Marketing Audit and Strategy for IKEA: A Comprehensive Report

This report provides a comprehensive analysis of IKEA's marketing management. It begins with an introduction to IKEA, a multinational company in the furniture and home accessories industry, and outlines the report's structure. The main body includes a background statement detailing the manufacturing industry and IKEA's market position, comparing it to competitors. A marketing audit is conducted, outlining the overall market attractiveness and growth potential, followed by a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. The report then applies the 4Ps model (Product, Price, Place, Promotion) to propose a new product, leveraging identified strengths and opportunities while managing weaknesses and threats. The report concludes with a summary of findings and a list of references.

Marketing Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background statement-................................................................................................................1
Marketing audit that outline overall market attractiveness and whether there is potential for
market growth-............................................................................................................................4
Following analysis, on the basis of 4Ps model, a new product has been launched by company
and thus with the help of that product how strength and opportunities could be identified and
further managing weaknesses and threats-..................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Marketing management is organizational discipline that focus on practical application of
the marketing orientation, methods and techniques inside organization and enterprise on
management of firm's marketing activities and resources.
IKEA is the multinational company which deals in designing and selling ready to
assemble furniture, home accessories and kitchen appliances. Company is situated in over 313
locations globally. The report includes a background statement for outlining the industry, market
position along with present unique selling proposition. Report further carried forward with
marketing audit which outline overall market attractiveness. The report ends with analysis
through 4Ps model while proposing new product which could be helpful for company to
capitalize strength and opportunities and managing the weaknesses and threats.
MAIN BODY
Background statement-
Industrial Background:
Manufacturing is process of converting component or material into finished good which
could be sell in marketplace. Every physical good which have been purchased by individual from
shop or online has been manufactured somewhere. Manufacturing industry is the largest sector
who had employed over more than 12 million of employees. It can be stated that healthy
manufacturing industry is hallmark indicator of thriving and healthy economy. Manufacturing
industry refer to the industry that is involved in processing and manufacturing of item and
indulged in either creations of the new goods or in the value additions. Manufacturing industry
account for important share of industrial sector in the developed countries. Final product could
either served as finished good for selling to consumer or as the intermediate good that is used in
production process. Manufacturing industry came into with occurrence of the socio- economic
and technological transformation in Western countries in 18-19 century (Lindgreen and Di
Benedetto, 2018). That is widely known as the industrial revolution. It has been begun in Britain
and then replaced labour-intensive textile production with the mechanization and utilization of
fuel. Manufacturing industry are chief wealth producing sector of the economy. Manufacturing
industry is broadly classified into food manufacturing, beverage and tobacco products
manufacturing, textile manufacturing, leather & allied products manufacturing, apparel
manufacturing, wood product manufacturing, paper manufacturing, coal and petroleum
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manufacturing, chemical manufacturing, plastic and rubber manufacturing, metal manufacturing,
Fabricated metal, machinery manufacturing, computers & electronic manufacturing,
transportation equipments manufacturing and furniture manufacturing. This industry has share
in Gross Domestic Product had been stagnant at 17% from last two decade. Total contribution of
industry to GDP is 27% in which 10% comes from the quarrying, mining, gas and electricity.
Manufacturing sector has steadily growing at rate of the 7% from past decade. Growth rate has
been 9 to 10% per year since 2003. Desired growth rate for next decade is 12%. National
Manufacturing Competitiveness Council (NMCC) is being set up with objective for enhancing
and improving productivity by proper policy intervention through government and renewal of
effort by industry (Mullakhmetov and et.al.,2016). Manufacturing industry is responsible for
products and goods in the economy, or physical product that has been purchased and used by
individual every day. In today's technological advancement, it allows manufacturer to do more
within limited time. Thousands of item could be manufactured within few time period.
Technology could be used for assembling, tracking and testing productions. Continuous
improvement in technology make manufacturing industry increasingly work efficiently, faster
and more cost-effective.
Market Position of Company:
IKEA is the European multinational group which sells and design ready-to assemble
furniture, home accessories & kitchen appliance among another usable good and occasional
home service. Company had revenue of $45.4 billion and has become world's biggest furniture
retailer since 2008. All companies aims at positioning themselves at best market position. It can
be measured by their quality, service, rating of consumer services and pricing. Somehow nobody
could beat up IKEA in this race and thus company had established a huge position in the
marketplace among its rivals (Wagner and Eggert, 2016). Company is always known for having
the least expensive price in marketplace. IKEA maintains its low cost leaderships through low
cost control strategy. Thus, company's product are affordable and renders good quality. It can be
explained below-
Criteria IKEA Tepe Home Koleksiyon
Number of stores There are 433 IKEA
store which are
operating in across 52
It had 27 Tepe home
store, 12 Tepe
kitchens, 10 Tepe
13 stores in Turkey
and 8 store in the other
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countries. Furniture sellers in
turkey.
counties.
Number of employees Company has 2000
employees in Turkey
stores and 10000
employees are
employed in other
countries where its
store has been located.
It employs
approximately 1750
employees.
It had 800 employees
currently working with
company.
Number of product
variety
It offers 120000 type
of product variety to
its customers.
It renders 40000 kinds
of the product.
It offers 25000 various
type of product.
Market share Company had 32.5%
of market share (Baker
and Saren, 2016).
It' market share is 25% Market share of
company is 11%
Current Revenue 25,17 billion euro 168,3 million TL 120 million TL
From the above table it can be summarized that company is immensely growing and
succeeding. Company has been doing well among its competitor and there is huge difference
among company's overall growth among its rivals. It offers over 120000 type of product which
provides their consumer a wide range of choice and could easily select product as per their needs
and demand. IKEA focus on product design that make home better place and which is fit with
needs and requirement of an individual's resident. They had established over 433 stores across 48
countries which state that company is immensely working and growing. It's product are
reachable to wide range of individuals (Naudé and Sutton-Brady, 2019). The company employ
about 172,000 employees who work passionately with company for gaining its objective and
goal effectively they always aim to offer product with high value, standard quality at the lowest
price so that there customers are well satisfied with their products. IKEA is also well-known for
its outstanding level of the customer support as they offer quick and free delivery to their
customer this is helpful for company to have huge consumer trust on company's product. This all
factors are helpful for company to place themselves different and at top from other competitors.
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Unique Selling Proposition of company:
Unique Selling Proposition (USP) is unique slogan or selling point which differentiate
good and service from their competitors. USP could include word that can be “low cost”, “high
quality” and “first ever” which point consumer what their good or service have that competitor in
marketplace doesn't have. It is the great marketing technique which is helpful for positioning and
selling product. A company with strong USP renders better foundation for the differentiation in
the product and providing huge success in competition. It is helpful for company to promote their
product and services in market effectively. IKEA had maintained its USP by providing good
furniture, good price and unique purchasing experience to their customers. Company provide
superior quality furnitures to their customer at affordable price that can be afforded by any of the
economic class in society either rich or medium class. Along with low pricing they always strive
hard to deliver the supreme quality furniture and service to their customer so that they could gain
huge customer satisfaction. This is helpful for company to place themselves different from other
competitors in marketplace. They provide free service to their customer after the purchase if
customer wants to carry it by themselves than they can if they want company to deliver the
product to their home this facility is given by company to their customer free of cost. This is
helpful for company in gaining huge consumer satisfaction (Gummesson, 2017). This is helpful
for company to place themselves unique from other companies in marketplace. Company can
effectively meet the needs and demands of consumer positively with their Unique selling
proposition. This USP of company is helpful for them to gain huge success and growth in market
and compete with its rivals effectively. IKEA had gain huge profit and revenue with the help of
USP in this product and services which is rendered by company to its customers.
Marketing audit that outline overall market attractiveness and whether there is potential for
market growth-
Marketing audit includes the internal and external factor which affects the business and
business operation all over the world. The internal factor includes factor which is helpful for
company to effectively compete with its rivals and place them in market with brand reputation.
SWOT analysis is strategic planning tool which is helpful for an organization to identify
strength, weaknesses, opportunities and threats that are related to the business competition or
planning of project. It can be described below-
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Strength-
IKEA offers wide range of wide variety of well-designed product at affordable price.
That is helpful for company to gain huge consumer attraction towards the product of company.
The company had gain huge product image in the marketplace. They had great balance among
function, design, quality and price. IKEA is the biggest furniture retailer all over world. The
revenue of IKEA is €25,17 billion and its financial profit are €14.437 billion. Product of
company are cost effective and value their customer's money. High rate of investment is
rendered to customer which is spent by them on company's furniture (Chonko and Hunt, 2018).
They manufacture DIY type of products that are pretty famous among its consumer and make
them first choice for their customers. They always strive hard to provide superior quality to their
customer along with different type of product its design and manufacture.
Weaknesses-
IKEA has its operation in various countries and that's why company face local troubles at
some locations. Company had got stuck in consumption due to the expansion problem in the
Russia. They also came up in news for issuing all men catalogue in the Israel taunting their ultra-
orthodox Jewish community. These steps had a negative impact on the company's brand image
among marketplace. IKEA mostly advertise their product in the form of catalogues. Sometimes it
becomes difficult for company to maintain low cost along with high standards quality service
and high product to their customer (Pasquier and Villeneuve, 2017). Company had its operation
in many countries so similar product standard could not be followed by company at
every6where. Fundamental rule of company is to keep low cost for its products but with the
increased raw material cost it is very hard for company to maintain the standard.
Opportunities-
Company had several growing demand for the eco-friendly product for their customer
nowadays. This is helpful for company in growth strategy. Consumer are becoming more cost
conscious. They can opt for such product as they change their furnishing time to time.
Developing countries like China could be targeted by company as this county had a huge
population so this requires unique solution for space use problem by individual at their resident.
IKEA could establish their business and could target & focus such saturated marketplace.
Company can start its online sale as more and more consumer nowadays deal through internet.
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They can enhance their advertisement strategy effectively so that wide range of consumer can be
attracted towards company and its products.
Threats-
Many regional or local companies are copying product of IKEA. So company requires
keeping on innovating and updating constantly to their offering so that they could stay ahead
from these companies and safeguards their revenues. Fluctuating government law and tax policy
could have bad impact on price of company's product and it can't be maintained by company if
tax become high. IKEA is losing its primary success factor that is its DIY product. As due to
internet there are wide option that are available with customer (Kotabe and Helsen, 2020). There
is more competition for company who are entering into market with low pricing furnishing and
home market segment. Global financial crisis had result in reduction of disposable income and
the spending of customer.
PESTEL Analysis is framework used by company for analyzing and monitoring micro-
environment factors which had its effects on organization. These six factor is helpful for
company to gain special significance as they could affect brand's profitability and its position in
marketplace. It can be described below-
Political Factor-
IKEA operate in more than 53 countries. Political force are available in each & every
nation and could affect business. From the supply chain activity to sale, all could be affected by
political factor. Political stability tends to have economic stability and further it turns into better
sale and profit. The attitude of government toward foreign brand and its policy too matter it. It
leads to have disruption in supply chain. From past five-year China has acted as low political
barriers for foreign brand and companies that enhances presence of brand in this marketplace.
IKEA is planning to enter and dominate into emerging Asian marketplace (Shiu, 2017). Supply
chain activity would be disrupted by the political instability.
Economic Factor-
Economic factor play a very essential role in environment of business. Condition of
global economy decide that how much revenue and profit is earned by business. Recession in
market leads to have a huge decline in purchasing power of consumer. As people had lost their
jobs and further they are forced to cut their living cost. IKEA has effectively managed its product
price very well that could be afforded by consumers in marketplace. So economic pressure could
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be managed and effectively by company (Zimmerman and Blythe, 2017). Still, economic
condition had affected the company's profit and revenue. IKEA is also facing major challenge in
the marketplace due to the current situation of Brexit in country while conducting their business
activity. As purchasing power of consumer in market have been decreased. The labour law, tax
& duties also affects company overall.
Social Factor-
Social and cultural factor have a deep impact on business and its profit. It is very
important for a company to follow cultural and social values of local market. But somehow
company is not properly following it and came under fire for photo shopping women out of their
catalogues in the Saudi Arabia and also for removing lesbian couples from their Russian
magazine. But now company is becoming more and more aware to improve and enhance to share
value and culture of country. They ensure that while printing their catalogues world widely they
won't print wrong things on it which could harm any culture and values of a nation. Other factor
and social trend also have a deep impact on the sales. If this particular style are not in trend then
company could focus on them (Olson and et.al.,2018). Changing social trend also affects the
company's growth and development. The Swedish lifestyle has been reflected by IKEA on its
product range through colour & materials etc., so wide range of consumer could be attracted
towards company's product.
Technological Factors-
The technological factor had a huge impact on companies overall growth and
development. The company implement innovative designing in their product through various
technologies so that they could deliver the product to customer which fulfil needs and demand of
customer. IKEA also had 3D mobile catalogue so that they consumer easily analyze product and
state that this product fulfils their demand or not. Company is also moving towards technological
advancement and is being updated on social media with lots of video on you tube so that they
could gain huge popularity among its customers and wide rage of new customer are also
attracted to purchase company's product. IKEA has also investment in Augmented Reality and
VR set to transform sale which is helpful for company to have effective sale (Chernev, 2018).
They also use data analytic so that they could let their consumer with an amazing experience
while they deal with company.
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Environmental Factor-
Sustainability is now important that must be focused by most of the business brand. Its
helps in reducing cost and also helpful for company to create better brand image. Brand's
operational cost could also be enhanced company's image in the marketplace. IKEA has aimed to
less carbon footprints in their product manufacturing by which company could have positive
impact on their customers. Company could aim at manufacturing recyclable product so that it
could not harm environment further and could have gain interest of consumer on company. They
are also moving forward with reducing the environmental impacts through CSR. IKEA had aim
to contribute into CSR which had positive impact on its customer and competitors as well. This
is helpful for company to enhance their profits through huge consumer attraction towards
company's product.
Legal Factor-
Legal threats are major problem for big business. It is due to the regulation and law are
tougher and could have small hassle with law can be costly to the company. Labour could be
important concerned that must be followed by IKEA in their business operation, and they need to
compliance and could raise operational cost with the help of this. Quality of product is also an
essential issue. IKEA could face many laws related challenges as the law and regulation in
countries could be different, so they must know and levy rule and regulation in their company
while performing their business activities (Haider and et.al.,2017). And its is very tough for
IKEA to follow government set of law and regulation so that they could have smooth flow of
business operation in several countries.
Following analysis, on the basis of 4Ps model, a new product has been launched by company and
thus with the help of that product how strength and opportunities could be identified and
further managing weaknesses and threats-
The Kitchenware & appliance is new product that is launched by company. This product
is helpful for company to gain huge competitive advantage against its rivals in market. It could
be described below with the help of 4Ps model of marketing mix.
4 P's of Marketing
The four Ps of marketing are key factor which are involved in marketing of good and
services. They are product, price, place and promotion. It is also known as marketing-mix. The
marketing mix of IKEA new product Kitchenware & appliances has been explained below-
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Product-
Product in marketing refers to goods and services that company provides. These goods
can be in form of tangible goods or intangible services. Regarding products marketing mix is
considered with quality and quantity that company provides to its customers. These are
categorised by their specific features and their differences. Diversification of product is also a
part of product in marketing mix. IKEA whose strengths are its global presence and wide range
of customer group needs to ensure about their product that they are unique as there are many
other companies that are providing similar products. Kitchenware are not something like new
and innovative concept and what company can do to ensure its success is that products need to
be specific and new by their design (Kucuk, 2017). Design of the company is already its strength
which company can use in its product strategy for new products that company is launching in the
market. Regarding its kitchenware and appliances company can make these products also DIY
type or can engage a different concept which is unique with Kitchenware and appliances so that
like its furniture become first choice of customers. Company can also make its products eco-
friendly which already present as an opportunity for the company. Company should ensure that
its products are diversified for different type of customers with different needs in similar product
and price as well.
Price-
Price have a significant place in marketing and marketing mix as well. Marketing mix of
the price states price that company demands for a product it sales. Differentiation of the price on
the basis of quality and quantity of the product also includes in price of marketing mix. IKEA
uses low price strategy which is a main factor of its success. Most of the customers are price
conscious and need to have product with good quality at law price. IKEA's biggest strength is
that it provides products which are of good quality and are of low price. As company try hard to
provide its customers good quality of products they also ensure that price of the product does not
increase with its quality otherwise company may lose its customers to its competitors. Price of
the product which company have decided to keep at low should also be diversified. Because as
per general perception products which are of higher prices do have better quality then those
which have lower price (Sulaiman and Syahrivar, 2018). This will ensure that people who like to
purchase products with higher price will also purchase IKEA's products. Price strategy of IKEA
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is lower price strategy which does not allow company to demand higher price when company
increase its quality or the cost of the company gets increased. This is why company should make
a definite price strategy according to its demand, supply and profit margin so that company does
not need to change and increase its prices which possess risk of loosing customers.
Place-
IKEA is basically the organization which is present across the world in large number of
countries. It has its presence in various countries and currently operates in numerous locations. It
is present in about 49 countries and thus have a total of around 415 retail stores which are spread
across various countries. As the company is launching its new product which is kitchen and
appliances thus in order to make it successful, IKEA will have the basic concentration where this
product will be launched. While selecting the price, region or country IKEA will evaluate the
various aspects like knowledge of the local market, corporate cultures as well as values and
many more (Deepak and Jeyakumar, 2019). Thus, this kitchen appliances will be launched in the
market of highly concentrated population and thus will mainly target the females between the
age group of 25 to 40. The outlet consisting of the kitchen appliances will be highly attractive
and will be situated outside the country in less populated area. It will attract the customers
through its presence on lavish place on the highway. Besides this, this outlet will be present in
the area where people frequently visits in order to capture their attention.
Promotion-
Companies are required to take assistance of correct promotional tool to enhance
awareness of products in the market. As competition is too high and enterprise is required to
retain the consumers by making them loyal towards the brand. For that it is very important to
promote the brand in most effective manner so that people know about the benefit of buying
items from that firm. IKEA being a global leader always takes support of traditional methods of
promoting the brand. In order to promote its kitchen items enterprise, need to take assistance of
Facebook, twitter kind of social platform (Keegan, 2017). In the recent time many people use
such sites, and they spend most of the hours on using such social networking sites. Use of this
platform will give benefit to business in attracting more potential buyers and making them ready
to spend money to buy such kitchen appliances. Use of social media will help the organization in
creating opportunity for business because by this way entity will be able to develop relationship
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