CARMEN VICTORIA AGUADO LPEZ

INTERNATIONAL CASE OF STUDY

IKEA

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IKEAS HISTORY
The business that we are going to talk is Ikea , the most famous furniture Company over the
World .This Swedish deal , created by Ingvar Kamprad1 ( IK Ingvar Kamprad , E Elmtaryd
was his farm , A Agunnyard was his hometown)2 . In
1945 Ikea launched the first advertising into a local
newspapers, three years after the furnitures appear in
the company (originally the company makes office
equipment not furnitures).

But if one thing is famous of Ikea, a part of the prices

of

campaigns, its the catalogue. 1951 was the year of

the first Ikea catalogue.3The catalogue is now
published in 27 languages for 36 countries, Africa is
the only continent where you cannot find an Ikea, and

it

s considered to be the main marketing tool of retail

giant. The Catalogue its distributed in stores or by mail, in Spain you can find in your mailbox
each September.
1958 is another famous date, was the opening of the first shop in Sweden and the creation of
the Tore box, who have not used a mythical box of those? Ikeas restaurant, created in 60s, it
s one of the other pillars with Swedish dining. As well, we have to take into account, the
creation on Ikea Family, the card with which families have advantages (20 % of discount in
products family) 4
Basing on the expansions, these started in 1963 when Ikea went to the neighbour country,
Norway. It was the leap to the expansion and the beginning of the empire thats today. The first
continent where Ikea has entered was Oceania, Australia specifically. North America has

1 Forbes Magazine, The worlds billionaires, 2015 Ranking Ingvard Kamprad

.Image of http://www.forbes.com/profile/ingvar-kamprad/.
2 Thisismoney .co.uk , IKEA Founder Ingvar Kampard , Lucy Balinger , 14
April 2008.
3 Home Design. Inspiring Ikea Catalogue Cover (1951-2014)
http://homemydesign.com/2013/inspiring-ikea-catalog-covers-1951-2014/
1951 catalogue cover
4 IKEA FAMILY. www.family.ikea.es/hazte-socio-family_en (Web in Line)
Inter IKEA Systems , B.V 1999-2014
2

received Ikeas group in 1985 with the opening in Philadelphia and in 1998 arrived to Asia,
China.
But nevertheless Ikea is not only expansions, furnitures etcIn 1990, they created the first
environmental policy, three years after started to join part of FSC (Forest Stewardship Council) 5
and in 1998 hires the first forestry manager.
In conclusion IKEA in our days is a good positioned deal thanks to the mistakes of his creator
and his persistence to overcome barriers.
IKEAS MARKETING STRATEGY
Ikea the same as other companies, has poor beginnings but in our days in famous over the
world. How has not visit an IKEA once in live? The first shop was not equal to today, the figures
have grown to be multiplied by an incalculable amount. If we look the results of 2014, we can
see that the total sales were 28.7 billion and their food about 1.46 billion. (In the Key Figure as
we can see)6

5 Ikea History 1990 ,

http://www.ikea.com/ms/en_JP/about_ikea/the_ikea_way/history/1990.html
6 Key Figure 1. www.ikea.com/ms/en_GB/this-is-ikea/about-the-ikeagroup/index.html
3

Regarding the strengths of IKEA, anyone who like IKEA knows. In first stay, powerful brand
image, who doesnt know Ikea? , thanks to globalization could be disclosed, but in a different
way than Coca-Cola or Apple. IKEA started in Sweden and after that jump into another countries
with only good prices and a catalogue that appear after not with subliminal publicity as CocaCola. Financing and deferred without interest (for example until the 14 of August 0% in entire
your purchase)7 , that can allow families to buy more and if we add that IKEA has a friendly
atmosphere with
facilities like restaurant
(for example in Spain
Ikea has this offer;
Breakfast 1, Lunch 2
and Dinner 3, that
includes their famous
Kttbullar)8 or day care
centre, its value rises.
Also, the wide range of
products and the
special offers that they put to remove during the year some articles to introduce others. But we
must take into account other two things; own brand manufacturing and brand installed thanks to
the franchise system.
On the other hand we have the weakness, an extremely weakness is the relatively few location
in some countries , for example the IKEA that I have more near is 45 kilometres away of my
house , in Murcia, and its on the suburbs of a city so for people is not so comfortable to drive or
to catch a bus. Then the shops have many employees for nothing because is an auto service
shop, you enter with your basket and after you write the references of the furniture you receive.
But buy the furniture is not a problem, the problem is when you arrive to your house and you
start assembling yourself and this for certain groups of consumers would not be so funny , you
lose many time with instructions with difficult names , fixa , frakta behandla and to make
matters worse the furnitures are not for the whole life.
Focusing on the Marketing mix (4PS ; Product , Price, Place, Promotion) , Ikeas is known for
its affordable prices to suit all budgets , the designed their products then they search a raw
materials sourced, the products are manufactured, then are distributed, and they sold by retail,
without no-frills low-cost framework. So they can save money of transportation to negotiate with
suppliers. The Place where Ikeas lays down their surface is on the outskirts of neuralgic cities
(Cologne, Madrid, Murcia, Paris) and the location is over the world ;Europe ,Asia, Australia,
North America. What makes Ikea being what is? From my point of view, their promotion and

7 Customer service of IKEA

86 Principal page of IKEA in Spain , www.ikea.com/es/es
4

their products. The Swedish names that they put, make show people interest in knowing what is
and when they discovered they want to buy it. But go to Ikea in a certain period of time depend
on the publicity or the catalogue. Campaigns like Bienvenido a la repblica independiente
de mi casa- Tony Segarra (Welcome to the independent republic of my house) or Its a
big country. Someones got to furnish it Donny Deutsch 9.
Other aspect to consider are, in my humble opinion they are what we look more and its better
to highlight them together. IKEA was the key to enter into a world of furniture like Lego, you can
assemble and disassemble when you want and put wherever you want. The only disadvantage
that you have to carry with the furniture to your car and then when you arrive home, remove of
the car and down to work. But you have the marvellous rate of transport that Ikea offer to you
(between 29 and 149, depending on the amount by which the lot is valued) 10to transport.
Another aspect is the design, IKEA recreates living spaces so you can form an opinion. The
pillows and the sheets are what most stand besides lamps ( during my Erasmus I realized that
as happens in Germany and thought it was something that only happened in Spain , a more
focused strategy I thought). Finally the famous Hot Dog (in Murcia in the structure they have a
large picture as a teaser), this kind of Hot Dog give you the necessary quantity of energy to
continue shopping, believe in me I tested. The price nowadays is 0.50
Germany

12

11

in Spain and 1.00 in

, as we can see the price are not the same. Another example the Halogen bulbs

GU10, 7.99 in Spain 13 and 4.99 in Germany14. Perhaps the level of competition or taxes are
what determined that.

IKEA FAILURE AND SUCCESS

IKEA is a company so standardised that doesnt change so common for enter into a market,
which have produced many problems. China, Arabia Saudi or Japan (they entered in 1974 and

9 Bernice Kanner, New York Magazine 1 June of 1992 , pp. 22-24

10 Leifer Service , Ikea Deutschland 2015
http://www.ikea.com/ms/de_DE/campaigns/services/service_und_leistungen.
html
11 Ikea Restaurant Spain
http://www.ikea.com/es/es/catalog/categories/departments/food/
12 IKEA Restaurant Deutschland
http://www.ikea.com/de/de/catalog/categories/departments/food/
13 Halogen Bombilla GU10 http://www.ikea.com/es/es/search/?
query=bombillas
14 Halogen Lampe GU10 http://www.ikea.com/de/de/search/?query=lampe
5

they went out in 1986, 20 years after they decided to re-enter) 15 are the leading countries. But
we are going to talk about China , that at the beginning was a stone in their shoes, a country
with a 66% of masculinity 16 that have evolved in recent years and increasingly closer to the
West and away from its eastern customs. The new generation looks more for the trendy
technology and brands with a good image.
China is a country where the tradition premium over the innovation (same products from outside
China), as an example their square tables instead of roundtables that Chinese citizens use.
China and Japan are famous for their little apartments and IKEA offered big sofas that were not
so compatible. Nevertheless we dont take into account the competitors of IKEA (YiJia, proper
home), AIKA (loving home)17 its one of its biggest competitors, Hola18 a brand from Taiwan.
For this reason the prices of IKEA in China are so cheaper and another reason its the facility to
copy the products.
After all, we will consider all the changes you made Ikea to seize the Chinese market, they put
their shops in the city centres near the public transport (they adapt that because in a European
Country, Ikea is located in the suburbs) they introduce chopsticks and special tea cups for the
Chinese New Year. They discover that Chinese consumers prefer the traditional shops, the
specialist stores so we can coupled with the location of the shops in the centre to competition
and gain market share.
On the other hand we are going to talk about a success of Ikea, Germany. In our days Germany
is the winner in the five top selling markets of IKEA 19 behind countries like USA, France, Russia
and Sweden. One success of Ikea in Germany was the first city centre store of IKEA opened in
June of 2014 in the city centre of Hamburg and IKEA the first one opened in Europe so close of
the population. Hamburg is a city where a 40% of the 1.8 millions 20of citizen have no car. But
with this shop the pretend to create a model and stablish one in Berlin, Johannes Ferber, the
managing director whos spearheading Ikeas expansion in Germany. Its a very expensive

15 Global Strategic Management , Jedrzej George Frynas and Kamel Mellahi

3rd edition , November 2014, p. 4-5
16 Source : Geert Hofstede , http://geert-hofstede.com/china.html
17 Danwei , Bilingual Brands : Love in the time of IKEA , Dror Poleg , 9 may
2006
18 IKEA and its competition in China , 20 April 2013 ( marketingtochina.com
)
19 IKEA Group , Yearly Summary FY 13 ,2013 p.24
20 El Economista , El primer Ikea en el centro de una ciudad pincha con la
venta de muebles , 4 August of 2014
6

experiment for us, but we want to know if the city-store concept works out, he said.
Altona could serve as a model for other big cities such as Berlin. 21 So, in future we could
discover if they are going to be stablish in Berlin
Based on their success, the firs IKEA was opened in 1974

22

in Munich Eching one year after in

Cologne, the expansion ok IKEA in Germany started until arrive 44 stores. Germans not just
seeking cheap prices, quality was the key. Ingvard start business with Poland to achieve that.
Another country where IKEA obtained a success was in USA, one problem that they have when
they entered was the recognition of the name, change of adverts, in 2002 they produced
Unborring/Lamp by Spike Jonz. The sport had opened with a discarded lamp sitting on the
sidewalk in the rain and had concluded with an actor saying; Many of you feel bad for this
lamp, the lamp is the basic model that cost 3.95$ 23. Moreover, fight with competitors like Ethan
Allen, Bassett Home Furnishing, William Sonoma and Lexington 24. But another problem appear
the size of Europe was smaller than American. On the other hand they started to be a success
and not only selling vase( they bought the big one because they drink many drinks with ice and
that occupy much), because stores offer adventures ,the stores are also places where families
can spend big load of time, thanks to the play area for children and the large cafeteria. Another
cause was Ikea buyers were more likely people that has travelled abroad , and this kind of
people is concentrated in the coasts where are more freedom, Americans started to be more
concerned with the design and more open with IKEAs world perhaps because IKEA began
production in USA to save costs. But a company in USA is not important until it arrives in New
York, 1990, 27.000 people visited it on opening day25. But visitors are not all, other claims in
USA is the politics as seen in the image26. This may be another of the hits of IKEA in USA.

21 Bloomberg Business, Nicholas Brautlecht , 30 June 2014. IKEA GOES

URBAN WITH FIRST HIGH STREET STORE IN HAMBURG
22 IKEA Germany
23 Ikea Unveils Unboring Campaign , 16 September 2002 ,
24 Apartment therapy , Top 100 US furniture store by sale , 18 January 2011
25 Arlene Hirst ,How IKEA became Americas furniture-selling powerhouse, 8
October 2014
26 New York Magazine ,24 September 1990 , page 41
7

To sump all , IKEA is a company that have learned of

their errors in pass , as an example Japan where they
re-opened another time , China where they change to
adapt, Spain where they put in strategic places for not
to saturate the market and bring together a larger
number of customers. But IKEA is a well-recognised
company over the world. That will give this fame
someday a place in the Latin American market?

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