Ikea Case Study Essay
Ikea Case Study
IKEA, founded in 1943 by Ingvar Kamprad, is a Swedish company which offers a wide range (approximately 9,500 products) of cheap ready-to-assemble furniture such as beds and desks, appliances and home accessories. They also offer a food service (turnover for IKEA Food in 2010 was 1.1 billion EURO). The company is the world’s largest furniture retailer. In 1951, the company publish the first IKEA catalog and in 1956, they create their own pieces of furniture in kit. In 2010, the IKEA catalogue was printed in more than 197 million copies in 29 languages and 61 editions. IKEA is named as an acronym comprising the initials of the founder’s name (Ingvar Kamprad), the farm where he grew up (Elmtaryd), and his home parish (Agunnaryd, in Småland, South Sweden). IKEA logo represents the colours of the Swedish flag.
The first IKEA was inaugurated in Sweden in 1958. Actually, IKEA is present in 41 countries with more than 127.000 co-workers (103.500 only for Europe). And the annual sales has grows to more 50% between 2000 and 2010.
Here we can see the various categories and sub-categories of the IKEA products, they use category extension:
IKEA have one brand level and use Umbrella brand strategy. Umbrella brands are brand names that are utilized by a range of different but related products. The idea behind this type of approach is to enhance the marketability of all the products that carry the same name brand, thus building an increased rapport with consumers. Because of this higher level of rapport, IKEA can introduce new products that are related to the existing product lines, and immediately attract the attention of customers who routinely use other products sold under the IKEA brand. The brand identity of IKEA can be sum-up by:
Consumer Mind Map:
PRICE QUALITY VARIETY DESIGN SERVICE
Satisfying Quality High quality of design Good Quality
Too much standardized products Low Variety
Good quality/price ratio
Brand association: IKEA has made only one alliance in 2004 with Jotun Powder Coating (IKEA metal furniture suppliers in Europe).
Positioning: IKEA is the only brand which offers cheap, well made, well designed furniture the most to young and design oriented people. IKEA does this by offering a wide range of self-assembled kits. The main competitors are: Alinéa, BHV, small furniture shops and the second hand market.
POP vs. POD:
* Points of Parity: Reasonable Price, Kits, Practical Uses
* Points of Difference: Good Quality (Swedish Notoriety), Design, Environmentally Friendly, Wide Range
Brand Equity: According to a survey , 86% of polled have answer that they buy their furniture at IKEA stores.
The strategic values of brand awareness are the low price, the fact that they offer all furniture for home and the sustainable development. To achieve its brand awareness, IKEA uses advertising (TV commercials, Catalogues, Radio, Billboards, ect…), low prices and the slogan “Design your own life”.
Brands Loyalty: According to the same survey, IKEA has a strong brand loyalty. Indeed, consumers said that they go to IKEA stores almost once per year.
In this survey, people were asking to grade IKEA in function of various criteria such as the price, the design, ect… We can notice that almost 50% of polled are grading the price between 8 and 10 over 10. So we can see the importance of the price in the purchase act and the consumers’ satisfaction.
Strategic Value and enhancing of IKEA :
* Attracting new customer : facilitate the access of store with special bus , delivery at home , creation of IKEA’s restaurant and a nursery
* Provide extras : Give a paper pen and rulers
* Channel distribution: one huge store in each big city
* Middle range products
* Leading product: Furniture for home
* Brand famous for its kit products
* Furniture in kit
* Cheaper products
* Modern and young people
* Cheaper price
* Big store with all furniture we need
Keller CBBE pyramid:
– Sense of engagement
– Beneficial attachment
– A huge credibility
due to advices for
space – Feel like home
– Have fun
– Good quality-price ratio – Young family
– Easy to assemble – Student Sweden products in …..kit
– Furniture’s maker
– Home decoration
Thanks to this brand audit, we have notice that IKEA has a strong brand and a huge range of products. This way of managing the brand brings to IKEA a strong success. However, IKEA should consider strategies to develop further its presence in the Asian, Australian and Middle East markets where only 6% of its sales were generated from this region. We also recommends to IKEA to focus on the Points of Parity. Indeed, they have to keep in focus the low price, the kits and the practical uses. More than that, IKEA has to plays on the “Swedish Quality” and open its target to the older customers. Finally, IKEA should offer more customization to the customers.
In addition to the brand audit, we had notice during our visit to the Delft’s IKEA that they create a real marketing concept. Indeed, IKEA offers a playground for the children to occupy them while the parents are buying furniture. They also offer restaurant service because most of IKEA customers come from far. IKEA has a huge customer catchment area. They also have Swedish food store to allow customers to buy some Swedish product before living. Finally, we notice that when you go to IKEA you have to follow a specific way to be sure that the consumer visits the entire store.