Ikea's Future Market Strategy

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IKEA
Analysis report on the marketing strategy in US market and expansion beyond IKEA
Analysis report on the marketing strategy in US market and expansion beyond

TABLE OF CONTENTS

1. Introduction ………………………………………………………………………………….……. 3 2. Current Market and Future Strategy …………………………………………………… 3 3. Further penetrating the US market? ……………………………….…………………… 5 4. A new opportunity: Mexican market ………………………………………………….. 6 5. Conclusion ………………………………………………………………………………………….. 7 6. References ………………………………………………………………………………………….. 8 7. Appendix …………………………………………………………………………………………….. 9

INTRODUCTION
The purpose of this report is to discuss the IKEA’s current market situation, suggest new market strategy and evaluate the option of further penetrating the US market considering the present market conditions. In this report we also provide an alternative market, which can be explored in near future, for the further growth and expansion opportunity to the company. SWOT analysis is taken as the basis given in the case study and compared to the present condition and taste of customers in the US to logically bring out the facts to support the further expansion in the US market. Matching the different methods, marketing and products policies of IKEA to the economic conditions and customer’s buying behaviour Mexico is suggested as the alternative market for the company and rationally discussed bringing and comparing the relative facts.

CURRENT MARKET AND FUTURE STRATEGY

The SWOT analysis tool aids to find the IKEA’s internal strength, weakness and external opportunities and threats specifically keeping in mind the U.S market (See Appendix Fig 1). IKEA’s strength of producing low cost products with right quality grants IKEA an advantage in the recent economic conditions in U.S. As the demand for convenience in US is increasing, the Flat packaging of products and added amenities like in store restaurant, child care services, renting a car for customer, offers IKEA to have a competitive advantage in U.S market. U.S is a potential market and IKEA already has an established base in U.S. Thus, the strength of economies of scale creates an advantage to IKEA. The brand image, corporate culture and emphasis on sustainability make IKEA suitable for U.S because of popularity of stylish but sustainable product. Based on the SWOT Analysis, we recommend IKEA to implement Aggressive Strategy as their Strategic Approach. Ikea should focus on i. expansion and growth, ii. Introducing new products and iii. Entering new markets. i. Expansion and Growth

In an Interview with “USA Today”, Founder of IKEA, Ingvar Kamprad mentioned that they have started using aggressive approach. They plan open five stores annually in USA. (Theresa Howard. (2004)) Compared to the competitors, this is a slow growth, but it suites the belief of IKEA, that too much fast progress can harm whatever you have. Recommendations:

1. The DIY approach is not very popular in US customers are willing to pay more for convenience. Assembling furniture can be quite a daunting task for many specially the old and working class people. Ikea should improve their customer service and make home delivery and assembly services more convenient and affordable.

2. IKEA should carry on with their plans to open at least 5 stores annually. IKEA can open its stores in the west coast and middle part of USA as there is a lot of potential market and growth opportunity in this region (See Appendix Fig 2).

ii. Product Strategy
IKEA’s product vision of producing high quality products at lowest possible cost and their work towards achieving sustainability are keys factors which are going to help IKEA to implement aggressive approach. IKEA is well-known for its product innovation and design.

Recommendations:
1. The market trend in the US changes at a very fast pace. Competitors store like Wal-Mart are able to change their product line very frequently to keep up...
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