Ikea 's Marketing Plan For Ikea

The services and products offered by IKEA provide value to its customers in various ways. For one, the products and services are very affordable. The products and services are not priced highly and therefore, the average customer can enjoy them. At the same time, the products are of high quality. From IKEA’s slogan “low prices but not at any price”, it is clear that the company prices its products lowly but that does not mean that the quality is compromised. IKEA satisfying its customer’s needs through providing them value for their money as they provide quality products that will last for a long time, and at affordable costs. The fact that the company has set the minimum acceptable standards for its wood, implies that it is also keen on quality and on the environmental impact of its action of making furniture ( Edvardsson, Enquist & Hay, 2006).

IKEA is rumored to be a very standardized retailer, i.e., a certain set of marketing strategies is used that are the same around the world. This indeed sets IKEA, operating on markets in Europe, US as well as Asia and Australia, apart among international retailers. Often the theoretical conclusions in international

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 provides vast variety of home products from furniture, bed, tables, chairs, to home decoration, and kitchen accessories. At the heart of the IKEA strategy was its product range which founder of the company Ingvar Kampard called “Our Identity”(Bartlett, Nanda 1996). IKEA is recognized world-wide for its innovative approach toward business and stylish designs. The company has used innovation for cost leadership. “Almost all IKEA products are designed for flat packaging, which reduces shipping costs, minimizes transport damage,

IKEA is the largest furniture retailer around the world. The current leadership position of the company provides considerable advantages in terms of the economies of scale and at the same time creating an entry barrier for new competitors. It is ready to achieve the target of EUR 50 billion annual sales by 2020.

In this business report on the global retail business IKEA, it will cover the nature of business, influences on operations, operation processes, operation strategies and how the business can sustain competitive advantage. IKEA was founded in 1943 by Ingvar Kamprad in Älmhult, Sweden. The business established after and with the money his father awarded him for succeeding in his studies, Kamprad sustained a cash inflow by selling pens, wallets, watches, picture frames, table runners, jewellery and nylon stockings at reduced prices to customers. Although, later on in 1958, IKEA was introduced as a leader of Swedish Furniture Company as they started to produce local furniture by the Swedish local manufacturers, which gained positive attention from their customers. Eventually, developing flat packs of furniture for storage and self assembly, making their signature style of IKEA and turning the small business into a global sensation.

Ingvar Kamprad, an entrepreneur, founded the Swedish furniture company IKEA in 1943 (Chu, 2013). Kamprad was only 17 years old when he founded the IKEA company. He named the company after the initials of his first and last name and the first letter of the farm and hometown he grew up in (Bhasin). In the years following, the Swedish furniture giant has grown to 328 stores in 28 countries as of August 2015. This includes 1.9 billion visits to IKEA.com, 771 million store visits, 213 million catalogs printed in 32 languages and 155,000 co-workers across 6 continents. According to IKEA’s website, their vision is “To create a better everyday life for the many people”. An interesting fact about IKEA is that its furniture production consumes one percent of all the wood produced on earth (Bhasin). The site goes on to explain how they optimize their entire value chain to provide affordable quality to their customers. IKEA expanded into China and other countries so that they could continue to attain their goal of creating “a better everyday life for the many people”. A unique aspect with IKEA is their product packaging. The product is a flat package, so it is easy for the consumers to take the product home and assemble it themselves.

IKEA is the largest furniture chain in the world, and in 2011 the Swedish company operated over 270 stores in 25 countries. In 2011 IKEA sales soared to over $35 billion, or over 20% of the global furniture market. Most of its stuffs believed IKEA will massive growth throughout the world in the coming decade because IKEA could provide what customer wanted: good design, and good made contemporary furniture with an affordable price. In one word, IKEA’s global approach focuses on simplicity, attention to detail, cost consciousness, and responsiveness in every aspect of its operations and behavior. (Jones, 2013)

IKEA’s history of formation and development is also associated with many events and outstanding achievements. It was the initiative that to change the furniture industry in 1952 - the flat-pack method which lets customers freely choose, transport and assemble products on their own. The initiative helped IKEA save transportation costs, traveling costs; especially with this business model, IKEA could make a significant cut of manpower and costs to solve customers’ questions or needs for repairing or switching goods. In 1953, Kamprad first held a private exhibition of IKEA furniture with more than 1,000 people lined up early to see the exhibition on the first day of exhibition.

There are two hundred and fifty three of IKEA FAMILYs over the world and five hundred and sixty five millions of visitors. The sales volume grow up to one point four billion Euro from 2007 to 2008. “Low price and good quality” is the most important thing to IKEA. Low price is not equal to poor quality, on the contrary, quality show the valuable brand.

IKEA designs and retails ready to assemble furniture directly to its customers with a network of total 328 stores located in 28 different countries and supported by 978 external suppliers from 50 different countries.

In august 2008, IKEA had total 253 stores where 560 million people visited. Here the total sales became 23 billion Euros. Considering 20% sales profit here IKEA’s average customer per store and cost per store are given below:

At the outset, it may be useful to characterise IKEA in terms of the characteristics of demand (also known as the four Vs, see Slack et al. p 20). First, IKEA is clearly a high volume operation – as indeed most international retailers are – which lends to systematising operations but which implies capital intensive processes and therefore cost considerations will be crucial. Second, IKEA offers a large number of products (up to 14000 depending on the country/store) so there is high variety in the

IKEA established itself as the largest furniture retailer in Sweden by the early 1970s by reinventing the wheel of furniture manufacturing at that time. Majority of furniture manufacturers in Sweden produced expensive products with designs that were basic or passed down generation to generation, additionally other manufacturers stores where located in downtown congested areas. IKEA’s strategies which consisted of low cost low priced furniture, brave intricate designs, self-assembly,

IKEA aims to develop inexpensive products doesn’t mean to sacrifice its promise to consumers – “A better everyday life”. Instead of low quality product IKEA tends to deliver its mission by better purchasing management. IKEA spread its Sweden designed furniture to manufacture in developing countries to keep the lowest production cost. With more than 1000 suppliers over 55 countries, approximately 62% of purchasing is from Europe and around 34% from Asia. (5)