Case Study Ikea

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1. What factors account for the success of IKEA? IKEA’s success was attributed to a number of core competency factors such as its strong brand image, having a well-defined target market, its cost cutting corporate culture which led to flat-packaging of its products, developing good working relationships with its suppliers, creating a “partnership” relationship with consumers and proper understanding of its consumers’ behavior. IKEA was able to deliver superior customer value based on the above factors which led to customer retention and hence loyalty, which is a long term goal for any business to survive effectively in a dynamic economic environment. IKEA’s brand image has created a…show more content…
Do you agree with the matrix approach described in Fig. B? IKEA’s product strategy and product range are simplistic yet brilliant as these are two of the main concepts behind the company’s success. A company like IKEA cannot be “everything to everyone,” therefore it was not going to make the entire market its focus but rather a segment of the market. Despite the limitations in its product range which allowed IKEA to produce only 12 variations of a product based on price and style, this strategy was aligned with the company’s mission, “Low Price with Meaning.” By utilizing a very basic concept, and with its niche and brand image being the Scandinavian design, it was able to: “survey the competition and establish a benchmark, set price points lower than the competition, identify gaps in the product lineup and readily identify market opportunities.” IKEA orientated its product strategy and matrix to satisfy the needs and wants of a specific market segment. The matrix, which contained only four styles and three price ranges, was simple and worked as the engine in driving this strategic process and according to Kotler and Keller, “simple is good” (Kotler & Keller, page 165). The main objective of the company was to reduce costs in order to offer a product at the lowest price in the market. Every department in the company was aligned with each other. Cutting costs initialized with establishing a price point, finding the most cost-efficient supplier, obtaining

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