In 1998, the first IKEA store was opened to the Chinese market in Shanghai, the country’s financial cradle and now ready to expand further. With a consistent economic growth level, China is attractive to most multinational companies as a green of business potential. However, a successful expansion needs to reflect the way in which IKEA understands the marketplace in terms of cultural infrastructure, protection of its brand, trade barriers such as host country legislation, political structure of the intended market e.g. failed market entry in Russia and Japan, although it aims at re-entering Japan.
Earlier this year’09, the company pulled out of a $1 billion investment plan to start retailing in India because of the Indian government’s strict licensing laws for foreign-owned companies whereby the government refused to raise the ownership cap by foreigners from 51% on single-brand stores.
As attractive as the potential Chinese consumer market is with a population of 1.3billion, not all of multinational companies that have ventured have succeeded.
The method of design, production/manufacture of IKEA products as well as distribution, promotion and sales are steered along course by the “IKEA Concept”.
The basis of the IKEA Concept ideology is making available home furnishing products at affordable prices, combining design, quality and functionality. This ideology has helped give access to a vast variety of customers instead of a selective target segment, enabling better living giving a range of lower priced product
IKEA is considering further expansion in emerging markets e.g. more stores in China and new opportunities in India, thorough market assessment is essential especially one which has a pricing strategy taking into account the difference in levels of income of consumers. This paper presents a case study of IKEA’s marketing implementation using techniques such as the marketing mix (the 4Ps) model. The findings illustrate what IKEA must consider in its strategy blue print as it further expands to foster long-term customer relationships and capturing customer value as it adopts a polycentric approach.
2.The IKEA Experience3
3.1 Guerilla Marketing5
4.1The 4 P’s6
5.IKEA in CHINA8
5.1SWOT Analysis of China8
5.2PEST Analysis of China10
5.3Managing sustainable growth for the future10
IKEA is one of the largest retailers in the world and is a success story starting from the humble roots of a young entrepreneur from Sweden. Probably the biggest symbol underlying this is with the name itself, coming from the founders initials, Ingvar Kamprad, along with the farm and village from which he was raised, Elmtaryd, Agunnaryd.
IKEA has a long history of being innovators starting with its most famous concept of flat pack and self assembly design. This concept was born in 1956 out of a combination of factors including, competitors trying to influence suppliers to boycott IKEA, the need to reduce costs, and with an employee removing the legs off a piece of furniture to easier transit and an effort to avoid damage. Other concepts where IKEA was a leader with the household furniture industry included, using catalogues, showrooms, restaurants in store, using denim as a furniture fabric, and even with using “particleboard” furniture as a stronger and cheaper alternative to its main natural resource, wood.
Fig 1.1 – IKEA Global Reach and Sales Figures
With IKEA’s success, it has grown and...