Ikea - the Inner City Strategy Assessment

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M19CBS – Strategic Marketing 2007 - 2008
By: EK


The ‘inner city’ strategy

By: MK & FA

Table of contents


I.Company background3

I.1. Historical development of the company4
I.2.The success of the company6
I.3.SWOT analysis7

II.The nature of the marketing strategy of IKEA 10

II.1.The currents marketing strategy of IKEA10
II.2. Comparaison with competitors' strategy15
II.3. STP and Relationship Marketing17

III.The marketing strategy of the new 'inner city' strategy of the company27

III.1.The success of the 'inner city' strategy of the company27
III.2. Carrying out marketing research to support the findings 29




IKEA is a success story, starting from a poor village in Sweden and being told all around the world now. It was built on the philosophy, which sounds impractical on a first glance: Giving higher quality at lower prices. How Ingvar Kamprad designed the strategies and implemented them, phase by phase, region by region and how IKEA entered into the list of “Elite TNCs” is the result of successful strategies. In this report we analyse these strategies and the new strategy of launching an outlet in Coventry town centre and how this shift in strategy is being anticipated by the locals. Also we analyse the segmentation, targeting and strategic positioning of IKEA and the way company is managing the relationships with the customers. Comparative analyses were carried out to evaluate the nature of competition within home furnishing industry. Primary data was sourced from local residents of Coventry, which comprised of qualitative and quantitative data. The data was analyse to measure the response that IKEA is receiving from residents. Finally the report is concluded supported by the research undertaken about IKEA Coventry.

I- Company background
I.1. Historical development of the company

IKEA, which is associated to the name of its founder and his native village, is one of the large furniture retailers in the world. The company was founded in Sweden by ‘Ingvar Kamprad’ in 1943 and the group has grown impressively since 90th. The company operates in more than 30 countries, Europe, US and Asia (Appendix: 8). The IKEA’s fortune is estimated at about 27 billion in 2007, an increase of 21% over 2006, which puts it in a sustainable position (Appendix: 1).The marketing strategy implemented by IKEA leads to reap the long term economic benefits (Anon 2007a).

The first IKEA store was opened in 1954 at Almhult in Sweden with fifteen employees, and today, the group owns more than 300 stores in the worldwide market with more than 118,000 employees (Appendix: 1). The expansion of IKEA group has been seen as an evolution of three stages: The first stage of growth was in Scandinavian market (Norway, Sweden and Denmark), then European market and finally the group has moved into the international market. The growth of the company on the domestic market was in 1950 and 1960. During this period, the Sweden furniture has devoted all his efforts and energy to build and strengthen the brand. In 1963s, following the success at local market, the company has expanded into new geographic areas by opening stores in Norway and Denmark (Dupuis and Dawson 1999).The success of the company in the domestic market is also followed by an expansion in European territory by opening the first store in Switzerland in 1970. After Switzerland, the company has continued its development in Western Europe, in Germany, France and Belgium. Today, most of IKEA stores are located in Europe.

To maintain the growth and to decrease dependency from European market, the company has entered the international market. During 1970s and 1980s the group enter the worldwide development by opening stores in Australia and Canada. The company has also expanded its geographic area to the American market...
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