Lokendra Naik

18010121046
MBA-A
RETAIL CATEGORY TYPE/ FORMAT

• Swedish-founded multinational group that designs and sells:-

1. Ready-to-assemble furniture
2. Kitchen appliances and home accessories
3. Other useful goods and occasionally home services
• World's largest furniture retailer since at least 2008
• IKEA stores are usually blue buildings with yellow accents
• The layout format of the store is a one-way layout called the long way encouraging the
customers to see the whole store .
IKEA (STP)

• Segmentation

o Geographic o Demographic o Behavioural

(Urban)
• Targeting

o IKEA'S Business idea is to offer a wide range of well designed, functional home furnishing
products at a low price.

o They are aiming to appeal to people of all ages, sexes, geographic locations, all who have one
thing in common: Price preference.
• Positioning

o Commitment to product design, consumer value and clever solutions

o Using inexpensive materials in a novel way and minimizing production, distribution

and retail costs, their customers benefit from low prices
MARKETING MIX OF IKEA

Product

Price Place

Marketing Mix

Process Promotions

People
PRODUCT

• Flat sized packaged boxes

• Easy to assemble
• High quality materials on furniture surfaces
• All IKEA products come with a 2 years everyday quality guarantee
• Same day shipping with the online shopping
• Has 24 hours open call center for any questions
PRICE

• Using different types of wood for a single wooden product a big reduction in the
production cost as well as the final cost of the furniture
PROMOTION

• High profile advertisement campaigns

• Spending 70% of annual marketing budget in printing catalogs
• After sale service to the customers
• Mini designed homes in the stores
• Sale campaigns in winter and summer times
• Ikea family card obtains discount. (Customer loyalty programme.)
PLACE

• Majority of Ikea Stores are located out of city center because of land costs and traffic
problem
• IKEA selects the place/region in the urbanized dense populated regions and factors
which influence it are
o Direct channel Distribution (STORES)- The means by which a company gets its product
straight to the consumer without using any intermediaries
o Direct and Intensive Channel for Online Shopping (online)- Strategy under which a company
sells through as many outlets as possible
PEOPLE

• Knowledgeable and friendly staff

• Technical support from experts
• Design advice department
• People socialize with each other
• Personal Selling Team (Staff and Other Customers)
PROCESS

• IKEA makes its own wood-based furniture and wooden components

• The business owns forestry sawmills
• On spot purchase procedure
Customer drives into the
store

Orders are made, order is

collected by the consumer

This is all part of low pricing

commitment
STORE LAYOUT STRATEGY

• IKEA’s maze store layout design is a genius’s work every IKEA has a very distinct
entrance and exit.
• The showroom is divided into sub-sections depending on the type of furniture displayed
• To get to the warehouse, the shopper must follow the long, winding path through the
showrooms
• IKEA offers its customers a break an area to rest and refuel before going on to the rest
of the store. (food outlets and other kiosks)
• IKEA has planned their floor design to a tee with respect to retail consumption
LOCATION STRATEGY

• Facilities of IKEA are located in 10 different countries so that IKEA could control both
accessibility and labor costs
• The location of each facility has to be accessible to suppliers
• Stores are located in major cities in over 30 countries so shipment from facilities to
stores would be too complex
• IKEA has warehouse distribution centers locations so that it could conjunct all the
products in one location and distribute them to stores
LAYOUT & DESIGN
VISUAL MERCHANDISING

• Visual merchandising is a
crucial retail strategy that maximizes
the aesthetics of a product with the
intent to increase and maximizes sales.
• Visual merchandisers use their design
skills to help promote the image,
products and services of retail
businesses and other organizations.
MERCHANDISE ASSORTMENT

• Merchandise Assortment planning aims to turn those losses into profit. Assortment
planning is about making the right product picks and ordering the right quantities to
match market demand
RETAIL PROMOTION STRATEGY

• Using mono-segment and adaptive types of product positioning.

• IKEA has adapted the lowest costs of its products along with the widest range as the
unique selling proposition of the brand
• Integrating several channels of marketing communication such as print and media
advertising, sales promotions, events and experiences, public relations and direct
marketing
RETAIL PRICING STRATEGY

• Prices Ending in 99
o Started this practice at Sweden
o After successful implementation, expanded to all the countries

• Referent Pricing
o When IKEA sets the new prices, they put the previous prices as well
o Customers see the previous price and the benefit they gain from the purchase

• Value Pricing
o Decides the target price first and then designs to make within that price
• Strategy is best seen as a
pentagon, in which form,
function, quality, sustainability
and low price constantly
compete with each other
RETAIL CHANNEL STRATEGY

o Transportation to IKEA warehouses in different countries

o Goods reach certain proposed warehouses of the region
o Distribution in the warehouses is sorted by 100 employees out of which 50% are women
from where goods are further on distributed to various stores
o IKEA Reverses Its Omni-Channel Strategy For Expansion in specific regions (INDIA)
temporarily but the online distribution also follows up same procedure
RETAIL SERVICE STRATEGY

• Customer contact
For IKEA customer contact is the most important factor and a front line operations objective.
IKEA try to keep the center of the company relatively lean, and not make too many decisions
centrally that would be better made in stores or factories close to customers and suppliers.
• Customization
Company replicates its existing business model and products for the host country in which its
business is set up.
For e.g.:- American customers, for instance, demanded bigger beds and bigger closets
• Cultural adaptation
IKEA consider about cultural adaptation, so they use different method for different culture
specially their catalogs and advertising, culture is extremely important at Ikea, even more so
than at other companies.
For instance :- In the 2013 IKEA catalogue distributed in Saudi Arabia, women have been
deleted from the picture
GLOBAL STRATEGY

• IKEA global strategy can be explained

through ANSOFF GROWTH MATRIX
• IKEA uses market penetration strategy for
it’s current products
• The decision of selling food and opening
restaurants inside the store they used
conglomerate diversification.
 SWOT ANALYSIS
Strengths
1.Value to its customers irrespective of the market conditions
2. Humungous cost reductions
3.Key Performance Indicators that include increased use of
renewable materials, smarter use of raw materials, establishing and
maintaining long-term relationships with suppliers
Weaknesses
1. difficult to control standards across locations
2. Costs of many inputs and raw materials has gone up and which
has impacted the profitability of the company
3. Environmental concerns about IKEA’s operations

SWOT
Opportunities

1. With its “green” business model, the company has a huge

opportunity waiting in terms of attracting ethical customers who Threats
like to buy such products IKEA’s low cost business model has been imitated and copied by
2. cost leadership, which means a single-minded focus on cost at its rivals, which means that the company needs to constantly
the expense of everything else. innovate
3. company’s expansion into the emerging markets and the
developing world
CONCLUSION

IKEA as a well-known and successful furniture

franchiser use 3 major service strategies. Overall
cost leadership, Complementary Services
Development and Multi-Country Expansion are
those 3 strategies. With these 3 service strategies
they have become very successful and the
practices they involve with leads for long term
sustainability
REFERENCES

• IKEA (2013). About IKEA. Available at:

http://www.ikea.com/ms/en_GB/about_ikea/index.html
• The Times 100 (2012). Business Case Studies. Ikea case study. Available at:
http://businesscasestudies.co.uk/ikea/swot-analysis-and-sustainable-
businessplanning/strengths.html#axzz2VB9TPpjz
• Interbrand (2012). Best Global Brands in 2012. Available at:
http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands2012.aspx
• Wikipedia (2013). IKEA. Available at: http://en.wikipedia.org/wiki/IKEA
Thank you