Marketing Essentials Report: IKEA's Strategies and Marketing Mix

This report provides a comprehensive analysis of IKEA's marketing strategies, beginning with an introduction to marketing concepts and the company's global presence. It delves into the roles and responsibilities of the marketing function, including pricing, distribution, marketing information systems, selling, product and service management, and finance, all tailored to IKEA's operations. The report then explores the interrelationship between marketing and other functional units such as Human Resource Management, Research & Development, Finance, Production, Sales, Customer Services, and Distribution. Furthermore, it compares the marketing mix of IKEA with other organizations, evaluating strategies like market penetration pricing and the 7Ps of marketing. The report also includes an evaluation of IKEA's marketing plan, providing insights into the company's tactics and objectives, ultimately concluding with a summary of the key findings.

Marketing Essential

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Roles and responsibilities of the marketing function.......................................................1
P2. Interrelationship of marketing with other functional unit................................................3
M1. Roles and Responsibilities of marketing function..........................................................5
M2. Significance of inter relationship between marketing and other functional unit............5
TASK 3............................................................................................................................................5
P3. Compare the marketing mix of two different organisation..............................................5
M3. Different tactics used by IKEA to achieve its objectives...............................................8
TASK 4............................................................................................................................................9
P4. Producing and evaluating a basic marketing plan............................................................9
M4. Marketing plan for IKEA:.............................................................................................12
CONCLUSION: -..........................................................................................................................12

INTRODUCTION
Marketing is the activity of business of promoting and selling products and services
which involves market research and advertisement. It is the prime component of business
management that helps in creating and satisfying the ultimate user(Proctor, 2014). Marketing
concept has the purpose of satisfying organisational objectives and should evaluate the needs and
wants of potential customers and meet their requirements. IKEA is the multinational company
which deals in furniture. It has been world's largest retailer industry having 415 stores in more
than 49 countries. This report explains various roles and responsibilities of marketing manager
along with their connection to other functional unit of organisation. In addition to this it also
describes about product and service mix used by IKEA that help in delivering valuable services
and it provide information that is used to develop effective marketing plan.
TASK 1
P1. Roles and responsibilities of the marketing function
Marketing refers to the process of delivering goods and services to the customer in an
most effective way to satisfy the need and want of end user. It includes several steps like pricing
of products, promotions, supplier management, selling, delivering of goods and management of
goods or services. Roles and responsibilities of marketing manger towards IKEA is as follow
 Pricing:-
Price refers to the monetary value charged by marketer on exchange of goods and
services. This is the most crucial part of marketing as it have an direct impact on the success of
business and is decided on the bases of feature, nature and benefit it provide to customer(Palmer,
2012). IKEA follows market penetration pricing strategy in which it provides high quality
products at low price to capture large market share by making some trade offs such as company
designs its own ready to assemble, low cost furniture and deliver it to customer in flat-packed
form which reduces shipping, storing and construction cost.
 Distribution Network:-
A distribution network is an chain of mediator through which goods are flow until it
reaches to the end consumer. It includes wholesalers, retailers, distributors, customers etc. IKEA
uses both physical and e-commerce platform to deliver its services to end users without any
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delay. Its well managed supply chain processing is reason behind the success of company. It has
298 stores in 37 countries and each stores holds more than 9500 products.
 Marketing Information System:-
MIS refers to the management of computerized database that provides manager with
tools to evaluate and manage the operations of marketing department. Mangers of IKEA gather
information from various sources to identify current and future demand that help in providing
better services to the customer. All the IKEA branches present through out the world are
connected with an common networking system known as “ inter IKEA system” which help in
monitoring the data related to sales, cash, inventory, stock, demand and supply balances. It help
company in decision making process and to formulate strategies to position their new products as
well as in maintaining existing product's market share.
 Selling:-
Selling refers to making products available to final consumer so that user can purchase
them on the exchange of money. IKEA is more concern about providing satisfactory services to
their customers by providing best quality product. Company provides its offerings with unique
design and features that are harder to imitate, at relatively low price from that of its
competitors(Wheeler, 2017). It provides an greater advantage to IKEA for attracting new people
to try company's product. Firm uses market penetration strategy in which it offers low price over
their designs to capture large customer base and also includes activities which are used to
increase the market share of product or services.
 Product and service management:-
It refers to maintaining the product or service mix to deliver customer with more
valuable services that provides different marketing opportunities present in market. IKEA
records all the data of their different branches over an networking system known as “inter IKEA
system” related to the transactions and customer feedback that help in determining current and
future trend of their offerings and to design products as per the requirement of their client. This
allows company to maintain long term relationship with their customers and to attract new
potential customers.
 Financing:-
Finance refers to the allocation of fund to various business activities in hope of getting
return in coming future. Main responsibility of finance manger is to generate fund from various
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sources and financing the operations of other department of organisation. For funding of various
marketing activities like promotion, distribution, warehouse cost etc. of IKEA there must be an
proper communication and coordination between the marketing and finance department for
smooth running of their business transaction. It help in preparing budget report and other
financial plan so that they can have cash in advance to financing their marketing practices. It
help in achieving maximum revenue at minimum cost and in eliminating other outstanding
expenses that may occur during executing of these activities.
P2. Interrelationship of marketing with other functional unit
Marketing is an business philosophy and its main aim is to satisfy customers need and
want, but it is not the sole responsibility of marketing department. To develop an effective
marketing plan involvement of other functional unit is also required. This inter relationship
provides better understanding of consumers behaviours and resources that may use to fulfil the
demand by providing valuable services. Functions of other unit and their relation with marketing
department is given below-
 Human Resource Management and Marketing :-
Role of Human-resource-management is to manage human resource of the company by
performing activities like recruitment, selection, training and development of employees,
performance management, payrolls etc (Peck, and et. al., 2013). Marketing unit is very much
depend upon HR department as it recruit competent candidate that can manage marketing
activities most efficiently. Therefore IKEA requires an proper communication between these
units so that eligible candidate can be selected to perform marketing functions.
 Research & Development and marketing :-
Its main function is to develop new and innovative product or improving the existing
product using additional features. R&D activities are closely related with the organisation's
marketing activities to ensure that product offer by them are as per the customer's requirement.
Marketing manager performs an market research with the help of R&D unit to identify the
prevailing marketing trends and demand of consumers , so that they can manufacture the product
with those feature which are needed by end users. This unit help IKEA to produce innovative
product using provided information that can not be substitute easily and provides an competitive
advantage to company.
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 Finance and Marketing:-
Finance department is consider as one of the most essential unit of an organisation
because it provide and manage the fund that is required for various business operations by other
units of firm(Stewart, and Smith, 2014). The marketing department is highly depend on finance,
as it required large amount of capital to be invest in promotional activities like advertisements,
TV commercials, sales promotions etc. to promote their product in order to create their Brand
Image and to increase sales. This section ensure the availability of sufficient budget that can
meet the requirement of fund for research, promotion and distribution of marketing unit.
 Production and marketing:-
Functions of both the department are interdependent, role of production unit is to develop
the product and manage the quality and quantity as per customer's requirement and on the other
hand marketing section works on promoting the product to make public aware about product and
pursuing them to make purchases. Coordination among these are of great importance to ensure
that right product can be deliver to customer who need it on time that in turn will satisfy the need
of end user and help in maximizing the organisational profit.
 Sales and marketing:-
This unit includes selling of goods and services to customer in market. Marketing team
provide with important information about the market and demand of consumer. Marketing
department target the customers and by using promotional activities motivate them to purchase
product and services. It doesn't sale goods rather it target the customer and position the product
as the solution to their problem and sales team actually sell them. IKEA sell its product with the
help of marketing team to maximize the sale with promotional efforts.
 Customer services and marketing:-
This section help company to keep satisfying their customer by providing value added
services after the delivery of product and services. This include listening to the customer's
problem, taking feedback and providing after sale services that will help in increasing sale and
develop an positive image of company in the eye of customer(Lutze, 2012). These activities can
be performed with the help of marketing unit as it conduct various surveys. IKEA maintain data
of its branches spread throughout the world in order to identify customer's grievances and can
solve them to make customer happy.
 Distribution and marketing:-
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Role of distribution department is to ensure that quality products can be made available
to customer in most efficient manner and on time. It uses a chain of intermediaries includes
wholesaler, distributor,retailer etc., through which products are flow and at the end node of this
link it being delivered to customer. Marketing unit provides information related to the customer
to whom product has to be delivered, quality & quantity demanded and time limit for delivery.
IKEA maintain good relationship with their suppliers and distributors so that they can get raw
material at low price and can distribute product as per their clients requirement.
M1. Roles and Responsibilities of marketing function
Marketing can be defined as transfer of good and service from manufacturer of product to
the end user. Main aim of marketing manager is to provide valuable services to their customers
to satisfy their needs and wants. Roles and responsibility of marketing manager toward
organisation is generally includes product management, pricing, management of information
system, promotional activities etc. IKEA uses MIS system to gather information about current
and future trend in market and this data is managed by all the branches of IKEA which are
connected using single networking system“ inter IKEA system” that manages the data related to
the sales, cash, inventory, stock, demand and supply balances.
M2. Significance of inter relationship between marketing and other functional unit
Main objective of marketing is to satisfy the customers need and want, but it is not the
sole responsibility of it. Functions of marketing department are interlinked with other units of
organisation like Human-resource-management, Finance, Production, Sales and Research &
development. Communication among these departments are essential to achieve organisational
objectives. Coordination between HR and Marketing unit of IKEA is necessary as HR manager
recruit the competent employees with required skill who can best present the marketing efforts
that helps company in generating sale that in turn will maximize profit.
TASK 3
P3. Compare the marketing mix of two different organisation
Marketing mix is a mixture of various ideas and plans which is followed by marketers to
promote particular product and service. It is combination of several factors that can be controlled
by firm to induce customer to buy its product or brand (Mundt, 2013). This is process of
integrating & designing different elements of marketing in such a way to assure the achievement
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of company's goal. Ikea uses 7p's to increase brand awareness. Following table shows
comparison between Ikea and Tesco :
Elements IKEA TESCO
Product Ikea has more than 9500
product range such as bar
tables & chairs, cafe furniture,
dining sets, high chair, junior
chair, armchairs & chaise
lounges, kitchen and
appliance, living room
furniture, bedroom, children's
furniture, etc.
Tesco produces various product
such as kitchen & bath cabinetry,
wardrobes, chest of drawers,
divans, bed frames, dressing
table, kid's furniture, sofas,
armchairs, bookcases &
shelving, office furniture, dining
tables & chairs, sideboards and
display units, mattress, storage
beds, bedside tables, etc.
Price It uses low cost leadership
pricing strategy so as many as
people will able to afford
them(French, and Russell-
Bennett, 2015). Due to
economies of scale
organisation have advantage at
global level because it is easy
to maintain its low price.
Tesco maintains low cost for its
products without reducing the
quality. Firm also uses number
of measures for low monetary
value of its product such as
economies of scale which helps
in maintaining low price
strategy.
Place Ikea operates in 340 stores in
28 market worldwide . In
addition, 22 pick up and order
points in 41 shopping centres
in 15 countries and 38
distribution sites in 18
countries. Tesco is
Tesco uses two main distribution
channels for its product are
online and offline. Company has
more than 6809 offline stores
around the world and online
business of firm is called Tesco
Direct. Enterprise's main
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multinational furniture retailer
also uses online channel to sell
its product to its target
customer.
headquartered are in Chestnut,
Hertfordshire, England.
Promotion The brand is based on the
concept of offering home
furnishing products at low
price(Hasan, 2011). It is
world's largest furniture retail
brands. The promotion
strategy used by company are
TV advertisement, newspaper
& magazine advertisement,
sponsorship, sales promotion
and public relations.
The main objective of firm is to
improve its brand image by
reducing cost for profit
maximization. It uses several
promotional strategies such as
television advertisement, offer
promotional discounts, uses
point of sale strategy, sponsors
charitable events, online
advertisement, etc.
People It is brand which is based on
strong relationship with
customer and also satisfy its
ultimate users(Chabowski,
Mena and Gonzalez-Padron,
2011) . Company focuses on
customers which are looking
for high quality product with
low price. For more visibility
to customers and employees
firm works on its
sustainability.
Sales assistants of Tesco are
greatly responsible for its
success. Company uses various
programs such as Save as you
earn, & buy as you earn to gain
and colleague privilege cards to
retain loyalty of its employees.
Workers of firm are well
compensated and highly
competent for their efforts in
making Tesco a success.
Process Furniture produced by Ikea by
itself where it makes its own
wood based furniture and
The process element of
marketing mix in Tesco is to
keep its consumers satisfied by
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wooden component. It uses
different type of supply chain
which helps in reducing
transportation cost and
handling cost. Company
deliver its products in flat
packed which leads in
reducing shipping cost and
construction cost.
easy delivery of product from its
stores as well as online.
Organisation hire competent staff
so that they can manage
customer grievances more
efficiently and can address issues
that created by them.
Physical evidence Physical evidence for Ikea is it
has large stores which offers
large selection of furniture
products(Polonsky, 2011).
Stores are properly designed
which includes well equipped
with restaurants, the space to
move around, modern display
technologies and having a very
huge parking area.
Tesco stores are very much
managed which includes
products are properly categorized
and easy to find. Offers are
placed in such as way that
customer attracted towards them
and purchase more than they
need. The website of company is
also very simple and easy to use.
M3. Different tactics used by IKEA to achieve its objectives
Marketing manager should uses different tactics to attain company's objective which
involves incentivise staff, training management, managing cash flow, setting employees goals
and provide useful & actionable feedback. The aim to set employees goal is to make their actions
towards contributing overall company's objective. It offers various attractive offers to their
customer so that it helps in increase in sales and also creates brand image.
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TASK 4
P4. Producing and evaluating a basic marketing plan
Marketing plan is designed by marketing department which explains the business
activities that involved in carry out particular marketing objectives within a set time frame. It is
blueprint that outlines a company's overall contribution and also includes how firm apply its
marketing strategy, combined use of resources which helps in attaining business objectives
including customer acquisition and sales target(Anche, Hozouri, and Mehdizadeh, 2014). It
includes various components that are background of company, vision, mission, objectives, Swot
analysis, STP and budget. It can not be prepared without market research. This provide guidance
towards the direction of marketing plan by giving various information on potential customers.
With this, managers can plan their future actions and operated for the purpose of profit
maximization. Ikea is multinational enterprise and manager create their plans to maintain their
position and growth in global market. For developing a market plan firm have to follow several
steps that are as follows:
 Company's background:
Ikea is the largest furniture retailer which is founded in 1943. Company is famous for its
modernist design for various kinds of furnitures and appliances. It has 415 stores in 49 countries
and its websites contains more than 12000 products. Enterprise deals in various products such as
kid's furniture, kitchen & bedroom furniture, cafe furniture, high chair, office furniture, etc.
 Vision, mission of company:
Vision: It represents the goals which organisation wants to achieve in future. The vision of IKEA
is “ To create a better everyday life for the many people.” This states that it provides wide range
of products at lower cost with high quality.
Mission: It is a statement which defines what an organisation is, its reason for being and why it
exists. Ikea's mission concentrated on sustainability long term growth by investment for future
which is beneficial for its employees, customers and suppliers. Organisation's mission is based
on belief that sustainability is not a lavish good but affordable by majority of people.
Objectives:
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The main objective of IKEA to become the worlds number one company in furniture retail
market. Aim of the company is to offer wide range of furniture of good design at low price
without compromising with quality.
STP:
It refers to Segmentation, Targeting and positioning of product. Company uses STP for
developing marketing communication plans which helps marketers to develop and deliver
relevant message to engage target audience(Gustafsson, and et. al., 2011). This also focuses on
selecting the most valuable segment & commercial effectiveness for a firm then develop a
marketing mix and product positioning strategy for each segment.
Segmentation: It refers to dividing population into various groups on the basis of their common
characteristics and attributes. The segmentation of IKEA is the consumer who is highly
educated, younger, white collar population that have cultural values and beliefs. The younger
millennials are more concerned with sustainability and humanitarian practices and less
concerned on symbols.
Targeting: It includes choosing particular groups which is identified by the segmentation. The
target market of IKEA is urban area because there has an increased population(Henriksen, 2012)
. When company target urban area than it leads in increase in growth, sales and it expands
internationally.
Positioning: It is a marketing strategy that states about what manager must do to position its
product to its customer. Positioning of IKEA provides competitive advantage. Customers getting
a product by saving money and also getting good quality furnishing for their homes.
 SWOT Analysis of IKEA:
Strength Weakness
 Ikea's major strength is it constantly
using innovations for reducing cost.
 Another strength is it has brand
reputation and market presence
 It is large size business so it is very
difficult to control standards across
various locations.
 Weakness of IKEA is it has negative
publicity.
Opportunities Threats
 Ikea has opportunity to have further  As it has low cost business so it is a
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expansion into developing economies.
 Growing online sales is another
opportunity of IKEA.
threat because it is copied by its rivals.
 Growth of average customer income is
the another threat of company.
 Marketing budget:
Ikea creates budget to figure out the amount to be needed for financing its actions
related to positioning and promotion of its product and services without any postponement or
outstanding expenses.
Marketing budget
Particulars 1st year 2nd year 3rd year 4th year 5th year
Initial money 8000 5000 10000 12000 18000
Investment 18000 25000 35000 18000
Total 8000 23000 35000 47000 36000
Marketing outlay
Promotion 8000 9000 9000 10000 3000
sales publicity 2000 4000 3000 2000 2000
Direct selling 4000 5000 2000 4000 4000
Total 14000 18000 14000 16000 9000
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Monitoring and control:
It includes several control measures which is used by marketing manager after
implementing marketing strategies to control planned actions.
Plan is very essential for success of enterprise and need to be managed because it is helpful in
find out the gap between planned and actual performance then analysis the difference between
them and remove the differences(Pimenta da Gama, 2011).
M4. Marketing plan for IKEA:
It is a plan that involved in accomplishing marketing goals within a particular time. It starts with
deciding vision and mission along with organisational objective that provide guidelines to
achieve desired goal. Next step is to segment potential market to apply various marketing efforts
towards the targeting audience and placing product as a solution to their problem. IKEA uses
SWOT analysis to identify different opportunities present in market. Marketing manager prepare
budget statement to manage their finance for marketing activities.
CONCLUSION: -
From the above report it has been concluded that, Marketing plays an very essential role
in providing valuable services to the end users and maximizing the customer base. An marketing
manger performs number of operations that help in fulfilling consumer demand and increase the
revenue of the business. Functions of this department are interlinked with other units of
organisation. IKEA uses product and service mix to offer their high quality product in low price
and with proper distribution channel. It also performs SWOT analysis for external and internal
environment and uses STP strategy to provide consumers with right product that can satisfy their
need.
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