Analysis of Ikea's Product Differentiation and Competitive Advantage

This report examines Ikea's product offerings and its product differentiation strategy, focusing on how the company sustains its competitive advantage in the furniture market. The report begins by defining the total product concept and product differentiation, emphasizing the value and benefits provided to customers. It then analyzes Ikea's diverse product offerings, which include ready-to-assemble furniture, home-ware, smart home products, and even solar PV systems. The core of the report explores how Ikea differentiates its products through affordability, quality, innovative design, and an effective supply chain, enabling the company to maintain its leading position. The report concludes by highlighting the importance of innovation and customer-centric approaches in sustaining Ikea's competitive advantage within the furniture industry. The report uses academic sources to support its analysis.

Ikea-Products and
Differentiation

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Question 1. What is meant by the total product concept and product differentiation.................3
Question 2. Provide an analysis of the product offering that your chosen organisation markets.
.....................................................................................................................................................3
Question 3 How does your chosen organisation differentiate its products to obtain a
competitive advantage.................................................................................................................4
CONCLUSION ...............................................................................................................................4
REFERENCES................................................................................................................................4
Books and Journals.....................................................................................................................4

INTRODUCTION
This report will be considering the products offering and product differentiation concept
in relation with the Ikea. In addition to this, it will consider the role of product differentiation in
sustaining competitive advantage (Martínez-Sánchez, 2020). Ikea is an multinational
conglomerate who sells ready to use furniture since 1943.
MAIN BODY
Question 1. What is meant by the total product concept and product differentiation.
The total product concept can be defined as the way of analysing the value and benefits f
the products that is being provided to the customers. The products offered to the customers are a
solution of the problems of the unsatisfied customers. Also, the products can be considered as the
offering of the company to the customer in order to enhance their customer base. Total product
defines the numerous advantages associated with a product or service (Li and Van Cayseele,
2017). This concepts help the consumer to compare the benefits of one products over the other
products offered by the competitor. In relation with Ikea, it sells various types of ready to use
furniture to enhance their sales and revenue. Product differentiation is the uniqueness of the
products in comparison to the competitors of the company. The product differentiation helps the
company to sustain their leading position in the marketplace. In addition to this Ikea has product
differentiation factors such as the quality of their products, marketing strategies and the cost
efficiency.
Question 2. Provide an analysis of the product offering that your chosen organisation markets.
The products offering of the company is the variety that they offer to the customers in
order to enhance their sales and profitability. Ikea deals in furnitures which are designed in such
a way that the products can be easily assembled by the customer itself. The company have
expanded their products base in furniture and home-ware, smart home business and houses &
flats. In addition to this, Ikea owns a MEGA family shopping centre in Russia. The company
deals in solar PV systems and also provide rental furnitures for small durations (Knight, Moen
and Madsen, 2020). Along with these offerings the main focus of the company is to sustain their
quality in every respect as this will help them in enhancing their operations worldwide. In the
smart home business of the company they offer wireless charging furniture which have attracted
the customer attention with an immediate effect.

Question 3 How does your chosen organisation differentiate its products to obtain a competitive
advantage.
The main idea and concept which helps Ikea in sustaining their competitive advantage is
providing affordable customers to their customers. This will be done by adding quality, value
and innovative design to their products offerings. The company have sustained their
differentiation strategy which have developed their competitive edge in the external
environment. This have been done by adopting various approaches which involves offering
lower prices, introducing diversified products, expansion strategy, effective supply chain and so
on (Gandhi and Houde, 2019). Ikea have developed an effective and successful supply chain
which have enhanced their productivity. Also, the cost efficiency factor of the company have
persuaded the customers to purchase the furniture immediately. Lastly, the company analyses the
trends of the customer requirements and then develop innovative differentiated products to
maintain their competitive advantage.
CONCLUSION
From the above report it can be concluded that products are being offered by the
company for enhancing their profitability and customers base. For sustaining competitive
advantage, the company must introduce innovation in their products offerings.
REFERENCES
Books and Journals
Gandhi, A. and Houde, J. F., 2019. Measuring substitution patterns in differentiated products
industries (No. w26375). National Bureau of Economic Research.
Knight, G., Moen, Ø. and Madsen, T. K., 2020. Antecedents to differentiation strategy in the
exporting SME. International Business Review, 29(6), p.101740.
Li, N. and Van Cayseele, P., 2017. Vaporware in a quality differentiation model with
preannouncement. Onderzoekspaper.
Martínez-Sánchez, F., 2020. Price versus quantity in a duopoly of vertical differentiation with
loss-averse consumers. Research in Economics.