Business & Marketing Communication: IKEA Case Study Analysis (DAM661)

This case study provides a comprehensive analysis of IKEA's business and marketing communication strategies, covering its history, organizational structure, mission, values, and product portfolio. The study delves into competitor analysis, focusing on Kmart and Amazon, evaluating their strengths and weaknesses. A SWOT analysis is conducted to identify IKEA's internal strengths and weaknesses, along with external opportunities and threats. The assignment further explores IKEA's segmentation, targeting, and positioning strategies, examining customer demographics, age, gender, life cycle stage, occupation, and marketing mix elements. It assesses the effectiveness of IKEA's communication channels, including advertising, public relations, and digital marketing. Finally, the study offers recommendations based on the analysis, providing insights for future marketing and business communication strategies.

Running head: BUSINESS AND MARKETING COMMUNICATION
Business and Marketing Communication
Name of the student:
Name of the university:
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Table of Contents
Task 1...............................................................................................................................................2
History.........................................................................................................................................2
Organisational Structure..............................................................................................................2
Mission and Vision Statement.....................................................................................................3
Values of the company................................................................................................................3
Product Portfolio..........................................................................................................................4
Task 2...............................................................................................................................................5
Task 3...............................................................................................................................................7
Task 4...............................................................................................................................................9
Task 5.............................................................................................................................................11
Task 6.............................................................................................................................................12
Task 7.............................................................................................................................................13
Recommendation based on the analysis....................................................................................14
References......................................................................................................................................16

Task 1
History
IKEA has been recognised as a company that is based in Netherland. The multinational
group was founded by Swedish businessman Ingvar Kamprad on 28th July, 1943. Back when the
company was founded, Ingvar Kamprad was just 17 years old and worked as a carpenter. Ingvar
Kamprad was listed on Forbes magazine as one of the top 10 richest people in the world in 2015.
The company has been able to achieve a multinational strategy while operating in the retail
industry offering kitchen furniture, accessories and appliances to the consumer community. Now
the company serves approximately 423 location globally and it intends to expand further
(Ikea.com, 2019).
Organisational Structure
The organisational structure of the company has been incorporated in a global scale. It
has been found that various companies operate the trademark of IKEA. The organisation
structure that has been adopted by IKEA help in terms of development of the activities with the
numerous franchises that the company has under it. Apart from the latter, the organisational
structure that is maintained by the company is Hierarchical in nature and the latter has been
deemed to be the shortcoming of the company there exists little to no communication between
the different levels in the company.

Figure: Organisational Structure of IKEA
(Source: Ikea.com, 2019)
Mission and Vision Statement
It has been found that the vision of the company is to help people create and experience
utility in their everyday activities. The mission of the company is to realise the vision by the
delivery of good quality products at low prices so that people from all income groups can afford
them (Ikea.com, 2019). The objectives of corporate governance and sustainability of the
company can be achieved through the help of the vision statements and incorporating the same
within the organisational culture of the company (Ikea.com, 2019).
Values of the company
There are certain principles and values that catered to by the company while they are
operating in the organisation that is deemed to be effective in terms of development of the
organisational competency. Following are the values of the company;
a. Togetherness
b. Being cost-conscious
c. Renewability and continuous improvement
d. Responsible business
e. Sustainable mind-set through CSR and environment sustainability.
f. Leading by example
g. Maintaining Simplicity in activities (Ikea.com, 2019).

Product Portfolio
There are various products that are offered by the company. Majority of the products
offered by the company are kitchen appliances. Following are the products that the company
offers;
i. Bathroom accessories
ii. Bedroom accessories
iii. Children’s accessories
iv. Cooking appliances
v. Dining equipment
vi. Food preparing accessories
vii. Outdoor
viii. Kitchen accessories
ix. Textiles and rugs
x. Furniture for office use
xi. Wireless chargers
xii. Family products
xiii. IKEA procurement (Ikea.com, 2019)
Task 2
Regardless of the nature of the industry, there are companies that rival the viability of
companies regardless the nature of the industry that the individuals are working in. IKEA are
operating in the home appliances and furniture industry. Thus while the company is operating in

the said industry. There are competitors that the company faces. Companies such as Kmart and
Amazon have been identified as the main competitors of the company that have been causing
issues associated to the sustainability of the company in the said country (Simões & Sebastiani,
2017). While the nature of products that are offered by the companies while they operate in the
industry is deemed to be similar, there are differences in products that are offered by the
company. As a result of the nature of the service and the products that are offered by the
companies, there are strengths and weaknesses associated to the operations of each company. It
is known that the performance of IKEA has been propelling other companies in the industry to
succeed in the said industry. Thus, from the perspective of IKEA, it is important to cater to the
needs associated with the operations of IKEA in New Zealand. The latter can be achieved by
identification of the strengths and weaknesses of the competitors of IKEA in New Zealand. The
strengths and weaknesses of the competitors that will be discussed in the following section are
Kmart and Amazon. Following are the strengths and weaknesses of Kmart in New Zealand
(Kmart.co.nz, 2019);
Strengths
i. The product-line of the company is one of the key attributes that defines the rationale for
the success that the company has been subject to while they are operating in the industry
regardless of the location that the companies are operating in. The company has
association with good brands and it helps in terms of development of the competency of
the organisation.
ii. The company has an effective and string brand image in the retail sales industry. The
company has been able to develop favourable brand equity with the nature of activities
that they have been carrying out while operating in the locations throughout the globe.

Following are the Weaknesses of Kmart.
Weaknesses
i. The supply chain that the company has developed is deemed to be ineffective. The
activity of supply chain management has not been adequately catered to by the company
thus, making it unable to compete with top companies in the same industry.
ii. Marketing communications is an activity that is deemed to be missing from the
competency of the company. The marketing related activities that are carried out by the
company are deemed to be ineffective as a result of which the motives that have been
developed by the company in terms of operations in a said industry.
Following are strengths of Amazon (Amazon.com, 2019):
Strengths
i. Amazon has been recognised as one the top online retailers in the world. The goodwill
that the company has been able to generate as a result of their effective approach to
business is the reason behind the acceptance of the company worldwide including New
Zealand. Furthermore, due to the cost leadership approach of the company they have
been able to gain effectiveness in operations through customer satisfaction.
ii. The operations that are carried out by the company are considered customer centric. This
implies that the company values relations that it has with the consumer community. The
latter is evident through the effective Customer Relationship Management carried out by
the company while it is operating in global markets.Following are the weaknesses of
Amazon (Mena & Bourlakis, 2016);
Weaknesses

i. There are various developing nations that the company has been operating in. They have
been subject to high valuations of debt while they operate in the developing nations. Thus
the debt reflects in the company’s propensity towards procurement activities. The latter is
backed by the functional ineffectiveness of Products such as Kindle fire stick that is
deemed to be a flop.
ii. It can be said that too much development or diversification of the brand portfolio
hampers the functional effectiveness of organisations. With seemingly too much product
and service diversification the company has strayed from its core competency that is
relentless retail of books online.
Task 3
Ikea has been recognised as one of the largest suppliers of home appliances and furniture
globally. The company has been recognised for the unique product designs that they come up
with and the portable methods of installation. The following section will evaluate the
effectiveness of operations of the company by using a SWOT analysis. The latter will help in
identification of the strengths, weaknesses, opportunities and threats associated to the operations
of the company.
Strengths:
 Brand value: According to Forbes Magazine, the company is currently placed in the TOP
5 companies in the world in terms of brand value. The current valuation of the company
is approximately $11.9 billion. Furthermore, the organisation has been recognised for the

effective nature of operation in the retail sectors placing them effectively in the list of top
10 retail companies in the world.
 Product Portfolio: The Company has been able to develop their product portfolio
effectively. While developing their product portfolio the company has been able to cater
to the needs of the masses. Apart from the latter they have not strayed from their core
competency that is development in terms of offering furniture and home appliances in the
market that they are operating in. (Lehner, 2015)
Weaknesses
 Standard Control: The vision that the company aims to stick to is to offer products at
minimal prices to suit the varied demands of the consumer community. Thus, the
company has had difficulties associated with keeping the prices favourably low while
maintaining the quality of the products that they offer in the market.
 Unfavourable environmental issue: While the company operates in the dynamic business
environment the company has not been able to cater to the needs associated with
environmental sustainability. Thus, favourable brand image that they have been able to
develop with the help of effectiveness of operations in development of their product
portfolio and CSR activities get undermined as a result of the lack of affiliation towards
the needs of the environment. (Fernie & Sparks, 2018)
Opportunities
 Environmental sustainability: It can be said that companies that adopt sustainable aims
are on the receiving end of favourable responses from the diverse groups of stakeholders

associated to the organisation. Hence, the company can capitalise on the same and
experience favourable nature of outcomes in the industry that they are operating in.
 Developing nations: The nature of products offered by the company are not expensive,
Moreover, they are developed by keeping the cost-effective quotient in mind. Thus, the
company can be subject to favourable responses from the part of the consumers as it
allows them to capitalise and cater to the needs of the consumers with low per capita
income (Deshwal, 2016).
Threats
 Business model: The company needs to constantly re innovate their business model as the
low-cost business model that has been developed by the company is frequently imitated
by the competitors of the company.
 Online furniture retail: The companies operating as online furniture retail companies have
can operate in the industry with cost effective approaches as the latter do not have to
incur storage cost as a result of which the latter can offer products in at low prices
(Anselmsson, Bondesson & Melin, 2016).
Task 4
Segmentation Strategy:
Customer Demographics:
The Company may be focusing in the customer demographics that will help the company
to be fit and able to attain sustainability. The company focuses on certain factors of the

customers. The customers are kept on watch and also provide with certain segments as well.
Thus the number of the customers are segmented under the sections of the their lifestyle, age,
purchasing behavior so as to keep their notice their actions and also build strategies according to
their demands and roles and response (Cosmo & Yang, 2017).
Targeting Strategy:
• Age: The age of the customers must be 22 years and above.
• Gender: The Company serves to the customers of both the genders that is both male and
female.
• Life cycle stage: Customers may belong from several stages that are- bachelor stage
young, newly married couples young, without any child; Full Nest I youngest child under 6 years
of age, Full Nest II youngest child six or over, Full Nest III older married couples with
dependent children, Empty Nest I older married couples, no children living with them, Empty
Nest II older married couples, retired, no children living at home, Solitary survivor I in labor and
Solitary Survivor II retired.
• Occupation: The occupation of the customers may vary from being students to employees
and professionals as well.
Positioning Strategy:
Positioning of IKEA depends on the selection of the marketing of the mixed and most
attractive to target the customer segment as much as they can. Types of positioning are done
based on the mono-segment, multi segment, standby, anticipatory, imitative, adaptive, and
defensive and stop gaps, type of the positioning. IKEA mostly uses the mono-segment type of

positioning and accordingly, that makes an appeal to the nee and the demands of a single
customer and prefers to get the value of the money.
Task 5
According to Helmefalk (2016), the three core product/service level of the IKEA are
namely core products which consists of the kitchen appliances as well as the furniture; actual
product which is the second level product or service of the company organizational competencies
to various companies as well and also provide after sale services to the customers. In the third
level that is the augmented product that the company offer is the delivery of goods as the
company maintain supply chain management as well as delivery of the products and after sales
service to the customers.
IKEA mainly focuses on the prices ending in 99; referent pricing; discount in the price
which guide the customers to purchase the product. This is pricing strategy is quite effective
specially the prices ending in 99 which attract more number of customers as it is in the
psychology of the customers that odd numbers are less than the even number and if the price is
kept in odd digit it attract more customers. Therefore, it is quite effective in nature due to the
attractiveness of the pricing strategy (Zha, Zhang, Xu & Zhang, 2018).
The company possess an effective marketing mix as they supply goods and services to
the different place of the world so their distribution channel is effective in nature. The network of
the company in terms of the distribution channel is quite strong. The company possess
manufacturers, retailers as well as suppliers locally which help them to reduce the distribution