The most successful retailer for mass market in the world is known to be IKEA which sells Scandinavian style home furnishings and other house goods in 301 stores in 41 countries. IKEA hosted 522 million shoppers last year. IKEA is a short word which stands for Ingvar the first name of the owner, Kamprad the last name of the owner, Elmtaryd the name of the farm where Ingvar grew up in, and Agunnaryd the name of the village near to Ingvar’s childhood home. IKEA was founded in 1943 when Ingvar’s father gave him money for his high grades in school, Ignvar was 17 years old back then. Ignvar started selling products to his customer by going to their houses and selling pens, wallets, picture frames, table runners, watches, jewelry and nylon stockings. In 1945, IKEA was advertised in the local newspaper for the first time and he developed a catalog for his products. In 1948 furniture was introduced to IKEA and within five years the first IKEA store opened in Sweden where the customers were able to see and touch the furniture of IKEA for the first time before ordering and purchasing them. IKEA started designing their own furniture in 1956 after competitors were pressuring suppliers to boycott IKEA and stop supplying them. This is made by approximately 1,500 suppliers located in more than 50 countries across the world. The idea of flat packaging came when an employee in Ikea disassembled the legs of a table to be able to fit it in the car to transport it. This was also done so the table doesn’t get damaged while transported. By 1970, IKEA has expanded and opened stores in different parts in the world, adding to them the IKEA restaurant. In 2000, IKEA initiated a project in India against child labor in cooperation with the UNICEF where more than 80,000 children were provided with education rather than being pulled into child labor. In that same year, IKEA’s customers were given the option to shop online. By 2006 IKEA has opened more than 200 stores around the world. Strengths
Ikea has a strong recognition for its brand globally
IKEA provides unassembled furniture which doesn’t attract all consumers
Constant international expansion throughout the globe
Shipping prices are increasing which makes customers reconsider purchasing a lot of quantities A range of approximately 9,500 products at a lower cost than the market price
The durability of the furniture is low
Throughout the development of Asia and Eastern Europe, Ikea is shifting from an international to a global status
Competition by low end furniture stores such as Costco, Wal-mart and high end vendors Strong relationship with its 2,000 suppliers which are located in 53.
No free home delivery which makes customers have second thoughts
Shifting to a higher price point will seek an opportunity to move the demographics into an average value rather than a low value
Competitors trying to imitate IKEA’s business model
IKEA.com segmentation strategy depends on gathering response and feedback from their customers when they search for the desired product, this helps in acknowledging information in order to get to the needs and demands of consumers. For example, IKEA.com is available in 2 languages which are English and Spanish as viewed on Ikea’s website (US). The fact that Ikea.com provides its users with two languages is a crucial way of increasing user satisfaction which leads to an easier way of purchasing products. Having Spanish as a second language on Ikea’s website in the U.S is important because 10.7% of the country speak Spanish, keeping in mind the fact that 16.09% of the total population of the U.S are Hispanics (according to www.cia.gov) and (www.hispanicvoters2012.com). Therefore, since the Hispanics are the second largest population in the U.S (White is 79.96%, Hispanics 16.09%), it is important to have the Spanish language on IKEA’s website because they are also being market segmented. Another way that they segment their...
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