Professional Documents
Culture Documents
IKEA Case Study
IKEA Case Study
IKEA Case Study
Matt McInerney, Colin Reed, Bryce Doubrava, Andrew Graczyk, & Mark Wylie
Marketing Strategy
MKTG 476
3.17.15
Problem Statement with Evidence
•Problem Tree
Problem Tree
Position Statement
IKEA
• Brand image, size, and low cost/price make threat of substitute products less
• Price of IKEA products are in line with cheap alternatives making threat of
substitute products less
Furniture Industry – Moderate threat of substitute products
IKEA – less than moderate threat of substitute products
Situation Analysis
Porter’s Five Forces
Porter’s Five Forces Analysis- Rivalry Among Existing Competitors
• Competitor Size – large competitors benefit from economies of scale
• Low market growth – makes competition intense as firms compete for the
same share of the market
IKEA
• Large company – benefits from economies of scale and less supplier bargaining
power making it more competitive
Furniture Industry – Moderate threat of rivalry
IKEA – moderate to less moderate threat of rivalry
Designing Marketing
Strategy
• Customer targeting strategies
• Customer positioning strategies
• Market research
• Customer Relationship Management
Designing Marketing Strategy
Market Segmentation
• Low/middle income young singles, college students, or young couples
• Suburban dwellers
Important subgroups
• 80 million Baby boomers
• GenX & Millennials
Persona
• 18 to 34 year olds and 35 to 49 year olds
• Unisex approach targeting both genders
• Young low/middle income singles, college students, couples
• $15,000 to $50,000 annual salary
• Uses computers, smart phones, other electronic devices
• Eco- friendly
Designing Marketing Strategy
Customer Targeting Strategies
• Requires knowledge of
• Customer needs
• Decision making process
• How customer searches for information on a
product
Designing Marketing Strategy
Customer Needs Analysis for the IKEA customer
• Low priced functional products
• Wide range of product choices
• Products easy to transport and assemble
• Positive shopping experience
• Average quality products
• Products that create a positive social environment and
reflect their tastes and personality
Designing Marketing Strategy
Customer Decision Making Process
• Problem Recognition
• Information Search
• Internal Search – information from memory
• External Search- information from outside sources
• Important for IKEA to be near target market so that when they are
conducting a search IKEA products are close at hand.
• Problem Resolution
• Evaluate alternatives to solve the problem
• Select best alternative
Designing Marketing Strategy
IKEA Customer Positioning Strategy
• Customer positioning map
• Value association map
• Typologies
Designing Marketing Strategy
IKEA Customer Positioning Strategy
• Customer positioning map
Designing Marketing Strategy
IKEA Customer Positioning Strategy
• Value Association Map
Designing Marketing Strategy
IKEA Customer Positioning Strategy
• IKEA Typologies
• Neilson Prizm
• Examines segment groups based on demographics and
behaviors that will help IKEA identify, reach, and retain their
most profitable customers.
• Two major Neilson segments that match IKEA’s segment
• Boomtown Singles
• City Startups.
Designing Marketing Strategy
IKEA Customer Positioning Strategy
IKEA Typology – Boomtown Singles
Boomtown Singles:
Urbanicity: Second City
Income: Lower Mid
Income Producing Assets: Below Avg.
Age Ranges: <55
Homeownership: Mix, Renters
Employment Level: WC, Service, Mix
Education Level: College Grad.
Ethnic Diversity: White, Black, Hispanic, Mix
Designing Marketing Strategy
IKEA Customer Positioning Strategy
IKEA Typology – City Startups
City Startups:
Urbanicity: Second City
Income: Lower Mid
Income Producing Assets: Low
Age Ranges: <55
Homeownership: Renters
Employment Level: WC, Service, Mix
Education Level: Some College.
Ethnic Diversity: White, Black, Hispanic, Mix
Designing Marketing Strategy
IKEA Market Research – Survey
• To gain information on two proposed IKEA sales alternatives, satellite stores
and an aggressive push towards online sales marketing research can be
• A survey could be conducted to
• collect consumer information on each alternative
• to gain insight as to consumer interest in these alternatives
• Gauge each alternative’s likelihood of success.
Designing Marketing Strategy
IKEA Market Research – Survey
Designing Marketing Strategy
Customer Relationship Management
• Monitor and assess the relationship between a business and its customers
• Develop a comprehensive view of the customer at every point of contact with
the company
• Four systems are used to track customers
• Internal recording systems
• Provide data on sales…what is selling and what is not
• Marketing databases
• Used to manage marketing campaigns
• Record demographics, detailed transactions, etc.
• Competitive intelligence systems
• Collect and analyze data about the firm’s competitors
• Client contact and sales force automation systems
• Help salespeople keep track of customer names, addresses, phone
numbers, etc.
Designing Marketing Strategy
Marketing Program Development
• Marketing mix across alternatives plus status quo
Designing Marketing Strategy
Status Quo Satellite stores Online Stores (More)
Product: The marketer must shape No changes – Low quality No change in design. No change in design.
each of the following strategies into materials with
a coordinated plan of action in functionality, moderate Select product type Offer all product types.
order to be effective. durability, “Democratic accordingly, based on Easy delivery
design” assembly required overall style popularity,
,Flat-packaged boxes for and what type of satellite
easy delivery store we are dealing with.
Price: The marketer must choose No changes – “Low price 10%-15% markup from 10%-15% markup from
the role of price in his positioning with meaning.” Pragmatic, price in IKEA store. IKEA store. Still low price
strategy, including the desired cost cutting.. and very competitive.
positioning of the product or brand More opportunity to Motivates customer to
as well as the margin necessary to motivate participants. visit.
satisfy and motivate distribution Motivates consumer to
channel participants. visit the real IKEA.
Place: The marketer needs to No changes - Self-service, Smaller stores to cover Create more online web
decide the type of channel more area. Specific IKEA pages for selling products.
organization to use, the extent of Child care facility, section taking up small Social media, Blogs.
channel management, and the section of store.
intensity of distribution appropriate IKEA in-store restaurant
for his product.
Status Quo Online Store Online Store Satellite Store Satellite Store
Performance Measure Weight Status Quo Score Value Score Value Score Value
Shorter Time to Implement
30% 30 9 80 24 75 22.5
Higher Customer Satisfaction
30% 50 15 40 12 45 13.5
Affordable Cost to Implement