Market Research: Ikea

Market Analysis

Market evaluation is consisted by few important sub items that happen to be; market size (current and future), market growth rate, the success of a market, industry cost framework, distribution channels, market movements, key success factors. Each one of them has a particular meaning and says specific things that can be used in order to improve or to choose between two different marketplaces. The purpose of this market evaluation is to determine the attractiveness of a market and to understand or even predict the opportunities and hazards that happen to be related to the advantages and weakness of the business.

A short guide will be given about what is important for every single point of the marketplace evaluation and then will be connected to the subject of this task.

For first point is given Market Size. How big is the market can be predicated on today's sales or on potential ones. The nominal GDP of United Arabic Emirates is approximated on $228. 578 billion and that shows just high is the life span standard in this region. The United Arabic Emirates (UAE) is rapidly, highly developed overall economy based on different socioeconomic indications such as GDP per capita, energy use. Even though UAE is now less dependent on their natural resources as a primary income source still an important role in this economy is played by the petroleum and gas exports. Lately, Dubai's Emirates began to look for another source of revenue and they looked into sectors like tourism. The region is trying to own pulled the eye of the people, especially to the wealthy ones. The rapidly developing market of Dubai and UAE is making almost each big brand, organization, company to make offices in Dubai and even headquarters. The Market Development rate simply means to extrapolate historical into the future. The GPD per capita in UAE is one of the highest on the planet and if you take this into consideration that presents only what tremendous buy electricity this country has. Needless to say like every other country and market, the UAE was hit by the economical crisis and in '09 2009 a loss of 4. 0% in the GDP progress was reported. An important inflection because of this point is that sometimes the progress can be expected by learning and studying if in the past were developed similar products like the the one which IKEA needs to implement and propagate within the united states and be the maximum amount of profitable as you can. Also the life cycle of the product must be taken into, because of this rapidly ever before changing world a product could be at the top today, but the day after to be forgotten and new product can occur. The following point of the market analysis is called Market Profitability. And here while different firms can have different levels of profitability, to comprehend how much money you can make in a certain market the needed thing here's, the average income potential of market and you can use as a guide to understand the actual of this certain area. To do so here are used the 5 causes that Michael Porter created. Referred to as the Porter's five pushes they identify the effect on the market profitability and they are Buyer and Supplier electric power, Obstacles to entry, Threat of alternative products and Rivalry among firms in the industry. As mentioned previously UAE monetary, especially Dubai and Abu Dhabi (the capital of UAE) are highly and speedily growing economy and they're a attractive destination for a lot of different brands and companies to place their office buildings, franchisees or branches. Another point that shows the opportunities that UAE can provide is the growing people of this country. But from another point the gender imbalance men are as twice as the females and that could be taken as a kind of menace for IKEA and the merchandise they are trying to send out. Universally accepted truth all over the world is a woman must manage the house so that as we are aware of IKEA policy, they offer flat pack furniture, home accessosiers and kitchen items in their shops all over the world.

This aspect of the Market research will be discussed deeper below in another form.

IKEA: Quest towards a worldwide cult status

Introduction & Company Profile

IKEA is a Swedish global home furnishing company founded by Ingwar Kamprad in 1940s (IKEA, 1999) having businesses in Europe, US, Asia, AustraliaandMiddle East. Spanning more than six decades, IKEA has disperse its wings into other major sectors like food and marketing. Sales information for 1998 showed a humble 6. 3bn which risen to an impressive 21. 2bn in only a decade (IKEA, 2008). During this time period, IKEA progressed into a worldwide icon through careful planning, effective learning resource utilisation and prices strategies. In 2005, the business possessed 226 stores spread over 33 countries; sales being highest inEuropeby 81% (BusinessWeek, 2005). In a press record released in November 2009, IKEA has reported growth inUKannual sales to 1. 2bn and increase in market show by 0. 7%. (IKEA, 2009). Taking into consideration the morbid economic climate prevailing in US and Western marketplaces, these statistical statistics can be considered as a confident indication for continual development of the business.

Porter's Five Causes analysis

Porter (1980) has given certain ways of measure the performance of companies in terms of competitive advantage, buyer-supplier control and hazards posed by new entrants, defined as Porter's Five Forces.

Competition within the industry

  • IKEA has got high competition within the industry from Ashley Furniture, Galiform, Wal-Mart, John Lewis and Homebase. However the global brand and trust in customers about product quality, cost efficiency and greatly popular design has given IKEA a competitive border.
  • Growing markets made IKEA diversify its business empire into food and textile industry. UKfood industry is already being ruled by supermarket giants Sainsbury's, Tesco and Asda. Gaining a place among these proven companies is a major challenge.
  • IKEA also forayed into the mobile industry by offering cheap and adaptable non-contract mobile services because of its customers (Lomas, 2008). Mobile sector is intensely competitive with top players Virgin, Vodafone and O2 offering unlimited free minutes within the deal period. While price slash and overall flexibility can provide viability, it is greatly hard to remain on top as customers could be more inclined towards traditional brands.

Bargaining electricity of suppliers

  • Is low. Suppliers never have received any major bargain power as IKEA is a more developed brand in the market. Suppliers tend to gain more by getting into a method of trading with such a higher value merchant.

Bargaining vitality of buyers

  • Buyers have a higher ability of bargaining. Frequently, competition in retail market gives the buyer lots of options to choose from based on price, services and design.
  • Recession has forced retailers to become more competitive in costs to attract individuals who are reluctant to invest more for home improvements.

Risk of new entrants

  • The threat of new entrants is low for IKEA as it is more developed as a worldwide icon. Customer commitment has helped in improving this competitive advantage in retail market. Moreover, any new entrant into the home retail business needs time and effort and effort to determine itself in the industry.
  • IKEA has a huge market occurrence over Europe, US, Asia and Australia. It really is virtually impossible for just about any new entrant to cause a threat to a already well connected business empire with geographic and product diversity.

Risk of substitutes

  • Is medium. Though there are a number of substitutes in home furnishing industry, like B&Q, Wickes, John Lewis and Homebase, the low-to-medium income customers tend to stick with IKEA because of the cost efficiency.
  • IKEA has been criticised for poor customer support, stock availability, product promise and smaller variety. John Lewis outperforms IKEA in every these areas and prompted many UKcustomers for a change over.
  • The all-in-one-shop principle in IKEA is unavailable in substitutes like B&Q, DFS and Wickes. Customers have to go directly to the store, order the stock and get a completely innovative and state-of-the-art home.
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