Case Study: The IKEA Concept

The well-known ‘build-it-yourself’ product design makes them progressive and makes them running ahead of the competition. IKEA is the only big brand in a category further not present in global markets, there are no real competitors operating in the same category. In 2013 775 million customers visited IKEA in 2013, and its website hosted 1.2 billion visits (4). Due to the ‘build-it-yourself’ product design IKEA is able to provide their customers with high quality and low cost products, even the customers with limited income and limited living space

The philosophy states “ Our vision is to create a better everyday life for the many people. Our business idea is to offer a wide range of well-designed, functional, home furnishing products at prices so low that as many people as possible can afford them.” IKEA needs to create products following this motto but have these products molded to the tastes and styles of the U.S. population. The prices must still be low but IKEA must force the message that even though the price is low that does not mean the quality of the product is poor. This message will be key for expansion in the U.S. to be a success. IKEA must maintain their shopping experience as that is a strong competitive advantage, and tweak their philosophy so it fits the American lifestyle. If they do this then they will have success in expansion.

* IKEA’s low cost structure has been the very core of its success. It’s low-cost and high-quality strategy fits with the current state of the economy. Offering convenience factors within IKEA’s stores would fit well with IKEA’s low cost structure. It maintains its low-cost business model by creating a different furniture shopping experience. IKEA supplies customers with all possible materials needed to complete their shopping when they enter the store (that are, measuring

IKEA is a world famous furnishing company known for selling Scandinavian-style furniture and other home-based goods. The company has over 230 stores, with operations carried out in over 42 countries with well over 70 000 employees. The stores themselves can occupy 410 million shoppers per year. It is a Swedish based company built on the idea of offering a wide range of well-designed, functional home furnishing products such low prices, that a majority of people will be able to afford them. The IKEA group is currently solely owned by the INGKA Foundation through a holding company, unlisted on any stock exchange.

This paper aims to demonstrate a detailed description of the elements of ‘IKEA’ company based on its famous name in the furniture industry.

IKEA is an international company which designs house products and sells them in the form of ready to assemble furniture. It is one of the world’s largest furniture companies. It is founded by17 years old Ingvar Kamprad in Sweden in 1943. The most important fact about the company is the attention to control the cost of the products, which allows them to lower the prices. Even today they are continuing to expand in the world by looking forward to new product developments. The number of stores of IKEA in the United States is 14 at the moment and they aim to have 50 stores by 2013.

IKEA is a unique Swedish furniture company. The company we so widely recognize today for selling good quality budget friendly Scandinavian style furniture began in 1943 as merely selling pens picture frames and wallets. Ikea was founded by a then 17year old Ivor Kampard, of the farm Elmtaryd near the small village of Agunnard in Smaland, hence giving rise to the name IKEA. This area is know for its thrifty and hard working ethos and Kampard very much incorporated this into his business venture. His innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by simply using cost-cutting solutions that did not affect the quality of products.

From its low cost structure to its corporate culture (“The IKEA Way”) to the do-it-yourself approach (replete with measuring tapes, paper, and pencils available in-store) plus its strong brand image (representative of high quality, low-cost ,trendy, modern and fashionable

IKEA’s mission is to offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them. Founder Ingvar Kamprad’s innovative strategy was to design functional furniture that was easy and inexpensive to build, receive it disassembled at stores, and display it on the showroom floor with detailed explanation tickets, making salesperson assistance unnecessary.

Ikea has established strong branding with wide range of stylish products. It focus on offering low-priced and affordable furniture. The furniture is easy to assemble and ship. It offers one-stop shopping and featured the amenities as playrooms for children and Swedish cafes, bank and enough parking spaces. It creates a friendly atmosphere and services to shop and design the store layout for a nice journey of shopping. It has strong global sourcing capabilities.

Value is the biggest reason for IKEA’s growth and popularity. The overall concept acknowledges that IKEA provides functional well designed furniture at low prices that makes it affordable for as many people possible. This helps create a better life for many people (Ferrell & Hartline, 2014). IKEA implements designing products that are stylish, functional, and essentially low in cost, however, customers must assemble themselves. The furniture is shipped in flat packs to save money in manufacturing and distribution and then passes it on to customers in lower prices at retail.

The debate about standardization and adaptation for international markets has continuously attracted more attention from multinational companies for several years. The case of IKEA has however tried to help me in understanding the argument involving these two marketing strategies as applied in the international markets.

IKEA’s clear vision is to offer well designed and useful home furnishings at low prices so many customers will be able and capable to afford them. IKEA designs exclusive products that meets firm requirements for task, well-organized delivery, excellence and has a good impact on the environment.

This forced him to design items in-house. Kamprad is also behind the simple, yet revolutionary innovation that is the flat pack. He began selling IKEA products in flat-pack form, from his own warehouses. Thus, the basic IKEA concept – simple, affordable flat-pack furniture, designed, distributed and sold in-house – was complete. Kamprad, felt he was not just cutting costs and making money, but serving the people as well. Kamprad’s business grew.

The IKEA group sells quality furniture at a low price, to maintain a strong competitor. For that, the company has to try to cut cost without losing quality in the products that it sells.