Service Operations and Marketing

Running head: SERVICE OPERATIONS AND MARKETING
Service Operations and Marketing
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1SERVICE OPERATIONS AND MARKETING
Introduction
IKEA is a leading home furnishing company with global revenue of more than 38
billion euros (Vahlne and Jonsson 2017). It belongs to retail industry and was founded in the
year 1943 by Ingvar Kamprad. Its head quarter is located in Leiden, Netherlands. This paper
is going to elaborate on the competitive strategy followed by IKEA, its marketing strategy
including the target market, marketing mix and positioning and its operations strategy. With
the same, it shall also highlight the relationship between competitive, marketing and
operations strategy.
Competitive strategy followed by IKEA
Competitive Strategy refers to the long term action plan of a company formulated by
means of considering different external factors in order to achieve a competitive advantage
over its other rivals and competitors. It is generally aimed at developing a defensive position
in the market and for gaining a superior ROI (Return on Investment) (Jiang, Jia and Gong
2018). The competitive strategy followed by IKEA is that of Cost leadership strategy. Cost
leadership strategy is one of the strongest bases of the competitive advantage of IKEA. It
offer affordable furniture to its target market by forming lowest possible cost and the entire
credit goes to the combination of economies of the scale and the technological integration
into different processes of business.
Marketing strategy of IKEA (target market, marketing mix and positioning)
IKEA use differentiated strategy as its marketing strategy in order to meet the
demands of its customers (Lebherz and Hartmann 2017). It has positioned itself to be a value
based positioning company in the market. Its target market include the young adults from low
to middle income families and business people.
Marketing Mix:

2SERVICE OPERATIONS AND MARKETING
Product: The products offered by IKEA cover a wide variety of things and offering for the
customers to choose from. They can be broadly divided into bed room furniture, outdoor
furniture, office furniture, baby furniture, living room furniture, Kitchen appliances,
decoration, safety products, clothes storage and leisure. It is to note that each and every
products of the company are provided fresh to the customers and this is the main point why
IKEA is been differentiated from its other competitors. It is also to mention that IKEA does
not depend on the solitary classification of products and administrations for its development
and extension (Sminia 2017).
Price: The Company competes with different international retail chains and the local
supermarkets. The low product prices comprise of the vision, business concept and business
idea of IKEA (Roschk, Trabold and Gelbrich 2018). It makes very low cost furniture for the
office and household uses. With the same, the company focus on the efficient operational and
cost control details. This in turn has allowed the company to lower down its prices at the time
of international expansion. Furthermore, it is also to note that the company allows lower
prices along with freebies at the restaurant of IKEA every day except Sunday.
Place: The Company has got outstanding distribution strategy as part of its marketing mix. At
IKEA, the distribution of the products and services are based on the certain principles. It has
an international distribution network, that is, a huge network of distribution. It has high
volumes on the flat packages and on the manufacturing sides and this is useful in increasing
the value to weight ration. The company have more than 20 distribution centres and at the
same time, has the business operation in above fifty different nations. More than 9500
products are sold at IKEA (Wilhelmsson and Persson 2018). It grants rights for becoming a
franchisee in the business market where the rights have not been given and this has helped
IKEA to maintain its exclusivity. Furthermore, it is also to note that the company evaluate
several type of parameters in order to choose the perfect franchisees and they include- the