IKEA Marketing Mix: Problems, Solutions, and Strategic Recommendations

This report provides a comprehensive analysis of IKEA's marketing mix strategies, examining problems in product, price, place, and promotion. The report identifies issues such as a lack of product differentiation, a cost-oriented pricing strategy, potential distribution management problems, and insufficient use of social media for promotion. It then proposes solutions, including product vertical differentiation to cater to diverse customer tastes, a price skimming strategy to leverage IKEA's competitive advantage, the development of a centralized distribution system, and increased focus on social media marketing. The report draws on various academic sources to support its findings and recommendations, providing a strategic overview of how IKEA can optimize its marketing efforts to enhance customer satisfaction and maintain its market position.

MARKETING AND MANAGEMENT
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Table of Contents
Problems in marketing mix strategies..............................................................................................3
Solutions to solve problems in marketing mix strategies................................................................4
Reference list...................................................................................................................................6
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Problems in marketing mix strategies
Product: IKEA is a large multinational firm that offers same range of products to all countries.
However, taste of different countries varies, which can impact on customer satisfaction rate.
IKEA does not provide any differentiation to their products, which can be identified as a
problem (Ikea.com, 2019). They sell different products like cupboards, dinnerware, cups are sold
to different countries on the basis of same catalogues. This may not satisfy needs of customers as
tastes of different countries vary. French people have a high sense of art, whereas China has low
cultural content. Hence, for meeting needs of customers in different countries, it is essential to
design and develop products according to needs of local people. However, IKEA tries to
maintain same product standard and design for customers of different countries with no
differentiation.
Price: A firm needs to adopt a proper pricing strategy that can help to sell a product among a
large base of customers. IKEA has an efficient cost control strategy that helps them to keep
prices low. IKEA’s pricing strategy is not culture oriented but it is cost oriented, which can
be stated as a problem. As opined by Pan and Nguyen (2015), culture oriented pricing strategy
helps to set prices according to tastes. For example, high standard people prefer to buy high cost
products that set with their standard. Hence, high quality products can be offered at high selling
prices to people who prefer to buy branded products at a high price.
Place: IKEA has a good place or distribution strategy with about more than 25 distribution
center. It has a large distribution network that helps in delivery of goods in a proper way to about
50 countries. Different products are transferred from suppliers to stores directly. However, rapid
increase in distribution scale of this company can create a problem of management in
future. They lack centralized distribution system that can to manage distribution process in a
proper way. Authority in distribution of products decreases if a global firm lacks centralize
process of distribution (Peinkofer et al. 2015). In addition, number of errors occurs if distribution
process occurs from a different centre.
Promotion: Effective promotion of products helps in attracting customers and increase brand
awareness. Effective promotion impacts on sales rate of a product. IKEA relies on electronic and
promoting products through a salesperson for promotion of products. Distribution of catalogues
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is done in different target markets. However, less reliance on social media and digital media
promotion is a problem that can create a challenge in future. As stated by Stead and Hastings
(2018), social media promotion is cheap and has the capability to attract and engage a large base
of customers. Proper communication can be done with customers through customized marketing
techniques like e-mail marketing. Much expense needs to face by this company in printing and
distributing catalogues throughout the target markets. In addition, different proper training
requires for sales person who distributes product catalogues. Improper behavior of sales person
can impact on relationship between company and customers.
Solutions to solve problems in marketing mix strategies
Product: IKEA can adopt the strategy of product vertical differentiation to provide
satisfaction to customers from different countries. Customers taste varies according to their
culture and beliefs. As stated by Huet et al. (2015), vertical differentiation enables a firm to add a
few features in a product along with existing features. This helps to increase range of products,
which can satisfy need of customers. It can be seen that need of French and Chinese customers
differs as French customers want products with more artistic designs. Moreover, this
differentiation can help them to achieve proposed pricing strategy. High quality products with
exquisite features can be offered at a high price, whereas products with fewer designs can be sold
at low prices. Hence, market competition can be avoided and different range of customers can be
satisfied in a proper way.
Price: IKEA has a competitive advantage in market due to its high quality and variety of
products. Hence, this firm can adopt a price skimming strategy. As opined by Stead and
Hastings (2018), price skimming strategy enables a firm to charge a high price. Some exclusive
products can be tagged with a high price for targeting high income customers. Products with
innovative features can be sold with a high price that can help to increase reputation of this
company. According to Nijssen (2017), after increase in demand in the market, price of products
can be increased. Generally, low price is set initially to attract a large volume of customers. At
present, IKEA has a large base of customers who are from different economic and social
background. However, after some time when competition in market will increase further, price
of products can be decreased.
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Place: IKEA may focus on developing a centralized system of distribution as this decision
may help this firm to mitigate identified problem of their distribution channel. Several benefits of
centralized distribution system are there and these can help IKEA to reach maximum customers
within minimum time period. Better control can be ensured by developing a centralized system
for distribution of product. As opined by Sainathuni et al. (2019), this kind of distribution system
can help to manage inventory effectively. It saves the cost of warehousing and reduces the
overall cost of distribution. One of the main advantages of this distribution system is easy
accessibility. Management of IKEA may get easy access to this system at any time as per their
requirement.
Promotion: This Company does not spend enough capital in social media marketing and this
aspect is preventing them to reach maximum potential customers within minimum time period.
IKEA must focus on social media marketing for maximizing their customer base. As
suggested by Peinkofer et al. (2015), many large organizations promote their products through
social media platforms such as Facebook, Instagram, Whatsapp, and others. IKEA may send
their catalogues to their customers by using Whatsapp and Facebook. In addition, this marketing
strategy is cost and time efficient. For this reason, it can help IKEA to maximize customer base
without spending a large amount of money on marketing.
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Reference list
Hartemo, M., 2016. Email marketing in the era of the empowered consumer. Journal of
Research in Interactive Marketing, 10(3), pp.212-230.
Huet, A.L., Frail, C.K., Lake, L.M. and Snyder, M.E., 2015. Impact of passive and active
promotional strategies on patient acceptance of medication therapy management
services. Journal of the American Pharmacists Association, 55(2), pp.178-181.
Ikea.com (2019), Marketing of Ikea, available at: https://www.ikea.com/my/en/campaigns/
[Accessed on 14th june 2019]
Nijssen, E.J., 2017. Entrepreneurial marketing: an effectual approach. Abingdon: Routledge.
Pan, J.N. and Nguyen, H.T.N., 2015. Achieving customer satisfaction through product–service
systems. European Journal of Operational Research, 247(1), pp.179-190.
Peinkofer, S. T., Esper, T. L., Smith, R. J., & Williams, B. D. (2015). Assessing the impact of
price promotions on consumer response to online stockouts. Journal of Business Logistics, 36(3),
260-272.
Sainathuni, B., Guthrie, B., Parikh, P.J. and Kong, N., 2019. Distribution planning for products
with varying life cycles. Flexible Services and Manufacturing Journal, 31(1), pp.41-74.
Stead, M. and Hastings, G., 2018. Advertising in the social marketing mix: getting the balance
right. In Social Marketing pp. 29-43
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