The Worlds Largest Furniture Merchant Marketing Essay


Swedish company IKEA was the world's greatest furniture retailer since the early 1990's. It sold inexpensive furniture of Scandinavian design. The business managed in 55 countries with a workforce of 76000. IKEA offered nearly 12000 what to the home home furniture market worldwide. It sold a wide range of products including furniture, accessories, bath rooms and kitchens at 186 shops in 30 countries across European countries, THE UNITED STATES, Southeast Asia, Midsection East and Australia. IKEA established fact because of its exclusive model, good deal, wide range of product and level packing. The Sweden-based Inter IKEA Systems (IKEA) was placed 42 by Business Week publication in its set of Top 100 global brands for the year 2005. In January 2005, IKEA was put third in BrandChannel's fourth total annual Reader's Choice Accolades for the global brand with impact in 2004. According to the Brand Channel search rankings, IKEA was the #1 brand in European countries and Africa. IKEA was the world's greatest furniture dealer that customized in stylish but inexpensive Scandinavian designed furniture. IKEA's success was recognized to its great experience in the furniture retail market, its product differentiation and cost control. The business sold its furniture in kits, to be assembled by the clients at home. In addition to furniture, IKEA also sold power items such as utensils, hooks, clips, stands, etc. IKEA's founder Ingvar Kamprad (Kamprad) had built a global furniture chain of 226 stores in Europe, Africa, Asia and the US. For fiscal year 2004-05, the company generated income of US$ 17. 9 billion, a 15% increase over the prior fiscal time. IKEA sales come to 21. 2billion Euros in 2008 displaying a rise of 7%. The largest sales countries are Germany, USA, France, UK and Sweden. In 2008 IKEA opened 21 new stores in11 countries and needs to open around 20 more in 2009 2009 within its strategy for growth. IKEA organised a market show of not more than 10% in the markets in which it operated. Regardless of this, it had been successful in almost all countries, because of public knowing of the IKEA brand.

IKEA is a worldwide company that has spent and is present in many countries; it encourages its products and services using the same brand in every marketplaces synchronized from its one main commercial office in Sweden which is accountable for a global insurance plan that concentrates on cost management, performance and value.

This company has a online shopping site for shopping and they have kept among the better of what they already offered there. We are able to analysis their catalog online but we can not look at each item, that's made through the e-shopping. The entire catalog of items is unavailable online, but many parts in each category are. You can find 17 current categories to shop-kitchen, bedroom, living room, bathroom, office, storage space furniture, accents and adornments, recliners and stools, children's furniture, cookware and tableware, eating furniture, seasonal, area rugs and flooring and many more. The categories are seen from a drop-down menu on the main shopping page. Choose the type of item you're looking for and you're taken up to full-color photographs of the various items with costing. Several items are shown on each webpage and following that you can look at the facts of a person item.

This individual item page provides details including sizing, finish off, care instructions, package measurements, and structure. It also gives you special top features of the product and ideas on use.

The items range from huge entertainment cabinets to kitchen tools-thousands of dollars to simply a few cents. If it ties in an area, they probably sell it. Couches, pillows and comforters,

curtains, area rugs, potatopeelers, plantstands, etc.


You can return the product within 45 times of purchase but have showing the voucher. Be remind that if the carrier is neglect to deliver you'll pay for the delivery charges. If the merchandise is damage they don't really refund.

Localization in Global Markets

IKEA targeted middle class customers worldwide. IKEA made shopping easy for customers. For instance, right at the entry of the store, customers could drop their kids at the playroom which got many types of safe play system, and then shop independently in a laid back setting. The stores were constructed by means of a circle, to permit shoppers to view all sections of the store. IKEA target market was the global middle class which distributed buying habits. The customer spending format was also related across countries. With these similarities, IKEA understood that to fortify its presence in the global market, it was necessary to localize. For instance in China, IKEA produced 250, 000 vinyl placemats in 2005 to honour the entire year of rooster.

IKEA stores were usually located outside cities, isolated from other outlets. This was done intentionally so that IKEA could create a full shopping experience for customers. The IKEA products were themselves beautifully crafted and interesting. Their stores were so designed concerning fascinate shoppers.


Strength of IKEA

IKEA is a highly known brand attracting key demographic customer groups. The IKEA business design is unique in its construction and execution with little direct competition over a like for like basis. Success has been motivated from the purchase price architecture offering value to the customer in progressive but functional products. Regardless of the large shed procedures IKEA operate there's a degree of expert understanding within key product areas where buys are more considered and require assistance such as kitchen installations.

Weakness of IKEA

International brand has a level of trust on European markets with 90% of the stores based in Europe and the balance crossways America, Middle East and Asia. Even though the model helps bring about low prices it has been recognized there can be an related low degree of customer service which couples showing that there is a require to focus on service to make sure a complete shopping skill and ensure duplicate business within the lively customer base. The introduction of Ecommerce has been necessary to race in a modern scientific world because of market movement, however there is also a reflection this movement into multi route retailing moves from the basic eye-sight of the client having the ability to see and touch the merchandise.

Opportunities for the company

IKEA are moving from International to global status through the introduction of Asia and Eastern Western models. There's a new and emerging market in China as the united states undergoes a huge industrial trend IKEA's traditional product value is low price high amount product however the movement into middle and higher price items will see an opportunity to move the demographic base and improve the average basket value with less confidence on a restricted demographic collection. At a time of recession in the global economy, it may show up that some companies will certainly reduce take up of services that Ikea's offers. However, in tough times clients have a tendency to focus after cost reduction and outsourcing - with are strategies that Ikea's offers. So hard times could be profitable for Infosys Although there are negative organizations within the development of the IKEA Ecommerce site there can be an associated opportunity to get expansion and increase levels of customer support as the excess transactional ability will reduce pressure from stores to a certain level.

Threats for the company

Normal sellers are beginning to copy the style of low cost value flat packed furniture in growing competitive retail market that will impact on the eye of IKEA. With monetary concerns over growing living costs and depleting disposable income there can be an overall threat to the performance of the business enterprise in UK and American marketplaces specifically.

1. Politics Factors

Ikea is working a globalized qualifications with stores surrounding the world. This company's performance is highly inspired by the politics and legislative conditions of many countries, like the EU (European union). For job legislations, the federal government stimulates companies to provide a mix of job opportunities from versatile, lower-paid and locally-based jobs to highly-skilled, higher-paid and centrally-located careers. Also to meet the demand from inhabitants categories such as students, working parents and older persons. Ikea realizes that retailing the corporation has a great effect on jobs and people factors being truly a obviously local and labour-intensive sector. IKEA employs many; student, impaired and elderly individuals, often paying them lower rates.

2. Economical Factors

Economic factors are worry to IKEA. The Company expecting to control demand, costs, prices and gains. One of the main factors on the current economic climate is high redundancy levels, which reduce the valuable demand for many goods. These financial factors are mainly beyond your control of the company but their special results on performance and the marketing blend can be reflective. even though international business continues to be increasing and it is expected to give bigger portions to Ikea's income, the business is still very much reliant on the united kingdom market. Ikea would be improperly damaged by any wait in the UK furniture market and are bare to market attention risks.

3. Public/Cultural Factors

IKEA have increased the quantity of items available for purchase. Demographic changes including the aging population, a rise in female personnel and a decrease in home meals preparation imply that UK vendors are also concentrating on added-value products and services. In adding, the company spotlight is currently in the direction of; the own business mixture share, the resource series and other operational improvements, which can drive costs out of the business. National retailers are ever more reticent to defend myself against new suppliers. The client demanding the merchandise which really is a function of these cultural condition and their consequent attitudes and beliefs. Customers are becoming more and more aware of medical issues, and their attitudes.

4. Technological Factors

Technology is a main macro-environmental variable which has subjective the development of several of the Ikea products. The client and the company benefited by the new technology. When the merchandise are radily available and services are actually good then your customer satisfaction goes up. IKEA stores operate the following technologies:

Wireless strategy

Intelligent range

Electronic shelf classification

Self explore machine

5. Environmental Factors

In 2003, there has been increased pressure on many companies and professionals to acknowledge their responsibility to world, and act in a way which benefits world overall (Lindgreen and Hingley, 2003). The major societal concern threatening furniture suppliers has been environmental issues, an integral area for companies to do something in a socially liable way. Hence, by realizing this trend within the broad ethical stance, Ikea's corporate public responsibility can be involved with the ways in which an organization exceeds the minimum obligations to stakeholders given through rules and corporate governance.

The ecological process used, comprise the next:

Replacing PVC in wallpapers, home textile, shower drapes, lampshades, and furniture.

Minimizing the utilization of formaldehyde in its products, with textiles.

producing a model of chair made from 100% post consumer plastic material waste;

Introducing a circuit of air-inflatable furniture goods into the product line. Such products decrease the use of raw materials for framing and filling up and cut travel influence and amount to about 15% of that of conventional furniture;

Dropping the utilization of chromium for metal outside action.

Using hardwood from correctly handled forests that replant and continue natural variety.

using only recyclable materials for even packaging and "pure" (non-mixed) materials for presentation to aid in recycling. [7]

introducing local rental bicycles with trailers for customers in Denmark. [39]

6. Legal Factors

Many kind authorities legislations and policies have a direct contact on the work of Ikea. For instance, government advised an enforceable Code of Practice should be set up forbidding many of the present tactics, such as demanding payments from suppliers and changing decided prices in retrospect or with no warning (Mintel Article, 2004). The company of powerful competition with well-known brands creates a threat of strong price wars and strong needs for product separation. The government's regulations for domination control buttons and decrease of buyers' electricity can limit entry to the sector with such settings as certificate requirements and restrictions on entry to raw materials (Mintel Survey, 2004; Myers, 2004). IKEA Marketing Mix Analysis

Marketing Mix

1. Price

The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, materials costs, product identity and the customer's recognized value of the merchandise. The business may increase or reduce the price of product if other stores have the same product. The price tag on something is obviously an important determinant of the worthiness of sales made.

IKEA's strategy is dependant on cost leadership. Across markets where it presently has a occurrence, products are sold at low prices. Prices are 30 to 50% less than rivalling products. Price versions are only a result of fluctuations in exchange rates. This penetration prices enables IKEA to gain significant market share. Low prices are due to large-quantity purchasing, low-cost logistics, store location in casing areas. IKEA also benefits from economies of scale and healthy supplier-firm interactions. IKEA gets into into long-term contracts, provides leased equipment and tech support team in exchange for exclusive, low-cost processing from suppliers. For new market segments, IKEA should hold on to its price- image

to maintain the brand's placement.

2. Product

IKEA's value chain is unique for the reason that customers are also suppliers and suppliers are also customers. The transactions between the provider and IKEA and on to the

customer have a value adding part of each level. Product differentiation is accessible in the value-added aspect. IKEA's consumers are treated as 'presumes' with the majority of its products necessitating set up after purchase. But although assistance in this aspect is bound, IKEA offers options for choosing, transporting and assembling furniture.

While this is well accepted in areas where IKEA now runs, it might be a point of awareness when joining new market segments. Should IKEA face market where DIY is not preferred, IKEA can include the expense of the service to the product's price.

3. Position/Place

'Place' is concerned with different types of transporting and storing goods, and then making them available for the customer. Getting the right product to the right place at the right time consists of the syndication system. IKEA stores are located in housing areas. This is a factor in the success of IKEA's low charges. While it can happen as a disadvantage, this will fit IKEA's marketplace of customers willing to transport their own buys and requiring less assistance in conference.

4. Promotion

Promotion is ways to setup business of communication with customer. This gives information which helps them to take decision to get a product or service. Ikea's offers were based on determined marketing conditions and social sensibilities of every country that divers a great deal from nook to corner marketplaces. IKEA was present in some countries like Canada, Australia and Germany for over 25 years while in countries including the US, Britain and Italy, it had been around for a little more than a decade. Over the years, IKEA had worked with different advertising agencies to bring out some of the most creative and choice television spots around the world. Because of this, an IKEA reason was considered a choice capture as it allowed the firm the liberty to explore some interesting and unexplored ideas.

IKEA newly corresponding up with the designers of well-liked video game The Sims 2 to make a things pack called The Sim's 2 IKEA home products. The game consists of many items that can be found in IKEA stores and premiered on June 24, 2008 in North America and June 26, 2008 in European countries. It was the next objects place with a main brand.

IKEA exposed a UK large advertising campaign in September 2007 titled 'Home is the main Devote the World' by house agent signs or symptoms with the name 'Not For Sale' written to them for biger advertising campaign.

A subway coach tinted in IKEA style was launched in Russia in 2008 of November. Four autos were twisted into a mobile showroom of the Swedish devise that possessed colourful seats and visualize completed, passed passengers until June 6, 2009.

The ticket-free system for London Underground(Oyster Credit card) are actually given with wallets sponsored by IKEA company who also guarantor the tube map.

5. People

To reach a cost-effective benefit to the organization, the company needs to recruit the right stuff and teach them properly. Customers make judgments and deliver perceptions of the service based on the employees they connect to. Staff must have the appropriate skills, frame of mind, and service knowledge to supply the service that customers are spending money on. Ikea try to make an application for the Buyers in People authorization, which explains to customers that personnel are taken health care off by the business and they are trained to self-confident standard.

6. process

Ikea complete their all process like strategy process, business development process, customer support process etc. in a very productive way. They always care about their customer service, their eye-sight and the facilities of their employer that's the reason the company does indeed their inner and external company job very powerfully.

7. Physical evidence

Physical data is one of the 7 p's of provision marketing performing an essential responsibility operating sector company. It handles final attractive or the display of written facts. This includes the existing system and existing facilities of the company.


In finish we can say that the world's largest home-furnishing dealer IKEA has been increasing sales all around the world by countrywide inexpensive improvement. IKEA main to catch the attention of sales as the proportion of countries middle income grows. In the future the size of Ikea's furniture market will be as large as the complete Europe's.

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