IF NECESSITY IS THE MOTHER OF

INVENTION, THAN CONVENIENCE

MUST BE THE FATHER....
Type : Privately held company
Industry : Retail
Founded : 1943; 75 years ago, Almhult Sweden
Founder : Ingvar Kamprad
Headquarter : Leiden, Netherlands
No. Of locations : 411 (2017)
Area Served : Worldwide
Key people : Torbjorn Loof (Chairman & CEO)
Products : Ready-to-assemble furniture
Chain of Product : Restaurant, Manufacturing, Housing
Revenue : € 36.6 billion (2017)
No. Of employees : 149,000 (2017)
Visits : 884 million (2017)
 What is IKEA???
IKEA is a Swedish-founded multinationalgroup,
that designs and sells ready-to-assemble
furniture, kitchen appliances and home
accessories. It has been the world's
largest furniture retailer since 2008. It was
founded in Sweden in 1943 by 17-year-old Ingvar
Kamprad, who was listed by Forbes in 2015 as
one of the ten richest people in the world, worth
more than 40 billion dollars. The company is
known for its modernist designs for various
types of appliances and furniture, and its interior
design work is often associated with an eco-
friendly simplicity.
• I (Ingvar) Founders first name
• K (Kamprad) Founders last name
• E (Elmtaryd) Farm were Founder
grew up
• A (Agunnaryd) Home village of
Founder
History of IKEA
• Founded in 1943.
• Started selling furniture
in 1947.
• In year 1948 Mr.
Kamprad introduced
self-assembled furniture
(chair).
• IKEA invented flat
packed furniture in 1956
(when an employee took
the legs off of a table to
fit it in his car).
• IKEA launched 1st store
in Almhult, Smaland, in
1958.
 Facts...
• IKEA uses 1% of world’s commercial wood supply.
• IKEA is the 3rd largest consumer of wood.
• IKEA owns 5lak. acre of forests world wide.
• There are more copies of the IKEA catalogues printed
annually than the Bible.
• In 2017 IKEA delivered 800 million cubic feet of product
(enough to fill more than 9000 Olympic size swimming
pools).
• In 2017 IKEA earned the revenue of $42.11 billion more
than the GDP of Serbia.
• Largest IKEA store is bigger than 10 football fields.
• IKEA also sell flat pack houses.
• IKEA is building its own town near London.
• IKEA is present in 5 continents.
IKEA’s Mission
To offer a wide range of home furnishing items of
good design and function, excellent quality and
durability, at prices so low that the majority of
people can afford to buy them.

IKEA’s Vision
IKEA’s vision is to create a better everyday life for
the many people.
TAGLINE:“AFFORDABLE
SOLUTIONS FOR BETTER LIVING”.
 Good
Quality
Low
Choice
Price
UVP
Unique
Value
Proposition
Unique
Glocal
Store
Design
Layout
Family
Time
STRENGTHS WEAKNESSES
• Global Brand • Consumer perceptions: cost vs. Quality
• Strong Brand Image • Locations not always accessible
• Eco friendly & recycling of products • Weak presence in Asia
• Functional design of products
• Wide stylish product range, cheap and affordable
• Market leader
• Solid financial position

SWOT Analysis

OPPORTUNITIES THREATS
• Current economy has increased demand for • Economic slowdown has decreased store traffic
lower priced products • Barriers to enter certain profitable markets
• Increasing demand for sustainable products • Organized sectors like Wal Mart, Office Depot,
• Online sales etc. and unorganized sectors like local
• More emphasis on CSR manufacturers.
• Increasing presence in developing countries
IKEA’s Strategy: Finding new ways to make
Furniture

Strategy followed by IKEA

Price

Quality
 SEGMENTATION

STP TARGETING

Competitive
POSITIONING
advantage

BCG Matrix

Distribution
strategy
Marketing
strategy of IKEA
Brand equity

Competitive
analysis

Market analysis

Customer
analysis
 •SEGMENTATION
S

•TARGETING
T

•POSITIONING
P
Segmentation

• Young and fashionable people. (20-35 ages

range)
• Middle class customers.
• Lover of modern furniture and accessories.
• Colourful and novel products.
 TARGETING

• They are aiming to appeal to people of all

ages, gender, geographic locations, all who
have one thing in common; Price Preference.
• Unmarried People having High Income Level.
• Married couples having Average Income
Level.
• People who like simplicity and functionality
together in every age.
 POSITIONING

POSITIONING

Cost Shopping Functional

Leadership Experience and Simple
COST LEADERSHIP

• Low-cost ready to assemble furniture

• Get it delivered for a fee or by yourself
• Saving electricity
• Take buses instead of taxis
• Expensive wood is used only on top visible
layers of the furniture
• Suppliers are chosen from a pool of 1800 to
maintain cost leadership.
 SHOPPING
EXPERIENCE

• Displays every product in room

• Give a message “You Don’t need a decorator,
you can get a harmony in your flat just like
that”
• The Swedish Restaurant (as popular as its
furniture) serves the people
• Customers move along a predetermined path
through a maze of rooms
 FUNTIONAL & SIMPLE
• Design is the last step, after choosing the
price point , in the process.
• Designers mainly focus on simplicity and
functionality in IKEA.
 Lowest
Prices

Market Good
Expansion Quality

COMPETETIVE
ADVENTAGE

High
Variety of
Quality of
Products
Design

Good
Service
 BCG Matrix
HIGH STAR QUESTIONMARK
•Billy (bookcase) •Textile
•Poäng (chair) •Stores in Developing countries
•Malm (bed)
Market Growth Rate

CASH COW DOG

•Restaurant •Algot (Mesh Baskets)
•Café
•Hotel
•Museum
•IKEA's Meatballs
•Alcohol
LOW
HIGH LOW
Relative Market Share
STAR
QUESTIONMARK
CASH COW
DOG
 Distribution Strategy
• IKEA coordinate with supply chain stakeholders
like designers, material suppliers, product
developers and its stores all over the world to
make their products available to the consumer.
• They had partnered with 1800+ suppliers in 51
countries who help them in maintaining the
quality of home furnishing /Kitchenware &
appliances in its 411 stores worldwide.

Supplier IKEA Customer

 Brand Equity

CSR activities and empowering their co-workers

has helped the company in creating
awareness and popularising their brand even
in the markets in which they are not present.
Competitive Analysis
Companies like TepeHome, Kelebak,
EnglishHome, Fabfurnish.com and much
more are dealing in online and Offline mode
while IKEA has only franchised stores which
mean low infrastructure cost and high
visibility.
 Market Analysis
Home furnishing industry is facing intense
competition from Local outlets & online e-
commerce start-ups. The only driving force is the
novelty in the style & design factor which is
shaping the industry demand side.
IKEA have functional & design leadership in the
furnishing /Kitchenware & appliances segment in
most of the markets it is in
 Customer Analysis
Customers of IKEA are the working class people
who are looking for value for money home
furnishing solutions. These are majorly in the
age group of 20-50 years. These are the
consumers who have an inclination towards the
stylish & modern home furnishing solutions.
7Ps (Marketing Mix)
Product

Price Place

Marketing
Mix
Process Promotions

Physical
People
Evidence
 PRODUCT
• Flat packaged boxes
• Basic assembling guideline
• Modular storage
• Easy to assemble
• Food, with a European touch
• In-store restaurant
• Product extends to service
• Excellent Swedish design
• Using different types of wood for single wooden
product
• High quality materials on furniture surfaces
• All IKEA products come with a 2year everyday
quality guarantee
• Same day shipping with the online shopping
• Sewing service for textile products
• Flexible return policy
• Has 24 hours open call center for any questions.
 PRODUCT LINE
• Bathroom
• Laundry
• Bedroom
• Lighting
• Children’s IKEA
• Living Room
• Cooking
• Secondary Storage
• Decoration
• Small Storage
• Dining
• Textiles
• Eating
• Workspace
• Hallway
• Youth Room
• Kitchen
 PLACE
• The vast majority of IKEA stores are located out of
city center in European & Western countries
because of land cost and traffic problem.
• Most of the Stores are located near Public areas like
railway stations, airports.(China, Japan, South
Korea)
• Distribution Channel: Direct and Selective
• Distribution Channel for Online Shopping: Direct
and Intensive.
 PROMOTION
• High profile advertisement
campaigns.
• Spending 70% of annual marketing
budget is printing catalogs.
• IKEA providing home delivery to its
customers.
• After sales service.
• Online advertisements.
• Mini designed homes in the stores.
• Sales campaignies.
• Gift cards
 PEOPLE
• Knowledgeable and friendly
staff.
• Technical support from experts.
• Design advice department.
• IKEA is a place where the people
socialize with each other.
 PHYSICAL EVIDANCES
Customer Experience at IKEA
• Bright and inviting store atmosphere.
• Resembles Modern Theme parks with childcare centers.
• Restaurants serving various delicious meals.

IKEA for kids: You shop, kids play

• IKEA provides clean feeding and changing rooms for small
children.
• Restaurants has special menu just for kids.

Free parking place

Free internet access
 PROCESS
The furniture is made by IKEA itself
whereby IKEA makes its own wood-
based furniture and wooden
components. So business owns
forestry saw mills.
 PRICE
• Makes low cost furniture.
• Focuses on cost control and
efficient operational
details.
• Freebies at the IKEA
restaurant.
 IKEA INDIA
• Opened 1st outlet in Hi-Tec
city Hyderabad on Aug. 9
2018.
• Spread out across 4,00,000
sq. Feet.
• Bought 23 acre plot in Navi
Mumbai & 3,50,000 sq. Feet
plot in Borivali Mumbai .
• IKEA also have properties in
Bangalore and Delhi
• Planning to purchase land
in Chennai, Pune, Surat,
Ahmedabad and Kolkata.
• Going to launch 25 small
format stores by 2025.
HOW IKEA’S STORE LAYOUT DESIGN
INFLUENCE THE SHOPPERS???

“IKEA’s store layout is a psychological weapon used to

confuse shoppers into spending more.”
• IKEA has a very distinct ENTRANCE and EXIT.
• Once a shopper walks through doors, they begin their
journey through the IKEA maze(store layout).
• The IKEA maze (store layout) is designed so that the
shopper must follow a set path through the store.
 First Half
• In the first half of the store, the shopper finds
themselves in the showroom (catalogue in
physical form).
• The showroom is divided into sub-sections
depending on the type of furniture displayed.
• Not all items in the showroom must be picked up
in the warehouse, there are a few smaller items
that the shopper can grab a hold of in the
showrooms . And this is IKEA’s first trap for the
shopper.
• By making the store layout mildly confusing,
IKEA makes the shopper less likely to leave
behind an item they are yet uncertain of
buying.
• This is IKEA’s way of nudging shopper towards
making those impulse purchases.
• When shopper comes out of the showroom
they might be thirsty or restless.
• cafeteria-style dining hall equipped with a
children’s play area, cheap food of good quality;
second trap.
 Second Half
• Now that the shopper is re-energized, the path
takes them to the warehouse.
• The shopper is easily able to find their desired
furniture items.
• The furniture already are flat-packed.
• The pathway from the warehouse to the
checkout counters is “obstructed” by heaps of
random sale items, at a reduced cost and
extremely affordable; third trap.
• After the shoppers checkout they have to pass
through 2nd cafeteria; last trap and effort to
make the shoppers spend more.
Why is IKEA a Genius???
“Simplicity and Common sense should
characterize planning and strategic
direction.”
- Ingvar Kamprad