Strategic Marketing Management Report: Ikea's Global Business Strategy

This report provides a comprehensive analysis of Ikea's strategic marketing management, focusing on the company's expansion into the Asian market with its Billy bookcase. The report begins with an executive summary highlighting Ikea's success and the challenges of international expansion, including market competition and cultural differences. It then delves into the role of strategic management, exploring how Ikea attains a competitive advantage through its unique product design, value-based pricing, and integrated supply chain. The report examines the 4Ps of marketing mix (product, price, place, and promotion) and its link with corporate strategy. It further analyzes the strategic marketing process, models like PEST and product life cycle, and strategic positioning. The report also explores growth opportunities in the market, marketing strategy options, and strategic marketing objectives. It concludes with an analysis of the impact of external factors, internal strengths and weaknesses, and proposed strategic marketing responses, offering recommendations for Ikea's success in the global market.

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Executive summary
Ikea is the most successful customise furniture manufacturing company across the world. The
company is highly popular for its unique design and customer friendly product ranges and
pricing. Billy bookcase is the most successful product of Ikea and the company now decides to
expand its business in the Asian market with the Billy bookcase. However, there are some
barriers like competitive nature of the market, cultural difference and over-inteference of the
government. In this regard, it is very important for Ikea to choose its marketing strategies
properly. This report guides Ikea to get a clear insights of strategic marketing process and
measures so that it will be a success for Ikea in the international business.

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Table of Contents
Introduction......................................................................................................................................4
Task 1...............................................................................................................................................5
AC 1.1 Role of strategic management in Ikea.............................................................................5
Attaining competitive advantage in the international market..................................................7
Maintaining balance with the external factors.........................................................................8
Harnessing customer satisfaction with the product.................................................................8
Setting better organisational objectives...................................................................................9
AC 1.2 Process involved in strategic marketing..........................................................................9
Analysing the market.............................................................................................................10
Retrieving information regarding the target market..............................................................10
Establishing a strong marketing mix process........................................................................11
Emphasising on customer satisfaction...................................................................................11
1.3 Link between strategic marketing and corporate strategy...................................................11
AC 2.1 Values of the models used in strategic marketing planning..........................................12
PEST model for strategic market planning............................................................................12
Product life cycle model........................................................................................................14
2.2 Link between strategic positioning and marketing tactics...................................................15
2.3 Merits of relationship marketing.........................................................................................15
Task 2.............................................................................................................................................16
3.1 Techniques for growth opportunities in the market.............................................................16
3.2 Marketing strategy options..................................................................................................19
Increase market presence.......................................................................................................21
Set up a brand value in the new market.................................................................................21
Design effective promotional measures.................................................................................21
3.3 Appropriate strategic marketing objectives.........................................................................22
4.1 Impact of changes in the external environment...................................................................23
Technological factor..............................................................................................................23
Social factor...........................................................................................................................23
Legal factor............................................................................................................................24
Globalisation..........................................................................................................................24
4.2 Internal analysis for strengths and weaknesses...................................................................24
4.3 Proposed strategic marketing responses..............................................................................25

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Set a product line as per the consumer needs........................................................................25
Design creative marketing strategy.......................................................................................26
Good relationship with the respective government...............................................................26
Recommendation.......................................................................................................................26
Conclusion.....................................................................................................................................26
Reference.......................................................................................................................................28

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Introduction
Ikea is considered to be one of the popular ready-to-assemble furniture manufacturing
multinational company that offers kitchen appliances, home accessories and other home furniture
services to the customers with a very cheap price. Founded in 1943 by Ingvar Kamprad, Ikea is
currently the largest furniture retailer across the world with 433 locations all over the globe
(Ikea.com 2020). It is important to note that the organisation generates US$ 45.4 billion in the
financial year of 2019. The headquarters of the organisation is located in Netherlands with a total
number of employees of approximately 211,000 (Ikea.com 2020). The values and optimism of
the employees and the management create a strong brand awareness for the organisation and
ensure sustainability in business in near future.
In respect to this, it is highly essential to evaluate the marketing strategies of Ikea and
analyse the corporate business practice that the company practices. It is important to note that the
report does not restrict its discussion to the marketing initiative of Ikea rather trying to foster an
in-depth analysis over the strategic marketing initiatives that the company follows and must
follow in course of establishing a strong competitive approach in the market. Henceforth,
different models and theories have required to understand and design an extensive strategic
marketingexperience that will be relevant and effective enough for the development of the
organisation.

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Task 1
AC 1.1 Role of strategic management in Ikea
According to Banerjee (2017) strategic marketing is considered to be a process of
planning and development of the marketing initiatives in order to obtain competitive edge in the
chose niche market. In the process of creating a marketing practice it is important for the
company to acknowledge the market situation and survey of the industry so that it will help to set
specific objectives and need for the respective organisation. From the research of Varadarajan
(2019) it can be argued that one of the major organisational objective is associated with
maximising the number of customers and secure high profitability so that the sustainability of
business will be intact. It is pertinent for Ikea to formulate an effective strategic management
practice so that it will generate competitive edge for the organisation in the international market.
Table 1: 4P marketing mix of Ikea
(Create by the author)
PromotionProductPricePlace

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The 4P marketing mix of the company is associated with the product, price, place and
promotional aspects. There are specific strategies and measures that the organisation has been
taken in order to create an effective and extensive organisational practice. As far as the product
of the organisation is concerned, it can be stated that Billy Bookcase of Ikea provides a very
unique design to the product that attracts the customers all over the world. The product has been
offered since 1979 and it is considered to be the most versatile bookcase across the world
(Harford 2017). Gillis Lundgren was the designer of Billy bookcase with the vision of creating
an effective and multitasking design of the bookcases. Flexibility and use of materials are very
important for Ikea to create its unique brand value. Therefore, the Billy bookcase is made of high
quality materials with a unique design that can easily attract the customers.
Moreover, the pricing strategy of the organisation is associated with the value based
pricing strategy. As per the research of Kienzler and Kowalkowski (2017) it can be stated that
the value based pricing strategy creates a great value of the product and able to convince the
customers about the worth of investing money. As a result of that it becomes easier for Ikea to
create a loyal customer base who knows about the value and importance of the products. As a
matter of fact, the value based pricing strategy of Ikea also enables the company to generate an
competitive edge in the market as the rival companies are not in a position to offer products in
such a low price (Hinterhuber and Liozu 2017).
The location of the Ikea is focused on an effective organisational strategy where Ikea is
focused on vertical integration strategy. Sabet, Yazdani and De Leeuw (2017) defined the
vertical integration strategy as a process where the business company is highly willing to control
its suppliers, distributors and retailers. In other words, it can be stated that the vertical integration
strategy allows the business companies to formulate a strategic approach so that it will assist to

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reduce costs and improve efficiency of the organisation (Wan and Sanders). Ikea intricately
emphasises on its supply chain and therefore, the locations are being chosen carefully and mostly
out of town. There are big warehouses where furniture will be displayed and help them to choose
the right product that they a 2017re looking for.
Both traditional and digital promotional strategies are associated with the business of
Ikea where traditional advertising like TV advertisements, sponsorships and newspapers play a
significant role (Ahire and Pekgün 2018). Moreover, the integration of social media marketing
and promotional strategy enables Ikea to enter into the modern business in order to gain
competitive edge with its business rivals. Moreover, the use of the company logo has become
another effective strategy of energising the brand presence in the market (Moon and Kim 2019).
As a leading customise Furniture Company, it becomes important for Ikea to use the logo of the
company as a tool to attract customers.
In this regard, the 4Pmarketin mix is effective enough to highlight some of the key facets
of the strategic measures that Ikea is creating to maximise its customers and increase profitability
to a great extent. Therefore, the significant strategic management facets of Ikea are as follows,
Attaining competitive advantage in the international market
The product description, location and pricing strategy of Ikea are strongly supported the
strategic advantage of the organisation where it is important for the organisation to put enough
stress over the market demands and requirements. The research of Kaleka and Morgan (2017)
advocated that the market demands are generally driven by the demands and expectation of the
customers. Therefore, it becomes a very important aspect for the business organisations to deal
with the customer expectations and gain competitive advantage in the competitive market

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(Nithisathian et al. 2018). For Ikea, competitive advantage is also achieved through unique
strategies that the rival companies are not able to incorporate. As a result of that creating value of
the furniture products is a very unique and pragmatic approach for Ikea.
Maintaining balance with the external factors
It is a pertinent measure for the business organisations to put focus on the external factors
in order to develop a sustainable business practice. In this regard, Ikea also emphasises on the
importance of external factors. For instance, the organisation is always looking into the standard
and quality of its products and never intends to compromise with the quality of the products. It is
also associated with the external factors where the government regulations strongly recommend
the companies the set of rules prescribed by the organisation. Moreover, for energy efficacy also
it is very pertinent for Ikea to follow the internal measures. Therefore, the organisation also
encapsulates a number of practice like virtual integration of supply chain that is considered to be
an energy efficient measure for the organisation.
Harnessing customer satisfaction with the product
According to the research of Hult et al. (2019) it can be stated that customer satisfaction
is one of the important aspects and to some extent the most significant facet that the business
companies should take in order to bring efficacy into the organisational practice. Therefore, it is
a very essential part for the business organisations to manufacture the product in such a manner
that it will satisfy the expectations and demands of the customers (Zablah et al. 2016). Ikea
intends to meet the specifications and expectations of the customers in a great manner. First of
all, the Billy bookcase is a product with value based pricing. Moreover, the unique design and
quality cannot be provided by any other companies. The customers can also place their

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customised request so that the Billy bookcase will be designed accordingly. It is definitely help
the organisation to pave the way for founding a strong brand image in the competitive market.
Setting better organisational objectives
As per the research of Day (2019) the success of an organisation is depended on proper
objectives of the organisation. The role of organisational objectives is to provide guidance for the
company for continuing its success and high profitability in business. In other words, it can be
stated that for achieving success in implementing the strategies, it is very essential for the
business organisations to set its objectives appropriately. However, the company also needs to
have in-depth knowledge regarding the market. In respect to this, marketing mix fosters enough
exposure to the organisation to compare the situation of the organisation and the market demands
(Wickert, Vaccaro and Cornelissen 2017). Therefore, it becomes a strategic aspect for Ikea to
focus on the marketing mix practice and shapes its strategies in reference to the marketing trends.
AC 1.2 Process involved in strategic marketing
Strategic marketing is a required steps for the multinational companies to compete in the
competitive international market. The purpose of the strategic marketing practice is to create an
effective organisational strategy that can foster competitive edge in the future expansion and
sustainability of the organisation (Anfer and Wamba 2019). Henceforth, it seems to be an
important aspect for the business companies to design the strategic marketing process properly
so that it will support to meet the organisational objectives properly. Moreover, the right decision
of the organisation is also relied on effective implementation of strategic marketing (DeTienne,
and DeTienne 2017). Therefore, it is very essential for the business companies to focus on the
process of introducing proper process of strategic marketing.

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Analysing the market
It is essential for the organisation to initiate a deep down research over the market so that
relevant information about the customers like their expectations and the different development
areas will be highlighted (Hunt 2017). In case Ikea, the organisation is strongly emphasises over
customer expectations. Therefore, the market analysis will definitely provide in-depth
understanding of the customer demands.
Retrieving information regarding the target market
Target market identification is the major purpose for the business companies in order to
get a clear image of the customers and prioritise them as per the needs and demands (Aziz et al.
2019). Henceforth, Ikea should retrieve information regarding the customers based on setting
target customers on their different priority basis.

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Establishing a strong marketing mix process
After identifying the target market, a marketing mix procedure plays the pivotal role in
terms of shaping the strategies on every aspect. The role of the marketing mix process is to cater
a competitive edge to the organisation underlining the strategies (George 2017). For Ikea, the
marketing mix process will deliver competitive advantage in product lining, choice of location,
pricing strategy, promotional tools and so on.
Emphasising on customer satisfaction
The final part is to evaluate the efficacy of the strategies to meet the satisfaction and
specific requirements of the customers (Kumar, Sharma and Gupta 2017). Henceforth, Ikea must
follow an evaluation over the customer needs and the impact of strategies over the needs.
1.3 Link between strategic marketing and corporate strategy
The link between corporate strategy and strategic marketing is very close and the purpose
of harnessing a strong link between the two is to make the strategic marketing practice relevant
with the corporate strategy. According to Brewster (2017) corporate strategy is related to the
long term plan of the organisation that guides the organisation to operational framework or plan
of action. The plan is to create a better market presence with the help of right balance between
the corporate strategy and the prescribed marketing strategies so that it will provide an
opportunity to encapsulate the market effectively (Engert and Baumgartner 2016).
The vision of Ikea is associated with the better life for most of the people across the
world. An utilitarian philosophy is played a significant role in the process. It is important to note
that aggressive expansion is not the objective that Ikea follows in business orientation. Rather it