IKEA

International Marketing CIA 1

Manisha Khadav R
1723674

 TABLE OF CONTENTS

Introduction ................................................................................................................................................ 1
Origin and History....................................................................................................................................... 2
IKEA Stores Layout ...................................................................................................................................... 3
List of countries with IKEA Stores ............................................................................................................... 4
Product Range ............................................................................................................................................ 5
Marketing Strategies .................................................................................................................................. 6
SWEDEN (Ikea’s homeland) ................................................................................................................................... 6
United Kingdom .................................................................................................................................................... 9
CHINA .................................................................................................................................................................. 12
India .................................................................................................................................................................... 16
Conclusion ................................................................................................................................................ 19
Bibliography ............................................................................................................................................. 20

INTRODUCTION

IKEA is a Swedish company registered in the Netherlands which was founded in Almhult, Sweden in 1943
by Ingvar Kamprad. It designs and sells ready-to-assemble furniture, kitchen appliances and home
accessories, among other useful goods and occasionally home services.

Since its inception, the company’s vision has been “To create a better Everyday Life for the People” by
offering a wide range of well-designed, functional home furnishings at prices so low that as many people as
possible can afford them because IKEA believes that home is the most important place in the world.

The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA
range. There were about 2.1 billion visitors to IKEA’s websites in the year September 2015 to September
2016. The company uses approximately 1% of the Earth’s wood supply, making it one of the largest
consumers of wood in the retail sector. As of November 2017, IKEA owns and operates 415 stores in 49
countries.

IKEA also runs a foundation for Fighting Child Labor and Promoting Education. The IKEA Foundation
(Stitching IKEA Foundation) is a charitable foundation that oversees IKEA’s global philanthropy to
improve the lives of children living in extreme poverty.

ORIGIN AND HISTORY

IKEA was founded in Sweden in 1943 by 17-year-old Ingvar Kamprad, who began by peddling
useful items to neighbors on his bicycle. The company's name is an acronym that consists of the
initials of Ingvar Kamprad (the founder), Elmtaryd (the farm where he grew up), and Agunnaryd
(his hometown in Småland, south Sweden). As of January 2008, the company is declared as the
world's largest furniture retailer and Ingvar Kamprad was listed as one of the world's richest
people in 2013.

Ingvar Kamprad founded IKEA in 1943 as a mostly mail-order sales business. It began to sell
furniture five years later. The first Möbel-IKÉA store was opened in Älmhult, Småland, in 1958,
while the first stores outside Sweden were opened in Norway (1963) and Denmark (1969). The
stores spread to other parts of Europe in the 1970s. As time passed IKEA expand its business in
other countries as well. Now currently IKEA is covering Europe, North America, Asia Pacific
and Middle East markets.

The main financial principle of the IKEA Group is to grow by using their own resources. In other
words, “We Earn Our Money Before We Spend It”. This makes it possible for them to make
long-term investments for the future. They re-invest a majority of their profits in existing and
new IKEA stores, as well as in product development, sustainable solutions and by continuously
lowering prices to their customers.

The company is known for its modern architectural designs for various types of appliances and
furniture, and its interior design work is often associated with an Eco- Friendly simplicity. In
addition, the firm is known for its attention to cost control, operational details, and continuous
product development, corporate attributes that allowed IKEA to lower its prices by an average of
two to three percent over the decade to 2010 during a period of global expansion.

2
 IKEA STORES LAYOUT

IKEA stores are usually very large blue buildings with yellow accents (also Sweden's national
colours) and few windows. They are often designed in a one-way layout, leading customers
counter clockwise along what IKEA calls "the long natural way" designed to encourage the
customer to see the store in its entirety (as opposed to a traditional retail store, which allows a
customer to go directly to the section where the desired goods and services are displayed). Most
stores of IKEA having the showroom upstairs with the marketplace and self-service warehouse
downstairs.

Most IKEA stores offer an "as-is" area at the end of the warehouse, just before the cash registers.
Returned, damaged and formerly showcased products are displayed here and sold with a
significant discount, but also with a no-returns policy. Most IKEA stores communicate the IKEA
policy on environmental issues in this part of the store.

Food markets are also available in IKEA stores. Every store includes a restaurant serving
traditional Swedish food, including potatoes with Swedish meatballs, cream sauce and
lingonberry jam, although there are variations. In restaurants IKEA provides meals according to
the tradition and culture of country like IKEA stores in Saudi Arabia, Kuwait, Qatar and the
United Arab Emirates serve chicken shawarma at the exit café as well as beef hot dogs, while in
United Kingdom, a Quorn hot dog is available in the exit café. Every store has a play area,
named Småland (Swedish for small lands; it is also the Swedish province where Kamprad was
born). Parents drop off their children at a gate to the playground, and pick them up after they
arrive at another entrance.

3
 LIST OF COUNTRIES WITH IKEA STORES

The world's five largest IKEA stores are:

1. Gwangmyeong, Gyeonggi, South Korea: 57,100 m2 (614,619.3 sq ft)

2. Stockholm Kungens Kurva, Sweden: 55,200 m2 (594,167.9 sq ft)
3. Shanghai Baoshan, China: 55,032 m2 (592,359.5 sq ft)
4. Goyang, Gyeonggi, South Korea: 52,199 m2 (561,865.4 sq ft)
5. Bangyai, Nonthaburi, Thailand 50,278 m2 (541,187.9 sq ft)

IKEA has announced plans to open a 65,000 m2 (699,654.2 sq ft) store in Pasay, Metro Manila, Philippines
by late 2020. Once opened, it will be the largest IKEA store in the world. IKEA purchased 610,000 sq ft of
land in Bengaluru, Karnataka next to a Namma Metro station where the company plans on opening their
third store in India later the same year. The store in Bengaluru will be IKEA's biggest in Asia.

PRODUCT RANGE

There are about 12,000 products in the total IKEA product range. Each store carries a selection of
these 12,000 products depending on store size. The core range is the same worldwide. Here are the core
product range of IKEA,

• Baby & children products

• Bathroom sinks, taps & cabinet
• Beds
• Chairs, stools & benches
• Cookware
• Decoration
• Desks
• Home furnishing accessories
• Indoor gardening
• Kitchen
• Laundry & cleaning products
• Leisure & safety products
• Lighting
• Mattresses
• Small storage & organisers
• Sofas & armchairs
• Storage furniture
• Tables
• Tableware
• Textile curtains & rugs
• Tools, fittings & curtain rails
• Wardrobes
• Clothes storage
• Eating
• Outdoor furniture
• Home electronics
• Mirrors
• Tv & media furniture
• Office furniture

MARKETING STRATEGIES

A marketing strategy is a business's overall game plan for reaching people and turning them into customers of
the product or service that the business provides. The marketing strategy of a company contains the
company’s value proposition, key marketing messages, information on the target customer and other high-
level elements. IKEA is known for its out of the box marketing strategies, as we will see how it made its way
into the Indian market with some very interesting and “out of the box” marketing strategies. Here we will
compare between Sweden, United Kingdom, China and India for our analysis of IKEA’s different marketing
strategies.

SWEDEN (IKEA’S HOMELAND)

1. Catalogue: In Sweden the catalogue is the most important promotional tool. It makes
IKEA unique and is a source of inspiration for customers. In Sweden the launch of the new
catalogue is a major PR event – for example to support the launch of the 2008 edition,
IKEA furnished the waiting hall of the Stockholm train terminal – and all major
newspapers carry lengthy reviews and commentaries.

2. IKEA Family: The IKEA Family scheme was first launched in Sweden and was at the
time one of the first loyalty programmes in the country. Today it is still one of the larger
ones with 1.7 million members and has become an important marketing tool for IKEA
Sweden.

6
 3. Internet: The web is also an important means of communication, especially for new
customers, to prepare customers for the store visit, and to make different planning tools
accessible at home, e.g. the kitchen design tool.

4. Target Market: While ‘the many people’ is an accurate description of the IKEA consumer
base in Sweden, in actual marketing terms the target market is a more focused: namely
women, 20–49 years old, often with children. In addition, an important target group in
recent years has been the 55+ age group who no longer have children at home, and who are
in a good financial position.

5. Re-launch Campaign: IKEA’s approach to the Swedes in terms of advertising and

promotion is intended to be youthful and different, fun and surprising, emphasising that
nothing is impossible, but that the company also is very honest and human. Although being
well known is often an advantage, it also brings problems: consumers become very familiar
with the company. IKEA Sweden was in a particular stage of the IKEA lifecycle, where
homes are already filled with IKEA furniture and accessories, and where IKEA is the
market leader for kitchens, etc. In these circumstances, it becomes more challenging for
IKEA to make itself appear new and exciting. The advertising strap-line for 2008 was
‘Decorate the home as you want to live’ and ‘Long live diversity’. IKEA has also
focused campaigns on the ethnic diversity of the Swedish population, by showing different
ethnic groups as customers, and one of the best known and longest running campaigns was
‘Not for the rich but for the wise’—implying that IKEA offered high quality for low
prices, and that ‘clever’ customers realised this.
7
 6. Low Pricing Strategy: Price is a core aspect of market positioning in Sweden – IKEA is
known for its low prices. This is achieved by having a low price promise, and by offering
low prices in comparison to competitors in different areas. In recent years, here as in most
parts of the IKEA world, cutting prices has been a major part of the marketing strategy.
Prices have been reduced by some 20% over the past 8 years.

7. Store Outlook: The stores are an important marketing tool for IKEA Sweden, as this is
where the customers come into contact with the company and where they can see what the
IKEA concept is all about. As the Swedish stores have been relatively small in many places
it has been difficult to expose customers to the full width and depth of the assortment. The
newer and larger stores now being built allow customers access to the full IKEA product
range. The stores in Sweden are laid out in a fairly standard way. The common store
blueprint is used as a starting point. As in all IKEA countries, the furniture section on the
upper floor always starts with five room settings, although these are adjusted to the national
market. A Swedish IKEA store for instance often has a kitchen island (a standalone unit
integrating cooking, washing up and eating spaces) in the kitchen setting, and large walk-in
closets in the bedroom settings.

8
 UNITED KINGDOM

1. Digital Catalogues: IKEA, the world's largest home furnishing retailer, is one of the early
adopters of the digital mode of marketing and has made maximum use of the social media
clubbed with massive emphasis on its digital catalogue which forms the core of the
retailer's marketing strategy.

With 345 operational stores across the world, IKEA's digital marketing strategy remains almost
uniform - extensive use of social media with separate country pages for respective markets and
an ever-increasing stress on digital catalogue applications which can be downloaded on app
stores such as Google Play and the Apple store. "The 2013 edition of the IKEA catalogue
application was downloaded almost 10 million times”, IKEA informs. Ever since 1951 the
IKEA catalogue has been a source of inspiration, a reference for home furnishing knowledge;
even as it (the catalogue) continues to evolve and improve.

2. Social Networking Sites:

Facebook – There are a minimum of 1.5 lakh fans on each of IKEA's country pages. It has
quiet a huge fan following. The retailer's social teams pose questions, links to photo albums
and post YouTube clips to increase engagement

9
 Twitter – IKEA has separate twitter feeds for all its country-specific twitter pages. Ikea makes
these pages engaging by fascinating its followers to indulge in campaigns such as celebrating the
'Bring your Own Friends Day (BYOF)’

Pinterest: This is an obvious choice for a retailer which deals in home furnishings, as this claims
to be the official 'visual discovery tool'. Making best use of Pinterest, IKEA visually presents its
merchandise to local markets in the UK and other countries.

10
 3. Outdoor Campaigns: While promotion of its catalogue through online mode constitutes
almost 70 percent of its annual marketing spend, IKEA also makes judicious use of OOH
(Out of home) by creating high engagement outdoor campaigns - one being in Paris
(around the Gare Saint Lazare) where the furnishing retailer, based on the fact that half of
the French people live in places with bathrooms smaller than 8sqm, installed a life sized
bathroom on one side and a laundry room on the other. To add interaction to the 3D panel,
IKEA deployed two actors (at peak commuting times in the morning and the evening) to
stand on the panel pretending to perform everyday bathroom activities such as showering
or shaving.

4. Indoor Garden, London: Besides outdoor bathrooms in Paris, IKEA also created indoor
gardens in London. IKEA with the help of the JCCaux (world's largest outdoor advertising
agency) took to the indoor environments of Waterloo and Liverpool rail stations in the UK,
to show to commuters that they could 'make more of their outdoor spaces'. A pop-up shop
invited commuters to sit down and observe the wide range of outdoor solutions available in
the IKEA store that could help them transform their outdoor space. Price tags were also
part of the wrap, making each column look like an actual product display.

11
 CHINA

1. Catalogue vs Brochures: One of the big differences when it comes to communication

with the consumer in china compared to the rest of the world is the reliance on the
catalogue. Here it is impossible – cost and reach wise – to distribute it like in many
other countries. The catalogue is distributed in the store and in some of the primary
market area but here the reliance is more on smaller brochures that are sent out several
times during the year. These brochures are produced by the same people in Älmhult in
Sweden that produces the catalogue, in order to make sure that the brochures have the
same layout and IKEA ‘feel’ as the catalogue itself.

12
 2. PR Activities: PR activities are also important involves taking Chinese journalists to
Sweden and Älmhult, teaching them about Sweden and IKEA and the roots of the
company.

3. Out of the Box Approach: IKEA is known for its ‘out of box’ thinking when it comes to
creating interest for IKEA and its products. IKEA started a TV-show in which viewers
were offered lessons in home décor. IKEA had ads in the Chinese Televisions and in
newspapers as well. Themes of the campaigns are the same everywhere in the world except
with the Chinese twist of ‘Be different, break traditions’ The IKEA advertising line in
China is a little ‘softer’ than in other places like in the UK. More humble advertising way
was adopted which does not stand out very much and is family friendly. They adopted a
friendly home furnishing solution to educate the consumers. The ad featured below is
typical: The message of the ad is ‘Small changes, a refreshing new life’. Life can be made
better, easier and nicer with small means. Small changes are the key word in IKEA ads and
in- store. Other ads that IKEA have run have the theme of “do not be like your parents”, a
theme that seems to speak directly to IKEA’s target group of young women 25-35 years
old.

4. Internet: The websites of the different stores in China is also argued to be important. The
internet is a common source of information for the target group, the younger middle class.
Also, this source is used as a way to educate customers before coming to the IKEA stores.

5. IKEA Family: IKEA Family was introduced in China in 2007 that work well to attract
Chinese customers.

6. Product Display: Although the products available in the Chinese stores are basically the
same as in any IKEA store in the world, the stores do not look the same inside. IKEA tries
to create room settings that are relevant to Chinese customers with realistic room sizes and
kitchens. The in-store room settings reflect those of Chinese apartments. One obvious
example is the incorporation of balconies. So even with the same products, the room
settings in the store in Shanghai look and feel very different from the store in Malmo. The
outcome is basically the same product range—but adaptation in the store through the
presentation of goods and types of home solutions offered.

13
 7. Store Outlook: The big-box IKEA format is unusual in China where shopping is
traditionally done locally and through specialist stores. The IKEA stores in China are
located closer to the city centre than is normally the case in other parts of the world,
although the location is not exactly down-town. Lower levels of car access in China make
out-of-town locations unpractical. Instead stores have to be located close to public
transportation hubs to ensure a high volume of customer traffic. A good example is the
Shanghai store which is very close to several bus lines and one of the metro lines.
However, as the Shanghai store also has 700 parking places under the store, IKEA is
expecting Chinese shopping patterns to change in the future. Customer reliance on public
transport is a contributing factor to service levels: home delivery services are more
common and more extensively used. Also, outside the stores in China local entrepreneurs
can be found offering transportation and home assembly services. In the new Beijing store
– the largest IKEA store after the Kungens Kurva’ store in Stockholm – a further
adjustment to the store format can be found in the form of wider aisles, to cater for the fact
that IKEA stores in China have up to three times the volume of visitors than IKEA store
elsewhere in the world.

14
 8. IKEA Home Delivery: When the Chinese need something done in the house they employ
someone, as labour is inexpensive. Explaining and justifying the DIY concept – which is at
the heart of the IKEA business model – is hard work in China. IKEA provides home
delivery, for both long and short distances, as well as an assembly service for a low fee
(e.g. short haul home delivery for RMB 50, and assembly of a single item for RMB 40).
IKEA has also created – although not intentionally – an industry of delivery drivers that
help to assemble IKEA furniture : these pick- up trucks and their drivers are lined up
outside the stores.

15
 INDIA

Ikea opened its first store in Hyderabad on 9th of August,2018 and the inauguration ceremony of this
store was full of pomp and galore. Telangana’s cabinet minister KT Rama Rao and Sweden’s
Ambassador Klas Molin inaugurated this enormous 4 lakh square feet store. No stone was left
unturned to make the first customers of IKEA feel special. While these customers walked in the store,
the enthusiasm of the staff was easily palpable. They cheered and sang and waved flags of India and
Sweden. The initiative to create an instant bond and connect with the people is highly commendable.
Ikea carried out three innovative approaches of marketing this new store.

1. Out of the BOX: The first one took place at the airport, on the conveyor belt. Wondering
how? Well, the company left empty IKEA boxes at the Hyderabad Airport announcing the
store opening. The fact that it was such a subtle yet an impactful way of resonating with the
brand. Twitter as well as Instagram was loaded with welcome notes, happiness and simply
describing their ‘out-of-box’ thinking.

16
 2. Public Space: The second beautiful thing they did was decked up a bus shelter around the city
with trendy and bright coloured furniture, rugs. This made people stop and visit them. They not
only experienced the different kinds of furniture but also captured them with a few selfies.

3. Autos: And the last one is when Ikea transformed the ordinary auto rickshaws. How? Well,
the company revamped it by painting it with blue and yellow to sync with the brand’s
colour and the roof was covered with a dazzling floral print. That’s not the end. Adding to
it, they also had Virtual Reality glasses in each of these auto rickshaws which gave them a
creative virtual look of the new IKEA store.

17
 4. Low Pricing: I believe IKEA has tweaked its business model especially for the Indians and
truly understands the concept of ‘fortune at the bottom of the pyramid’. It knows the fact
that the average annual salary is even less than $2000 and 1000 of its products displayed at
its new store cost even less than Rs200. With India being the most consistent sourcing
material for its global operations for the past three decades, it is one of the toughest market
for them in terms of affordability.

18
 CONCLUSION

During initial stages of entry into new markets, IKEA has well gone through a phase of trial-and-
error learning before it could hit the bull's eye. For instance, when the retailer entered USA, it
had to transform its traditional moose and advertising slogan, "IKEA: The impossible furniture
store from Sweden," to "It's a big country. Someone's got to furnish it," because the former was
projecting a wrong image of the retailer. Quite naturally, India is another unique market that is
waiting in the wings for the home furnishing retailer to explore. What remains to be seen is how
IKEA would adapt to the Indian market and, will it be able to successfully engage Indian
consumers with similar innovative marketing tactics that have established the retailer as a
marketing success?

There is no formula for success that fits all marketing strategies when a global brand decides to
try a new market, except perhaps unconditional acceptance and responsiveness to changes. The
greatest challenge is to adapt constantly. It's essential for successful marketing campaigns to take
into consideration the local approach versus the global/regional desire for standardization. One
size-fits-all approach is a rare reality. A consistent global brand promise is a desirable asset but
what makes a real difference is to be brave and ready to change the target audience and build a
differentiating promise.

IKEA made all necessary adjustments to make sure there was no mismatch in its growth
ambitions and brand promise. Becoming an inspirational brand which is blogging with the
Chinese middle-class youth is an unexpected twist in its brand proposition. IKEA demonstrated
courage to get the most relevant changes. By courage I mean all big corporations are ready to
shift production, work with local sources, overcome legal requirements but not too many of them
are ready to adapt a brand proposition that suits the level of development the market
and consumer perception require.

IKEA is a strong brand that understands that growing globally requires sacrifices and innovation
from global teams, and they are ready to listen, respect and learn from the local environment.
The European headquarters' excitement to enter new markets with proven best practices is
something of the past, proving that the real shift in the global mindset is to recognize that local
versus global can bring optimum results.

19
 BIBLIOGRAPHY

1. https://en.wikipedia.org/wiki/IKEA
2. https://www.wsj.com/articles/ikea-lets-some-take-diy-off-the-table-1532338200
3. http://theconversation.com/how-ikeas-founder-exported-a-certain-image-of-sweden-
from-frugality-to-fika-91017
4. https://www.cheshnotes.com/2017/04/ikea-marketing-strategy-and-practices-a-case-
study/
5. https://www.ikea.com/au/en/catalog/categories/departments/bedroom/tools/cobe/room
set/20184_cobe01a/
6. https://www.ikea.com/au/en/
7. https://www.ikea.com/in/en/
8. https://www.ikea.com

20