Analysis of IKEA's Marketing Principles and Strategic Recommendations

This report provides a comprehensive analysis of IKEA's marketing principles. It begins with an introduction to marketing, emphasizing its significance in achieving business objectives. The report then delves into IKEA's marketing processes, including market analysis, target market selection, and marketing mix decisions. It explores the benefits and costs of a marketing orientation for IKEA, followed by an examination of micro and macro environmental factors influencing marketing decisions. Furthermore, the report discusses segmentation criteria, targeting strategies, and the impact of buyer behavior on marketing activities, including the influence of cultural, personal, social, and psychological factors. The report also covers new positioning strategies for IKEA's products, including the use of promotional tools and techniques to enhance brand awareness and customer loyalty. The report provides a detailed overview of marketing principles and strategies employed by IKEA, along with strategic recommendations to improve marketing tactics in a competitive market.

Marketing Principles

INTRODUCTION
In the business entity, different departments are there among which marketing is the most
essential one that helps the firm in attaining its goals and objectives in the desired manner. There
are various types of marketing processes which are used by a company. Business enterprise uses
various tools and techniques related to marketing principles so that they can introduce different
products and services to the consumers (Corrigan, 2011). Different marketing principles help in
understanding various concepts that assist in understanding different perspectives of marketing
which helps in developing and enhancing the market size. These principles of marketing focus
on different factors whether it is micro and macro that exist in the business environment. Present
report is based on IKEA which is a multinational group of companies that having a expertise in
designing and selling the ready accessories to assemble furniture, appliances and home
accessories having a vision “To create a better everyday life for many people”. In the below
mentioned report, different elements of marketing principles have been described. Along with
this, elements of marketing mix are explained in different situations of organisation (7 Key
Marketing Principles, 2017). Moreover, report has also discussed new strategies that can be
helpful for IKEA in improving its marketing tactics in the competitive market.
TASK 1
1.1 Various elements of the marketing process
Marketing is the process which helps in promoting as well as selling products and
services of business entity so that they can fulfil the requirements of consumers. Along with this,
it assists in providing maximum satisfaction to the consumers. IKEA offers the best quality
merchandise and services according to the needs and wants as well as desires of customers.
IKEA has to use appropriate marketing process so that they can identify the needs and wants as
well as problems of consumers (Dann, 2010). Different elements of marketing process which are
used by the manager of IKEA to attain success are:
 Analyse the market opportunity – Manager has to identify current as well as future
trends so that they can fulfil the wants of consumers and can capture opportunity to attain
success in the competitive market (Abdullah and Ismail Ahmad, 2010).

 Select the target market and marketing Strategy – They have to use appropriate
market strategy for doing segmentation, targeting as well as positioning so that products
and services can be offered to the right customers.
 Marketing mix decision – Manager have to take correct decision on the basis of product,
its price and promotion so that firm can obtain maximum profit (Deshpande and Rundle-
Thiele, 2011).
 Implementation and control – In the last stage, manager has to implement the
marketing strategies for attracting large number of customers and attaining the set targets.
Along with this they have to do proper control so that they can not face any problem.
1.2 Benefits and costs of marketing orientation for IKEA
Marketing orientation is a business model which assists in focusing on delivering
products and services which are designed according to the needs and wants as well as
requirements of consumers to do production efficiently. Benefits and costs of market orientation
assists in understanding the generating profits of business entity. It helps in making correct
decision which is based on the desires of consumers (Donovan and Henley, 2010). The benefits
are:
 Increased client retention – Manager of IKEA has to provide the best services to
consumers and proper satisfaction to them that will help in retaining consumers for a long
period of time.
 Reasonable competitive advantage – This helps the business entity in developing
products and services according to the needs and wants of consumers. Therefore, they
can use the products which assist in attaining competitive advantage (Alserhan, 2015).
The costs of marketing orientation of IKEA are:
 Scope and quality – Manager of IKEA has to set the price in a proper way as it affects
the quality of products. If the scope of services is wide then they can charge premium
rates from consumers (French, 2010).
 Political enforceability – The cost of products which are provided by IKEA are affected
by the rules and regulations as well as policies of regulatory bodies. Therefore, they have
to set a price which does not affect the needs of consumers.

2.1 Macro and micro environmental factors which influence the marketing decisions
There are different factors included in micro and macro environment of business which
affect the marketing decision of IKEA (Armstrong and et. al., 2014). Some of them are stated as
follows:
Micro factors Macro factors
Employees – They play an important role in
providing better quality of products which are
delivered to the consumers and for that, they
have to provide motivation to the workers time
to time (Henley, Raffin and Caemmerer, 2011).
Political – It includes all rules and policies
along with the laws which are made for IKEA
and benefits of consumers.
Social – It includes age, distribution,
population etc. when the taste of consumers
change then this affect the decisions of the
manager while doing marketing.
Consumers – This is an important factor in
IKEA and they are retained for a long time
because company is providing various choices
of merchandise to them.
Economic – Profit of IKEA depends on the
income level of consumers and the capabilities
that how much they can spend.
Competitors – IKEA has to know about the
activities of competitors and the products and
services they are offering to consumers which
will help in attaining the goals and objectives.
Along with this, they can attract a large
number of consumers.
Technological factor – Staff members of IKEA
have to use upgraded technology in producing
the products so that they can provide the
innovative products to the consumers (Corner
and Randall, 2011).
2.2 Segmentation criteria to be used for the products in different markets
There are variety of products and services which are offered by IKEA. Manager of
company has to segment the market so that they can sell products and services which are based
on different aspects. It includes:
Geographical– This is an important segment of IKEA for selling the products and
services. The business entity has to open their retail stores in an area where large number of
people are living so that they can them towards the brand (Dann, 2010).

Behavioural– In this, manager of IKEA can do market segment on the basis of
purchasing power of consumers because profit of business entity depends on the sale of company
and the purchasing of consumers.
Demographic – In this, market can be segmented on the basis of race, age and status as
well as income level of consumers. Manager of IKEA has to provide the best quality goods
according to the requirements of consumers (Donovan, 2011).
These are the segments which help IKEA in attaining the targets as well as success in the
competitive market. IKEA can use demographic segmentation which will helps in selling the
products and by that they can attain their targets and obtain the leading position in the market.
2.3 Targeting strategy for a selected product/service
The selected product of IKEA is that they have to sell best quality food to the consumers.
To attain the goals which are decided by higher authorities of IKEA, they have to make proper
marketing strategy and for that, they have to do proper research of market. Different targeting
strategies include undifferentiated marketing, differentiated marketing and concentrated
marketing. The most effective strategy for IKEA to do appropriate segmentation of market
depends on the nature of business (Goeldner and Ritchie, 2012). Manager of IKEA can use
differentiated marketing strategy which helps in targeting large number of consumers of different
segments. Manager has to offer the best quality services to consumers in different segments of
competitive market. Thus, by doing this, company can maximise the profits and increase growth
in market at the time of high competition (Burchell, Rettie and Patel, 2013). To attain the set
objectives of IKEA, manager can target large number of consumers in different segments of the
market in country. (Hair and et. al., 2012) (Jobber and Ellis-Chadwick, 2012).
2.4 Effect of buyer behaviour on marketing activities in different buying situations
There are different buying behaviours which affect the profits of IKEA. It includes:
Complex Buying Behaviour – It occurs when the consumer is highly involved with the
purchase and when there are significant differences between brands.
Variety Seeking Behaviour – It refers to the different situations where there is low involvement
of consumer but the consumer perceives the significant difference between the brand options in
front of them. In this type of situations consumers tend to do a lot of brand switching.

Habitat Buying Behaviour - It occurs when involvements is low and the differences between the
brands are small. In this consumers do not make a strong attitude towards a brand.
Dissonance Buying Behaviour – It occurs when the consumer is highly involved but they sees
as a little difference between the difference between the brands.
Cultural influences – Culture is the most basic cause of the wants as well as behaviour of
the person. Growing up, children learn basic values, perception and wants from the family and
other important groups. Marketing are always trying to spot "cultural shifts" which might point
to new products that might be wanted by customers or to increased demand.
Personal Influences - Consumers are communicating more than ever online and making
more of their choices based on the opinions of others - sometimes friends, family, and reference
groups sometimes experts and sometimes complete strangers. The individual status and role of
the buyer is also influence.
Social Influences – It includes personality, lifestyle, life cycle and age. Along with this it
also includes physiological needs, esteem as well as status. Moreover, self actualization as well
as beliefs and attitudes.
Psychological Influences - It is difficult if not impossible to plan marketing activities
without some understanding of how ordinary people behave when they are in the marketplace as
consumers and as customers.
Different Market situations:
Extended problem solving: It helps in providing actual information which includes marketing
mix, salesman should adopt problem solution approach to selling.
Limited problem solving: Non brand aligned customers should be stimulated to conduct a search.
If already buying the brand then the offer of a warranty should be used to reduce the risk of
brand switching.
Habitual problem solving: Repetitive advertisements are used to reinforce the already favourable
attitudes.
2.5 New positioning for the selected product/service
The manager of IKEA has to give actual importance to their products which assist in
generating loyalty in the business and by that they can provide the proper satisfaction to the
consumers. Effective positioning helps the business entity to make the perception of consumers
positive towards brand. They have to do proper market as well as product segmentation which is

correlated with each other that succour in establishing the positioning of merchandise in front of
buyers or end users (Lefebvre, 2012). IKEA is using a simple strategy but they have to improve
the quality which aids in maintaining good relations with target market so that they can create
positive impact on the minds of consumers. Market is that place where many competitors of
IKEA are present and they are selling the same kind of products to ultimate consumers. So, it is
essential for IKEA to use innovative technology to provide upgraded and innovative products in
the best way so that they can attract a large number of consumers. With the help of this, IKEA
can make the brand name popular and well known by people in market. Some promotional tools
and techniques which can be used by IKEA to sell the best quality food is advertisement,
personal selling. Along with this they have to maintain the public relations which helps in selling
the products.
3.1 Developing product to sustain competitive advantage
IKEA has to apply different techniques so that they can attain the advantage in high
competition. For improving the product, they have to use proper process which includes
screening of data and then they have to develop the concept so that they can analyse the business.
For developing products, there are different strategies which can be used by the manager of
business entity so that they can attain the success (Shaw, 2016).
Cost leadership – In this strategy, manager of IKEA has to set an appropriate objective
so that they can become the low cost producer in the market. It includes in a traditional approach
which helps in reaping the objectives on a large scale which exploit the scale of economy.
Differentiation – This strategy helps in differentiating the products and services from
competitors so that company can attain maximum benefits and can charge high price from the
consumers of products and services.
3.2 Arranging distribution to provide customer convenience
There are different types of distribution strategies which can be used by IKEA. They are:
Personal methods of distribution are different mediums so that they can sell the products
and services to consumers. In this method, no middle person is involved. This medium is having
a direct approach so that they can sell the products and consumers can easily avail the services.
This method should be used by IKEA to attain the goals (Varadarajan, 2010).

Online medium is also a part of distribution strategies and included in the channels for
doing promotional activities. It includes online websites and stores. This form of distribution is
beneficial for IKEA for reaping success in the market. Along with this, it is a cost effective
method and helps in reducing the cost of product.
By these methods, IKEA can attain advantage at the time of high competition and these
are beneficial for them so that they have to follow this (Wang and Pizam, 2011).
3.3 Setting prices to reflect organisation’s objectives and market conditions
IKEA has to use different strategies for doing appropriate marketing and by that, they can
attain goals and objectives. Along with this, by using these strategies, they can set the best price.
Penetration pricing – This pricing helps in keeping the price of products and services low
which they are providing or selling to the buyers that will help in penetrating the market.
Moreover, they have to increase the awareness for products so that they can attain the goals and
objectives.
Price skimming – In this, IKEA has to keep the price of products high. By using the law
of demand as well as law of supply, price of the product decreases (Wymer, 2011).
Premium pricing – The manager of IKEA have to ensure that employees are serving the
best quality of the products with the high price which helps the business entity in entering into
new market.
Economy pricing – The quality of products and services has to be kept low along with the
price.
IKEA has to follow different pricing strategies so that they would introduce the new
products in market then they follow the price skimming strategy. In which they have to maintain
the demand as well as supply of the product which helps in decreasing the price of the product.
The objective of IKEA is selling high quality products and services at reasonable price
(Principles of Marketing - Basic Concepts and Fundamentals, 2017).
3.4 Integration of promotional activity to achieve marketing objectives
Promotional mix are the important elements which include different types of techniques
like advertising, direct selling, public relation as well as sales promotion. It is important for the
marketing department of IKEA so that they can achieve marketing objectives by using various
techniques for promotion. Manager of IKEA has to conduct the campaign because current

market activity become successful (Lefebvre, 2012). This company can invest a lot of money so
that they can do proper advertisement which helps in attracting large number of consumers. The
managers of marketing department have to integrate all business activities in a proper manner so
that they can achieve the marketing objectives within the actual time. By doing proper sales
promotion, managers of IKEA have to provide some vouchers, coupons to customers for using
the products and services which are delivered by them. Sometimes, the discount policy is also
used to increase customers so that firm can maximize their profits. Personal selling is also a tool
and having common forms that are individual gathering, correspondence and message.
3.5 Additional elements of the extended marketing mix
There are three extended elements of marketing mix which are used by IKEA. These
elements help in targeting the consumers and attaining the maximum profits. Elements of
extended marketing mix are:
People – For IKEA, employees are an important part as they help in making the best
quality products for consumers. According to the same, consumers can make an actual
judgement that they have to purchase the product of not and also make a decision about the
service provision which are delivering by the people who representing the IKEA (Varadarajan,
2010).
Process – The marketing manager of IKEA has to use effective process for doing
marketing. It helps in delivering the best product with appropriate information which helps in
increasing the sales of business entity.
Physical evidence – Business organisation has to deliver the best services in an efficient
manner. Along with this, they have to deliver the services in a quick manner which will assist in
attracting large number of consumers. IKEA should also provide physical appearance of
organisation to the end users as physical appearance in the competitive market is important and it
helps in enhancing the growth as well (Burchell, Rettie and Patel, 2013).
TASK 2
4.1 Marketing mix for two different segments in consumer markets
The marketing mix of consumer segments are:
Basis Geographic segmentation Behavioural segmentation

Product Main aim of IKEA is to attract large
number of consumers and for that, they
have to open their outlets in those areas
where many consumers are present.
IKEA is offering products as well as
services according to the needs and
wants of consumers.
Price The business entity has to set price in a
proper manner so that every consumer
can afford to use the product (Dann,
2010).
In this, price depends on the income of
consumers whether they will buy the
branded products or not.
Place Retail stores are present everywhere
which will be convenient for the
consumers.
IKEA has to open the retail stores in
international market so that they can
attract large number of consumers.
Promotion Company has to do promotion
according to the culture as well as value
of people.
Manager of IKEA has to use different
techniques for doing their promotional
activities so that they can attract the
consumers.
4.2 Difference between business to business and business to consumers
There are different types of business entities in the market which are selling different
products. Along with this, employees of IKEA have to do proper research so that they can
develop products according to the demand of market as well as consumers. In the competitive
market, there are distinct products which have different range of price and they are divided into
different sectors. Along with this, they have to do proper marketing activities so that they can
attain the goals and objectives. Moreover, marketing activities are not same in all the business
entities as it affects the sales of company. There are two types of businesses in the market which
includes business to business and business to consumer (Abdullah and Ismail Ahmad, 2010).
Business to business – In this type of business, products are purchased by the employees
of company for organisational purpose. Along with this, they have to select proper method or
mode for doing the payment so that delivery on time can be made. IKEA can use online system
for making the placement of order. It is a complex system of business.

Business to consumer – In this, consumers are the essential part of business entity
because they are the end users of product. They have to make payment for what they are
purchasing which will help IKEA in attaining the success as well as helps in expanding the
growth (Deshpande and Rundle-Thiele, 2011).
4.3 Difference between international and domestic marketing
Domestic marketing refers to the different marketing activities which are employed on a
large scale (Service marketing mix – 7P's of marketing, 2017). International marketing are the
practices which are adopted to cater the global market. There are some differences in
international and domestic marketing which are like:
Basis Domestic marketing International marketing
Meaning It refers to the marketing which is
done within geographical boundaries
of economy.
It refers to the activities of
production, promotion, distribution
and selling over geographical limits
of country.
Area Small area is covered in this
marketing.
Large area is covered in this
marketing.
Government
interference
In the domestic marketing of IKEA,
there is less government interference.
In international marketing, there is
high government interference.
Business
operation
In this, company can do marketing
only in one country.
In this, they can do marketing in more
than one country.
Technology Limited use of technology Here, they are using the latest
technology.
Risk factor In the domestic marketing, there is
low risk.
Very high risk in the international
marketing.
Capital Less Huge
Nature of
consumers
Almost same Variation in the consumer tastes and
preferences.
Research Required but at a very high level. Deep research of the market is