An In-Depth Analysis of IKEA's Strategic Marketing Approach

This report offers a detailed analysis of IKEA's marketing strategies, examining the principles of marketing and its role within the company. It evaluates IKEA's approach to internal and external environmental analysis, including SWOT and PESTLE analyses, to understand the factors influencing its business decisions. The report explores the relationship between corporate and marketing strategies, justifying decisions at the corporate level and assessing their impact on business unit and functional levels. Furthermore, it evaluates IKEA's competitive positioning and the use of marketing strategies to achieve a competitive advantage, summarizing various strategies and their application within the organization. The analysis covers aspects like market segmentation, pricing, branding, and the integration of internal and external analyses to devise strategic alternatives, offering insights into IKEA's success in the global furniture market.

Strategic Marketing

Contents
1. Understand the principles of marketing and its role in business practice............................3
1.1 Evaluate the role of marketing in an organisation..........................................................3
1.2 Analyse the relationship between corporate strategy and marketing strategy.............3
1.3 Explain how marketing strategy is developed.................................................................4
2. Be able to evaluate approaches to marketing analysis...........................................................5
2.1 Evaluate various approaches to internal environmental analysis...................................5
2.2 Evaluate various approaches to external environmental analysis..................................6
2.3 Explain how internal and external analyses can be integrated to devise strategic
alternatives............................................................................................................................8
3. Be able to apply strategic marketing decisions and choices.................................................8
3.1 Justify decisions and choices to be made at a corporate level........................................8
3.2 Assess how these decisions influence marketing at business unit and functional level. 9
3.3 Evaluate approaches to competitive positioning of businesses......................................9
4. Be able to evaluate the use of marketing strategies for competitive advantage...............10
4.1 Summarise a range of strategies that can contribute to competitive advantage.........10
4.2 Assess marketing strategies, their application and implementation for an organisation.
..............................................................................................................................................11
4.3 Evaluate marketing strategies for an organisation........................................................12
References................................................................................................................................13

1. Understand the principles of marketing and its role in
business practice.
1.1 Evaluate the role of marketing in an organisation.
Marketing plays a very important role in case of IKEA. It is a big reason of getting the
customers know about the concept and quality products of the brand. Role of Marketing in
IKEA is as follows-
1. Fulfil consumer requirements- Marketing helps IKEA in finding out the customer’s
requirement and create marketing strategies accordingly. Consumer needs depend
upon the individual as well as cultural personalities.
2. Helps in growth and survival- Survival of every business depends upon the retention
on customers so marketing is very important for IKEA to achieve the goals as it is
customer- focused.
3. Widens market- Most of the marketers utilize communication tools like sales,
advertising, event marketing in order to promote the products. So, marketing helps
in creating and protect the brand image. Today there is a high technological
advancement and interactive methods of marketing.
4. Setting right prices- Price is a very important element that helps in retaining the
customer and with the help of marketing strategies, IKEA is able to set fair prices of
the products.

5. Better products- It is important to do marketing of the products because people are
not aware about all the products offered by IKEA. Marketing also helps in design and
manage the products.
6. Competition- There is a very high competition in the market and marketing enables
IKEA in maintaining a balance between the customer’s expectations and
competitor’s products.
7. Economic Growth- As marketing increases, demand for the products also get
increases. It results in industrial growth as well as increment in employment
opportunities. It also helps in raising living standard of the people.
1.2 Analyse the relationship between corporate strategy and
marketing strategy.
Globalization is one of the important trends that are in all the companies nowadays. It is
difficult to get market share in new country like Asia. IKEA’s has an effective strategic
management that basically helps in determining the sustain ability and competitive
advantage among competitors. IKEA’s corporate strategy comprises of the joint venture and
pricing strategies. IKEA has created its corporate strategy by offering high quality products
in low prices so that everyone can easily afford the same (Zabala-Iturriagagoitia, 2014). It is
very easy for the organization to get the customer base but everyone is not much aware
about product quality of IKEA. And some people think that low price equals to low quality.
IKEA provides an option of online order in which they deliver the products to the customers
without even charging delivery cost. They have very interesting designs that attracts
customers a lot.
IKEA has the same mission and vision and its vision statement is “To create a better
everyday life for the many people”. There is a relationship with the organizational vision and
business idea as their business idea supports the vision of providing a big range of home
furnishing products at very prices so that many people can afford the same. Mission of the
organization is not broad and it does not discuss about things like customers, products
culture and competition in the business (Lynch, 2018). According to IKEA, a vision or mission
should be strong enough to create business strategy and to provide assistance to the
managers in decision making and allocation of resources. Its mission statement suggests the
purpose of the organization and vision suggests the guidelines of moving the business to get

an expected future. It has accomplished its vision by creating marketing strategies according
to that. IKEA contributes in different CSR programs like United Nations Brighter Lives for
Refugees program. It also contributes in other organization regularly. It creates a positive
brand image of the company in front of the audience.
1.3 Explain how marketing strategy is developed.
Marketing strategy of IKEA has been developed after the analysis of various internal as well
as external factors. They focused upon weak parts or areas that needs improvements and
created marketing strategies according to that. IKEA has used demographic, geographic and
psychographic segmentation in order to divide market into segments to fulfil the needs of
market by supplying kitchenware, appliances and home furnishing products. It also uses a
differentiated targeting strategy for satisfying the needs of customers who needs value for
money products (Mohammad Arabzad an, 2012). IKEA has converted itself a value- based
company from product-based company. IKEA is partners with many big designers across the
world and use their ideas in creating the products and it is one of the biggest competitive
advantages of the organization. There are mainly three driving forces of the company-
artistically designed products, affordable furniture and low cost. IKEA has a respect in the
eyes of the customers and employees who work for them and say well about the
organization. It also helps in increasing market share. IKEA has maintained a very good
relationship with supply chain stakeholders like product developers, supplier and designers
and all the stores in the world. IKEA has partners with many suppliers in 51 counties that
help the organization in maintaining the quality of products in its 380 stores all over the
world (Winer and Dhar, 2014).
Branding is a very important thing when it is about marketing of the products. There are
many ways like CSR activities and empowerment of co- workers that help in creating
awareness about the products. IKEA used many advertising campaigns to help the company.
There is a very high competition in the market for IKEA and organizations are providing
online as well as offline services to the customers. IKEA has only its franchised stores and it
makes the infrastructure cost low and high visibility.
2. Be able to evaluate approaches to marketing analysis.

2.1 Evaluate various approaches to internal environmental
analysis.
There are various approaches to internal environmental analysis like-
SWOT analysis
It refers to the analysis of IKEA’s internal as well as external environmental. In SWOT
analysis, strengths and weaknesses are part of internal analysis and opportunities, threats
are a part of external analysis (Thomsen, 2018).
Strength- IKEA has many strengths and one of them is the clear vision that organization
have. It adds values to the customers. IKEA basically provides array of the products that can
be easily assembled by the customers. It helps in reducing the cost to the customers. IKEA
has adopted cost- leadership strategy to sustain in the market competition. IKEA has many
Key performance indicators like long- term relationship with the customers and proper use
of raw material (Tassabehji and Isherwood, 2014).
Weakness- Ikea has its operations in many countries and it becomes difficult to maintain
standards all over the world. IKEA has adopted cost leadership strategy that provides
competitive advantage but as per the passage of time cost of input and raw material keeps
on increasing that hamper the profitability of the company.
Opportunities- IKEA has a “green” business model that can help in attracting customers that
are environment conscious. IKEA can also expand its operations in emerging markets as it
can provide high advantage and visibility in the industry.
Threats- IKEA’s business model has been copied by many other players in the market so
there is always a fear of losing the customers. It creates a pressure on the organization to
create timely innovation to sustain in difficult competition (Dragičević, 2018).
Value- Chain Analysis

Ikea uses low price strategy and consider it as a competitive advantage. In primary activities
and inbound logistics, IKEA has big warehouses and shipments for production activities. IKEA
has its operations in many countries. In Procurement, IKEA has a very good Bargaining
power with the suppliers and have numerous suppliers to purchase raw material. In
technological development, IKEA has a very strong human resource management and they
provide good training to the employees. They also possess centralised cost structures to
maintain low cost of the products (Castillo and Salem, 2012).
2.2 Evaluate various approaches to external environmental
analysis.
PESTLE Analysis
Political- IKEA has its 41 stores all around the globe and there are different political factors
at different locations. All countries are taking advantage of political stability as without the
same economic stability is not possible.
Economical- There is some economic conditions where an organization has to survive in
worst scenarios. Every store of IKEA has not the same economic conditions so it may
change buyer decision (Sax and Andersen, 2018).
Social- It is important for every organization to take care of cultural value while providing
the quality products to the customers. IKEA always take care about the taste, preference as
well as sentiments of the customers.
Technological- IKEA is technologically advanced as it has started its own website and
provides online order deliveries to the customers present all over the world.
Legal- Every business have some legal threats. There are different laws of each and every
country and IKEA has to operate by following all the laws and regulations.
Environmental- IKEA is involved in eco- friendly production approach and focus on
converting store energy into renewable. The organization is also investing in solar and wind
panels (Atighechian et al., 2016).
Five Forces Analysis

Rivalry among existing firms- There are many competitors of IKEA in the global furniture
industry like Walmart and Argos but still currently IKEA is a market leader in furniture
market.
Threat of new entrants- Threat of new entrants is quite low in case of IKEA because the
nature of market is saturated and huge investment and expertise is necessary to become
the leader in the industry (Lechehab and Kamassi, 2016).
Bargaining power of buyers- Bargaining power of customer is very strong because there are
many big players in the market providing the same furniture and customers have more than
one option in the market.
Bargaining power of Suppliers- Bargaining power of suppliers is low in case of IKEA as there
are many suppliers available that possess the same capabilities. IKEA is known for
maintaining long term relationship with the suppliers (Yoon, 2010).
Threat of substitutes- Threat of substitute is not that much high because there is no other
furniture provider like IKEA.
2.3 Explain how internal and external analyses can be
integrated to devise strategic alternatives.
IKEA’s internal as well as external environment can be easily integrated to devise strategic
alternatives like it helps in financial management and create strategic control of the
organization. It helps an organization to get a clear picture of future strategies and what
organization wants in future. It also help in creating long term as well as short term plan.
Every organization needs a strategic plan so that it can fulfil all the goals and objectives in an
easy way so internal and external environment analysis let IKEA know improvement areas
and development opportunity. It assists the organization in creating different strategic
alternatives and the best can be implementing out of them (Selling IKEA abroad, 2013).
3. Be able to apply strategic marketing decisions and
choices.
3.1 Justify decisions and choices to be made at a corporate
level.

There are different strategies that work at corporate level. Such strategies are used by IKEA
as well.
 Focus on Pricing and Quality- Ikea has adopted a differentiation strategy for setting
the price of the products and it suggests that IKEA ha to set affordable prices of the
products and not compromise with the quality. IKEA wants to maintain the strong
position in the market and don’t want to lose the same by compromising quality of
the products as well as principles (Goswami, 2018).
 Relationship management- It assures maintaining strong relationship with
distributors and suppliers as it helps in maintaining the quality as well as timely
delivery of the products. It also helps in creating confidence.
 Alliances for global markets- IKEA is contributing in creating alliances in the new
market that helps in defining the characteristics of the product like price and quality.
It is very important to create global market alliances.
 Innovation- IKEA always tries to maintain innovative ideas while producing the
products so it always thinks upon improving the designs of the product, pricing
strategies and product promotion. There are full- time managers who work on the
strategical and innovation part. Innovation makes customers happy and excited
about the new products (Gheibi et al., 2018).
3.2 Assess how these decisions influence marketing at
business unit and functional level.
These decisions influenced marketing decisions at business and global level because it is not
an easy task to maintain the level after implementation of strategies. Things keep on
changing like inflation rate and demands of the customers. Sometimes it really becomes
difficult to maintain quality on low prices because cost of raw material has been increasing
day by day and cost has been increasing. IKEA still has set affordable prices of the products
so it is affecting the profit of the business. Many new competitors have been entered in the
market that has the same strategy as of IKEA. They are also providing products at affordable
rates so this is difficult for IKEA to create frequent innovations as it involves cost. This also

creates impact on the relationship with the suppliers and distributors as they have other
businesses as well to cater (Du Plessis, Strydom and Jooste, 2012).
3.3 Evaluate approaches to competitive positioning of
businesses.
There are different approaches to find out competitive positioning of the business and one
of them is PESTLE analysis. It is one of the strongest strategic management tools.
 Political/Legal- There is a constant change in political as well as legal environment
that creates negative impact on the market and sale of the products of any
organization. Political factors are many like corruption and government rules and
regulations (Hitt, Ireland and Hoskisson, 2017). Legal factors include laws, taxation,
health and safety laws and employment laws. Ikea’s business has a large part in
Europe because government of Europe is quite stable and encourages foreign trade.
Its taxation policies are also very liberal. IKEA has its finance and management in
Leiden, Netherlands as it was beneficial for the company to relocate it from
Denmark. There is a high impact of Globalization on the organization and meanwhile
it entered Chinese furniture market when there was liberalization in the rules of
government. Ikea is suffering from heavy taxes and it creates difficulty in setting the
price of the products as customers expect low prices (Fearne, Garcia Martinez and
Dent, 2012).
 Economic- Economic growth of any country totally depends upon the economic
climate as it created impact on the strategies related to expansion. IKEA don’t want
to expand its operation in underdeveloped or developing countries because at such
locations buying power is low. So, IKEA’s main market focus is on Europe where
people can easily afford IKEA products. IKEA has faced many issues in China because
of the economic condition of the country.
 Socio Cultural- There is a high impact on customers as well as sales due to socio
cultural impacts IKEA has accepted the cultural environment of the countries in
which it operates. There is a concept of DIY in IKESA that states do it yourself. Labour
in China is not so expensive in comparison to the other countries.

 Technological- IKEA always takes help of the technology in retaining the customers
by providing high quality furniture in cheap prices. IKEA started utilizing technology
in sales and marketing by starting its online selling. Due to technological
advancement, IKEA is increasing its sales continuously. It introduced a technology
called ‘KIOSK’ that is used by IKEA’s customers by which they can view the sofa
covers in different fabrics (Baraldi, 2008).
 Environment- IKEA is very much committed towards utilization of resources in the
best possible way. It also offers CFL’s that can last up to 10 times longer and utilize 8
percent less energy. IKEA has also taken an initiative to reduce use of plastic bags
and introduces Blue Bag that is cheaper and reusable in nature.
4. Be able to evaluate the use of marketing strategies
for competitive advantage.
4.1 Summarise a range of strategies that can contribute to
competitive advantage.
There are various strategies that help in evaluating marketing strategies for competitive
advantage.
1. Cost Leadership Strategy- Cost leadership strategy refers to provide good pricing to
the customers. IKEA has used this cost leadership strategy by providing low prices of
the products (Anthony, 2016).
2. By this, products of the organization become so much affordable for different class
of people.
3. Differentiation Strategy- Branding of any organization helps the same in
differentiating it with the others. With the help of this method, IKEA has created its
own identity different from the other organizations. It helps people to find a
strength they can help in differentiating from other players and increase the visibility
(Vecchiato, 2012).
4. Innovative Strategy- Every company try to adopt innovative methods to sustain in
the market. It helps Organization in getting a competitive edge. IKEA has used this
strategy by creating attractive home furnishing products. This strategy helped IKEA in
reducing the pain and risk (Jukić, 2019).

5. Operational Effectiveness Strategy- Some companied tries to retain only those
operations which they do actually good. IKEA has a very strong customer base and
the organization has created a very strong position in the market because of this
strategy.
6. Technology based competitive strategy- This strategy is based on the technological
advancement. In this strategy, organizations try to get the competitive advantage by
the introduction of new technology (Bacal, 2011).
4.2 Assess marketing strategies, their application and
implementation for an organisation.
The company had decided to develop the strategies as below:
Using Social Media
Earlier people used to take social media as a distraction. However, this is not the scenario
these days as it had become an important part of your lives. IKEA made sure that they post
all the discounts, promotions and giveaways through the news or maybe events from
Facebook, Twitter, Instagram as well as Pinterest.
Quality
The products of IKEA go through accurate tests so that there is no compromise in terms of
quality. IKEA products are known for the quality and customers are very satisfied with the
products.
Functions
The products of IKEA are the ones that look attractive in terms of looks and design, along
with being useful and user-friendly. The equipment that are used in the production are the
most appropriate ones and don’t have elements that have no significance and give exact
answers to the sheer home furnishing requirements. There is a broad option of products
and hence covers all the roles in the home. The products are user-friendly and are useful for
daily purpose (Lindgreen and Anthony Di Benedetto, 2018).
The advertising activities are also the ones that are necessary. The unnecessary commercials
are not allowed and this is the reason that one barely sees any commercials pertaining to
IKEA as only the festive season of the year is the only time that they advertise.
Promotion