general utility products which are used in day today life
activities. The product range of Walmart includes electronic equipments, home
appliances, children products such as toys and video games, jewellery, grocery and other
food products.
 Price – Walmart is the leading supermarket chain which delivers general utility products
and does not includes any production activities, they procure the products from various
distributors and enjoys the benefit of economies of scale. Walmart offers discount
schemes and low prices which attracts customers.
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 Place – Walmart is a global brand which has around 10000 stores across 28 countries,
they operates on both platforms that is offline and online. Stores of Walmart includes
Walmart discount stores, Walmart super centres and Walmart express stores.
 Promotion – Promotional activities of Walmart includes sales promotion, personal
selling, advertisement etc. Walmart promotes usually promotes its brand name by various
sources like print media, social media and digital media.
 People – Walmart is global brand which has main focus on people, they have around 2
million employees working across various countries. People include employees as well as
the customers by which an organisation is able to earn profit ( Stanfield, 2011).
 Process – Walmart includes processes of procuring, warehousing and delivering the
products.
 Physical evidence – Walmart has 11000 retail stores in total distributed across the world.
In addition Walmart also has few offices which controls the functioning of Walmart
stores.
TASK 3
P4 Basic marketing plan
Marketing plan refers to the design of all marketing activities such as promotional and
advertisement activities. This plan sets an time frame in which all activities are needed to be
performed by various marketeers. Marketing plan includes vision, mission and various analyses
of the company. Marketing plan of IKEA is described below:
Company Background
IKEA is a retail furniture company which is owned by private individuals, founded in
1943 by Ingvar Kamprad. IKEA is the leading furniture retail company which manufactures and
delivers custom made and ready to assemble furnitures.
Vision
Vision of IKEA is to create world a better place to stay. They offer a wide range of
furniture units, kitchen appliances and home utility equipments which helps in improving living
standard of an individual's life.
Mission
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Mission of IKEA is to deliver quality products for the achievement of their ultimate
organisational goals which are customer satisfaction and profit maximisation ( Gan, 2015).
SWOT analyses
 Strengths – IKEA has a clear vision and objectives which gives comprehensiveness in
responsibilities and authorities. IKEA operates in multiple countries which is beneficial
for them as if any one of the country changes their policies about furniture products, they
can earn profit from other countries.
 Weaknesses – In order to create an positive brand image, IKEA has decreased the prices
of their products which results in poor quality of products. Few of advertisement
campaigns by IKEA has negative impact on their brand image.
 Opportunities – IKEA can start their operations in developing countries which has a lot
of population like China and Africa. IKEA can improve their online shopping platform
to increase online sales.
 Threats – Furniture retailing is a growing industry which offers a number of new
competitors
STP of IKEA
 Segmentation – Segmentation is the process of classifying whole population in multiple
classes or segments. IKEA has divided world population according to demographic,
Psycho-graphic and gender ( Hwang, 2016).
 Targeting – IKEA targets public aged between 20 to 60 years.
 Positioning – IKEA positions a brand image of a furniture retailer who manufactures
unique and low cost furniture units.
Marketing mix of IKEA
 Product – IKEA manufactures a wide range of products including ready to assemble
furniture units, home appliances and kitchen utility products
 Place – IKEA has 25 distribution centres across 50 countries.
 Price – IKEA produces relatively low cost furniture units in order to build an brand
image and expand their business.
 Promotion – IKEA has a team of promoters which advertise their products by the
medium of print advertisements, social media advertisements and digital advertisements.
Marketing strategy
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For the expansion of their business, IKEA develops marketing strategies which targets all
classes of society and in order to make effective marketing plan, marketeers of IKEA considers
all segments of the market.
Financial projection
Ikea Income Statement 2016 2015 2014
Revenue 35,074 32,658 29,293
Cost of Goods Sold 18,918 18,221 16,372
Gross Profit 16,156 14,437 12,921
Operating Income 4,499 4,049 3,743
Total Financial income and expense 869 299 352
Income before minority interest and taxes 5,368 4,348 4,145
Tax 1,158 822 801
Income before minority interest 4,210 3,526 3,344
Minority interest 10 14 15
Net Income 4,200 3,512 3,329
Execution
All steps of marketing plan and strategy are required to be followed in order to execute
marketing plan.
Evaluation
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 Sales analyses – Sales volume of furniture units are higher than sales volume of general
utility appliances.
 Cost profitability analyses – After lowering the costs of manufactured products, IKEA
is facing high profitability ( YIN, 2015).
CONCLUSION
From the above report it can be concluded that marketing is the core function of any
organisation which promotes and advertises products. There are few roles and responsibilities of
marketing function which helps in decision making about various departments such as
production, sales etc. In the above report marketing mix elements like product and price are
compared of two organisation which are IKEA and Walmart. In order to capture whole market,
organisation develops a marketing plan involving SWOT analyses, vision -mission statement and
marketing mix. All departments of a business firm is either directly or indirectly related to
marketing function.
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REFERENCES
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