TOPIC: IKEA

Group members

Sr.No Name Roll number

1. Gayatri Nair 08
2. Rohan Nandani 09
3. Jeel Sanghavi 30
4. Richa Sanghavi 31
5. Vaibhavi Sanghavi 35
6. Harshvi Shah 37
INDEX

Sr.no Title Page Number

INTRODUCTION :

IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was founded in 1943.
Today it is the world’s largest furniture retailer, recognised for its Scandinavian style. The
majority of IKEA’s furniture is flat-pack, ready to be assembled by the consumer. This
allows a reduction in costs and packaging. IKEA carries a range of 9,500 products, including
home furniture and accessories. This wide range is available in all IKEA stores and
customers can order much of the range online through IKEA’s website. There are 18 stores in
the UK to date, the first of which opened in Warrington in 1987. In July 2009 IKEA opened a
store in Dublin too – its first in Ireland.

IKEA stores include restaurants and cafés serving typical Swedish food. They also have small
food shops selling Swedish groceries, everything from the famous meatballs to jam. Stores
are located worldwide. In August 2008 the IKEA group had 253 stores in 24 countries, with a
further 32 stores owned and run by franchisees. It welcomed a total of 565 million visitors to
the stores during the year and a further 450 million visits were made to the IKEA website.
IKEA sales reached 21.2 billion Euros in 2008 showing an increase of 7%. The biggest sales
countries are Germany, USA, France, UK and Sweden. In 2008 IKEA opened 21 new stores
in 11 countries and expects to open around 20 more in 2009 as part of its strategy for growth.
IKEA founder Ingvar Kamprad, whose paternal grandparents were German-speaking
immigrants to the Småland province of southern Sweden, was a precocious trader. In 1943, at
age 17, he started the company, putting together its name from his own initials and the initial
letters of his family’s farm (Elmtaryd) and his home village (Agunnaryd). At first he sold
miscellaneous small articles such as pens and lighters. In 1948 he began selling furniture, and
in 1951 he published the first annual IKEA catalogue. In 1953, in the town of Älmhult, he
opened a showroom where customers looked at displays and placed orders. The first retail
store opened in Älmhult in 1958.

Flat-packing of furniture, introduced in 1956, was a key factor in reducing the company’s
costs and enabling it to cut prices. During the late 1950s, IKEA’s unhappy competitors
pressured Swedish manufacturers to cut off supplies to the company. IKEA responded by
undertaking its own design work and by contracting with foreign suppliers, at first in
Denmark and Poland. Later the company set up a manufacturing subsidiary, called
Swedwood.
IKEA became an international retailer when the first store in Norway opened in 1963. The
company expanded beyond the Nordic countries in 1973, when a store was established in
Switzerland. Thereafter, stores opened in many countries, including Germany (1974),
Australia (1975), France (1981), the United States (1985), the United Kingdom (1987), China
(1998), and Russia (2000). The typical IKEA store is extremely large, generally covering an
area of 186,000 square feet (17,280 square metres).

IKEA is not owned by shareholders. Instead, it is controlled through a number of operating

companies, holding companies, and nonprofit foundations. The complex corporate structure
was created partly in response to high Swedish taxation.

IKEA Vision and Business idea

The IKEA vision is ‘to create a better everyday life for the many people’ puts this concern at
the heart of the business. Our business idea supports this vision by offering a wide range of
well-designed, functional home furnishing products at prices so low that as many people as
possible will be able to afford them.
 SWOT ANALYSIS

IKEA is well-known around the world for being that Swedish company offering inexpensive
products for your home. It’s a staple for people with lower income who still desire design, but
at a lower cost. And although this is exactly how IKEA became such a popular worldwide
brand, it’s also a problem.

SWOT analysis of IKEA: Strengths

 Market research.
IKEA knows the ins-and-outs of their customers.If they didn’t, the company would have a
hard time providing what their customers want. And what their customers want are a
collection of affordable furniture and home appliances.If IKEA didn’t know this is what their
customers want, they wouldn’t be able to sell so many units. Nor would they bother to put in
so much work into the development and design of their countless products.

 Countless designs. 
IKEA designers create stylish, newly designed products. But it goes further than physical
decorations. The products are developed for easy transport and assembly. In the store, you’re
able to see the finished, assembled piece. But when you walk out, you’re given each item in
bits and pieces because it’s easier to put in your car and take home.
  Brand recognition.
IKEA is one of the most recognisable and well-known furniture brands worldwide. The brand
has more than 600 million customers annually. And you can currently shop for IKEA
products in more than 38 countries. Combine the brand recognition  with the low-cost
furniture options, and it’s no wonder IKEA is as popular or as well-known as it is.

SWOT analysis of IKEA: Weaknesses

 Bad press.
IKEA has had a few run-ins with bad press. Employees have complained about poor
treatment. The brand has faced ridicule for advertising techniques in non-western countries.
And the worst offence: children being hurt or killed in relation to IKEA furniture. IKEA has
also had to recall dangerous products because they’ve led to injuries.

Although the saying “any press is good press” may come into mind, in IKEA’s case, bad
press leads to distrust from their customers.

 Low quality.
IKEA products are known for being lesser quality. This seems to be a byproduct of offering
inexpensive products. How can it be affordable and high quality? IKEA has yet to find a
solution.
On social media, you will likely find someone criticising IKEA’s less than stellar product
quality.
And because they can’t live up to greater quality expectations, other companies now have the
opportunity. Whether these companies can provide both quality and cost-effective furniture
and kitchen appliances is yet to be determined.

SWOT analysis of IKEA: Opportunities

 Few countries

IKEA is only in 38 countries. This is a relatively low number considering how well-known
the company is. They can branch out further, especially since IKEA is barely featured in
developing countries. Places like Malaysia, Mexico, and Brazil are just a few locations IKEA
should consider moving into.

 Online shopping.

Additionally, you can purchase IKEA products through their website. Online shopping is
becoming more popular as years go on. Especially around holidays like Black Friday, where
people want to avoid long lines for fantastic sales.
IKEA is in a firm spot to accentuate their sales by offering more products online. Considering
the company has more than 800 million online visitors, it’s definitely a sales channel IKEA
should focus more efforts into.

SWOT analysis of IKEA: Threats

Some of the weaknesses of the IKEA brand are threats too.

 Fast competition.

For instance, the competition for furniture products is growing. We’re seeing global brands
like Walmart offering expensive food products. Although their catalogue isn’t as expansive
as IKEA’s, that may only be a matter of time.

 Increase in cash.
Additionally, growing income can be a problem for the company too. As consumers have
more excess cash, they’re less likely to buy cheap, low-quality products. Unfortunately, that’s
the basis behind the IKEA brand. And since their quality is on the low-side, consumers will
look for high quality, even if it costs a bit more.
IKEA Global Marketing Success Story

1. GLOBAL MIDDLE CLASS TARGET

The global middle class segment of the society comprises of those people who aim at
maximising their satisfaction on purchasing a product or a service, in the most inexpensive
way possible. The gist behind IKEA’s global marketing for targeting the middle class
segment is that the middle class segment is the largest segment of the society.

Moreover, who doesn’t want a cheap and good quality product in today’s world? IKEA
highlights its global marketing strategy by putting more light on low prices offered, along
with decent quality standards, which in turn enables them to capture the global middle class
target. The strategy adopted by the company primarily focuses on Guerilla Marketing.

For eg. IKEA emphasises on buying the consumer an experience before he buys the furniture.
The ‘Place in your room’ catalogue app of IKEA, lets a consumer try the desired products in
their homes.

2. VISION- TO CREATE A BETTER EVERYDAY LIFE FOR MANY PEOPLE

IKEA aims to create a better everyday life for many people of the world. They work upon
this vision by primarily focusing on the ‘affordability factor’ of the people, such that masses
are able to maintain a decent standard of living in an optimal way. Their vision isn’t just
restricted to creating good quality furniture, rather focuses on the improvisation of quality of
life for an average individual. IKEA aims at doing better everyday, in an efficient and cost-
effective manner.

3. LOW PRICES OFFERED

The basis of IKEA’s global marketing is rendering good quality products at low prices to
their customers. It focuses on continuously lowering prices for their customers every year- a
2-3% cut per year. Ikea implements cost effectiveness into their organisation by making a
number of trade offs:
 Self service- no sales people cost.
 Manufactures for itself- no third party involvement.
 Providing products in a flat package form, which is a cost effective method for
shipment, storage and assembling.

4. MAINTAINS A WIDE CUSTOMER BASE

IKEA’s global marketing strategy has emerged as an ideal global marketing strategy
worldwide. The strategy has enabled the organisation in maintaining a wide customer base. It
relies on customer feedback and their average views of a product, inculcating the same in the
organisation’s work structure. Moreover, the emphasis on affordability and quality by the
organisation, keeps the old customers intact and attracts new ones, leading to widening of the
customer base.

5. CUSTOMER CENTRIC MARKETING STRATEGY

Customer centric marketing is a strategy that focuses on product development according to

the needs of every individual customers. IKEA has adopted a customer centric marketing in
its global marketing strategy, which makes the organisation understand a customer’s lifestyle.
For this purpose, numerous customer researches are undertaken to develop marketing
objectives and inculcate the customer preferences in the organisation’s development.

For example, the Taiwan hot pot dish associated with dinner tables by IKEA emphasised on
human interaction and led to a great customer experience at the same time.

International Success
One of the key factors to its international success was its international marketing and its
usage of different marketing channels. Ikea utilizes multiple marketing channels including
catalogues, commercials and social media to market their products to the rest of the world.
Catalogues are Ikea’s greatest marketing tool, “it takes up 70% of their marketing budget
(Just great database, 2019). With more than 200 million copies, the catalogue is one of the
most widely distributed books worldwide (Quito, 2017)”. One of the main reasons for the
success of these catalogues is the fact that they are often customized to the region they are
distributed to. Ikea is able to cater them to fit the local taste and trends to capture more
customers. For example, their US catalogues often contain larger spaces, while Chinese
catalogues contain smaller spaces, as houses and apartments are often smaller in China. Ikea
also markets their products internationally through commercials on regional channels. These
commercials often vary in length and content depending on regional preferences. They are
also adjusted to fit the cultural norms and values or social issues of a region. Lastly, Ikea also
has its own YouTube channel, Facebook and Instagram page in different countries it is in.
They are able to use social media to reach and share content with their consumers in that
region.

GLOBAL STRATEGY AT IKEA

IKEA entered the global market with its standardized products strategy. It had its own global
strategy of opening stores and operating in new markets around the world. The furnishing
retailer worked to find an effective combination of standardization, low cost, technology, and
quality for its products in the market. However, its standardized product strategy also took
into account culturally sensitive factors emerging out of divergent consumer tastes and
preferences in different markets...

FORAY INTO CHINA

The boom in the Chinese furniture market was driven by growth in China’s housing market,
the steadily developing economy, and research and development in furniture manufacture and
design. According to the Ken Research Private Limited report in 2016, China’s furniture
market would grow at a considerable Compound Annual Growth Rate (CAGR) rate, reaching
US$86.6 billion by 2020. The furniture industry in China was known for its good quality,
affordably priced furniture products, which were made leveraging on the low cost skilled
workforce. After decades of development in the furniture industry, China emerged as the
world’s largest furniture producer as well as exporter. Simultaneously, the strong growth of
the domestic furniture market was bolstered by an increase in purchasing power among the
Chinese customers.

IKEA’S INITIAL FAILURE

Initially, it was not all smooth going for IKEA in the Chinese furnishing market. Its
conservative approach to market entry meant IKEA took at least five years to understand the
Chinese customers before starting its first full-scale standard IKEA store in Shanghai in 2003,
replacing the original outlet. Earlier, IKEA applied its distinct organizational culture and
retail business strategies in its Chinese stores, wherein the core concept of company
showrooms, flat-packed products, and Do-It-Yourself (DIY) assembly concepts remained
intact. In an attempt to differentiate itself in the Chinese furnishing market, IKEA offered its
customers a wide range of options to suit their preferences and living requirements.
TASTING SUCCESS IN CHINA
After years of struggling, the Swedish furniture giant finally made a mark in the Chinese
furniture market in 2011. The company made numerous changes in its strategies and took
more than 12 years to become profitable in China. In 2011, Mikael Ohlssen, the then CEO of
IKEA, acknowledged that sales in China were growing faster than at the company as a whole.
In 2011, a Forbes article noted: “In the last fifteen years, home ownership has gone from
practically zero to about 70 percent. However, many people have little sense of how to
furnish or decorate a home. They are very eager to learn from the West. This is one of the
reasons that IKEA is very popular in China. Their Western-style showrooms provide model
bedrooms, dining rooms, and family rooms showing how to furnish them.”

CHALLENGES
Despite its long presence in China, the furniture giant faced criticism for being too
conservative in developing the home products sector. IKEA opened new stores at a slower
rate in China than other foreign retailers such as Wal-Mart Stores, which expanded rapidly
throughout China. Though IKEA claimed that it attracted Chinese consumers on the price
front, it was still not well recognized by Chinese consumers, some industry observers
remarked.
In which countries IKEA has its International market?

IKEA is a multinational group of companies that designs and sells ready-to-

assemble furniture (such as beds, chairs and desks), appliances and home
accessories. As of December 2022, there are 460 IKEA stores operating in 63
countries.

Map of countries with IKEA stores

Legend:

Blue: Current market locations

Yellow: Future market locations

Red: Former market locations

Grey: No current or planned market locations

IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was
founded in 1943 and is today the world’s largest furniture retailer, recognized for its
Scandinavian style. The majority of IKEA’s furniture is flat-pack, ready to be assembled by
the consumer. This allows a reduction in costs and packaging. One of the key competitive
advantages IKEA has is its extensive knowledge about the customers. The company
understands the purchasing factors that influence customers to buy and implements the best
practices to induce that decision. Additionally, low prices are the cornerstone of the IKEA
business idea and the company tries to do things as efficiently and cost-effective as possible.
To drive costs down all the time, the company must find new and innovative ways to do that
and to incorporate them in its business model. The business’ innovations include new
materials that contribute a sustainable environment and are less costly or using the newest
ways of packaging, handling, and transporting materials.

IKEA as a brand

As of 2021, IKEA was the most valuable furniture retailer brand in the world, and also the
eighth most valuable retailer in the world, valued at over 21 billion U.S. dollars. The
company operates 464 stores worldwide and is present in most major markets. Before the
coronavirus (COVID-19) pandemic, there were around one billion customer visits to IKEA
stores every year, with that number decreasing to around 775 million in 2021.
List of IKEA stores over the world:
IKEA Marketing Strategy: a brief overview
IKEA marketing strategy is based on sophisticated customer research and
market research. “IKEA actually sends design experts into people’s homes to
listen to their concerns and provide feedback. This allows IKEA evangelists to
make marketing decisions based on people’s real-life experiences rather than
just surveys or data. “Accordingly, it can be argued that marketing strategy of
IKEA is proactive, rather than reactive.

In 2018, the world’s largest furniture retailer shifted its marketing focus from
rooms to product innovation. The ‘magic’ blue bag has been placed at the core
of marketing strategy of IKEA and the latest ads have been designed to
illustrate how the addition of just a few innovative items can transform the
home for the better

Generally, IKEA marketing strategy integrates the following:

1. Focusing on product and price elements of the marketing mix.

Specifically, IKEA attempts to offer the greatest range of products for the
lowest cost. Economies of scale play an instrumental role in achieving
competitive prices. The Swedish furniture chain offers mixed-and-
matched products accommodating unique style and needs of each
customer. Reusable durability is another important feature of IKEA
products. Along with product and price, additional elements of marketing
mix, also known as 7Ps of marketing include place, promotion, process,
people and physical evidence.

2. Using mono-segment, adaptive and aesthetic types of product

positioning. The furniture retailer targets cost-conscious customer
segment that prefers to get value for money they pay. Accordingly, IKEA
has adapted the lowest costs of its products along with the widest range as
the unique selling proposition of the brand. The home improvement and
furnishing chain continually adapts its products to changing customer
needs and wants on the basis of its proven ‘democratic design’ concept.

3. Integrating several channels of marketing communication such as print

and media advertising, sales promotions, events and experiences, public
relations and direct marketing. Specifically, the furniture giant derives the
maximum benefits from print and media advertising and direct marketing.
The marketing message focuses on consistent and unmistakably
 recognizable theme in terms of prices, design, product names and brand
colour scheme.

4. Effectively applying product placement marketing technique. Product

placement is one of the important tools within IKEA marketing strategy.
Movies such as Fight Club, Cash Back, 500 Days of Summer and TV
programs such as 30 Rock: Blind Date, Being Human (UK): Ghost Town
and Little Britain can be mentioned as the most notable cases of product
placement by IKEA.

Competitive advantage in the Marketing strategy of IKEA –

Coordinating with designers across the world and testing their ideas so as to
provide the growing home furnishing needs is one of the biggest advantages
that Ikea has over other players in the markets. Wide-range, artistically
designed, eco-friendly and affordable furniture at low cost will always be the
driving force for the company. IKEA has garnered respect in eyes of the
community it serves and for the employees who work for them which has
created positive word of mouth and has helped the company in increasing the
share of wallet of the customers.

Long-term strategic partnership across the supply chain has helped the
company in manufacturing and delivering the items on time.
Distribution strategy in the Marketing strategy of IKEA –
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 1002+ suppliers in 51 countries who help them in
maintaining the quality of home furnishing /Kitchenware & appliances in its
380 stores worldwide.

Brand equity in the Marketing strategy of IKEA –

Branding is the essential element when it comes to marketing your products.
Positive word of mouth, CSR activities and empowering their co-workers has
helped the company in creating awareness and popularizing their brand even
in the markets in which they are not present.
Its various popular advertising campaigns like “Home is the most important
place in the world” or its “unboring” and various others TV campaigns
helped the company in creating top of mind awareness.
There are 460 stores all over the world, operating in 63 countries.