Ikea China Marketing Analysis

International Marketing Report of IKEA in Chinese Market

[pic]

12BSP040 INTERNATIONAL MARKETING

School of Business and Economics
2013. 04. 22
Contents

1. Executive Summary 1
2. Introduction 2
3. Internationalization 3
4. Foreign Market Segmentation and Targeting 5
5. Environmental Analysis 7 5.1 Strengths 7 5.2 Weakness 8 5.3 Opportunities 9 5.4 Threats 10
6. International Marketing Objectives 11
7. Foreign Market Entry Strategy 12
8. Product/ Service Mix Preparation 13 8.1 Product---Chinese Beauty 13 8.2 Service---DIY Guiding Video 16
9. Conclusion 17
References 19
Appendices 21
Executive Summary

As the world's largest furniture retailer that designs and sells ready-to-assemble furniture, IKEA was founded in 1943 in Sweden by Ingvar Kamprad. The event that marked the onset of internationalization, however, came in 1963 when the first stores outside Sweden were opened in Norway driven from home by peer pressure which was aiming for raw materials with lower cost. In October 2011, IKEA has already had 332 stores in 38 countries. As for china, IKEA opened its first store in shanghai in 1998 (excluding Hong Kong in 1975). Currently, it only has 11 stores in China and the expansion speed is much slower when it is compared with other foreign furniture companies such as British B&Q which already had 38 stores in China (Li, 2010).

China enjoys the largest population in the world so it boasts a huge potential in market demand and a sound foundation for development. The furniture industry in China is booming while currently, the furniture industry in China is characterized by small workshops which mean the lack of competitive local brands so it is optimal opportunity to win market share from rivals. Furthermore, there is no branch of IKEA in some big cities in the second tier, namely Tianjin, Wuhan, Xian etc. which have significant consumption capacity. Besides, the products range of IKEA in China is

References: Burt, S., Johansson, U. and Thelander, A. (2011) Standardized Marketing Strategies in Retailing? IKEA’s Marketing Strategies in Sweden, the UK and China. Journal of Retailing and Customer Services, 18, pp.189-190. Chaletanone, W., Cheancharadpong, W. (2008) Internationalization of IKEA in the Japanese market and Chinese markets. 2008 Master thesis- Group 2022. Evans, J, Treadgold, A & Mavondo, F .(2000) Psychic distance and the performance of international retailers-A suggested theoretical framework, Journal of international Marketing Review, vol.17, iss.4/5, pp.373-391. Kidman, A. (2012) How Do IKEA’s Prices In Australia Compare? Lifehacker.com.au. Retrieved 15 May, 2012 from http://www.lifehacker.com.au/2012/05/how-do-ikeas-prices-in-australia-compare/ Hollensen, S, (2007) Global Marketing, 4th edition, Prentice Hall. IKEA Group. (2012) 2012 Facts & Figures. Inter IKEA System B.V. Hansegard, J. (2012) IKEA Taking China by Storm. Retrieved 26 March, 2012 from http://online.wsj.com/article/SB10001424052702304636404577293083481821536.html. Jensen, J. R and Szulanski, G. (2006) Presumptive adaptation and the effectiveness of knowledge transfer, Strategic Management Journal, Vol 27, Issue 10, pages 937–957 Jobber, D Johanson, J., & Vahlne, J. -E. (1977) The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1): 23–32. Jonsson, A. and Foss, N. (2011) International Expansion through Flexible Replication: Learning from the Internationalization Experience of IKEA. Journal of International Business Studies, 42, pp. 1085-1090. Li, Y. (2007) IKEA Success in Chinese Furniture, Bachelor Thesis, Jyvaskyla University of Applied Sciences. Retrieved March 15, 2008, from Jyvaskyla University of Applied Sciences digital theses. Li,Z. (2010) The Competitive Advantage of IKEA and IKEA in China",Bachelor Thesis, University of Gavle. Retrieved June, 2010, Department of Technology and Built Environment Miller, P Root, F., (1994) Entry strategies for international markets: revised and expanded edition, The New Lexington Press, Lexington, MA. Salzer, M. (1994) Identity across border: A study in the “IKEAworld”, Linko¨ping Studies in Management and Economics 27. Linko¨ping: Linko¨ping University. Srivastava, N. and Andersson, G. (2006) One Design Suits All. Bachelor Thesis in Business Administration. Wei, L. and Zou, X. (2007) IKEA in China: Facing Dilemmas in an Emerging Economy. Asian Case Research Journal, 11(1), pp. 14-15. What China Times, News Economy. (2012) War on the home front as IKEA 's suppliers become its rivals. WhatChinaTimes.com. Retrieved 23 September, 2012 from http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120923000090&cid=1102 Zhu, D. and Zhou, H. (2010) Towards Efficient Road Transport in Logistics Operations. Master’s Thesis within International Logistics and Supply Chain Management. Network map of IKEA China Source: IKEA Internal Document (2010) [pic]