The problem which we have discovered is that IKEA should focus on promoting their green products because it is a growing trend all over the world and we assume that it will keep growing for many years to come.
This problem will be solved by using Ansoff’s intensification strategy. Therefore we have chosen to focus on the marketing mix in order to describe the product in better terms. It will also show how we can attract the consumers in a better and more improved way. Furthermore, it will show how IKEA could differentiate from other competitive brands on the market.
IKEA’s products are all tangible goods. IKEA offers a wide variety of household products and furniture. IKEA has lately focused on developing sustainable products that will last for a long time and therefore are good for the nature. IKEA has been known for inexpensive products that do not last very long. However, introducing sustainability in 1999 helped re-determine their image. The quality of the green products is a very high standard, but is still sold at a fairly low price, coherent to the brand values and mission statement of their original products.
All are products are designed in a very Scandinavian style with minimalistic features and nothing too overdone. IKEA needs to make products that come from natural resources that are embracing the nature. IKEA should also use natural and 100% recyclable packaging.
The function of green products:
* Improves conditions for survival of the rainforest
* Keeps the nature in balance – now and in the future
* Improves the overall feeling of well being within the consumers *
Increases mental awareness of green solutions and social responsibility
* Provides IKEA with a great image outwardly and therefore gives a strong competitive advantage With these five claims IKEA is trying to satisfy the needs of the green consumers and therefore they should add these products to the global market. The consumer will not only buy a product, they will also support local carpenters around the globe, as well as it will help secure a greener future for our grandchildren – yes Christian, yours as well.
IKEA is currently using the cost-based price strategy where they only consider cost and profit and base their price on that.
The case will be the same when it comes to the green products; however, the cooperating companies are paid a fair amount for their products.
The furniture market is a monopolistic market with a wide range of prices from very low to very high. IKEA is trying to differentiate themselves by offering inexpensive prices with green thinking.
Even though they operate with inexpensive prices, they still have a high brand value.
IKEA has the so called “IKEA Home Card” for consumers who are not able to finance their purchases immediately. Consumers get a 10 months interest free period where they typically divide their loan into 10 equal amounts and pay one amount per month.
IKEA offers a discount on certain products differentiating from time to time. IKEA could introduce an offer where consumers will get a 10% discount every time they buy 5 or more products within the green product line.
IKEA is situated all over the world, however not so much in the developing countries. We believe they should introduce the green products to the western part of the world as a tryout. The western world has a growing trend for green products, which has not been fulfilled by any other furniture or household companies yet. If this implementation turns out well, they should invest/focus on the Asian market as we see future possibilities for a growing demand of green products due to possible green legislation.
IKEA is producing the products themselves, but the carpenters (and others) are delivering the raw materials which will be used in production. IKEA is currently operating with a direct distribution where there are no intermediaries between the manufacturers and IKEA. They are also operating with an administrated vertical marketing system, where IKEA dominates the other members of the channel.
When IKEA focuses on green products, they will receive a lot of good PR and through this PR they will gain free promotion of their green products.
IKEA should also focus on their regular promotional activities such as TV commercials, magazine ads, and banners.
IKEA also distributes their own magazine to many households where they come up with great ideas of how to design your home, and the latest offers in store.
We believe viral marketing also is highly relevant. They have an online based store on the internet through this store they could advertise the Green products. They should also make a homepage only for the Green products and advertise the homepage through different medias such as Facebook. Viral marketing is very relevant to the modern human being, we are constantly online on the net, and therefore must IKEA catch the consumers’ attention on this form of promotion.
In the beginning they should invest a lot of money in these promotional events in order to create more awareness of the Green products and thereby enlarge their target audience. Since IKEA is a successful organization we believe that have the budget to these promotional activities.
Sub-conclusion on marketing mix
This analysis reveals that IKEA is going to:
* Seek new ways to create social awareness
* Position themselves away from traditional brands
* Keep in mind the future and its barriers
* Use the western world as tryout and in the long run Asia
* Use natural resources
* Hopefully create