Marketing entry strategy2
Market Entry Mode4
The potential opportunities in the global market7
Market size and its growth (Sales, Development)12
New Market: BRAZIL, Why and how13
IKEA first began in 1930s when Ingvar Kamprad the founder had an idea to create innovative products related to home furnishing. The name ‘IKEA’ originates from Sweden standing for co-founder Ingvar Kamprad, his family farm - Elmtaryd and Agunnaryd, the village that Ingvar grew up in. It is on the family farm where Ingvar opened the first ever warehouse, in a small little shed in 1948. His concept was to design innovative and fashionable products by using cheap resources to keep cost low. This is where Ingvar applied what he had learnt in Smaland. However while cost-cutting and creating much lower prices compared to their competitors, Ingvar kept in mind not to affect the quality of the products. Reducing costs at any given opportunity and saving where possible was the initial concept but achieving high quality furnishing to ensure people live a better life. Now IKEA is a global trademark that represents home furnishing with over 300 stores in more than 35 countries. Marketing entry strategy
Kiefer and Steve (2009), states IKEA’s success as being nothing short of a global phenomenon. Giving IKEA such a high rating due to their success, it must suggest that they have been very wise in planning their market strategies to enter different global markets. In fact they are armed with a wide range of international experience in Europe, North America, and most recent Far East Asia. They see Far East Asia as an emerging market, which counts for a very small 3% of the company’s total sales (Kiefer and Steve, 2009, p485). They believe this market is an emerging market that carries great potential, but at the moment it is encountered to be in its infant stages. Kiefer and Steve (2009) explain that IKEA’s drastic expansion in the Far East, exemplifies their ambition to dominate an emerging market.
IKEA are very familiar with the global market due to their achievements in adapting an effective Internationalization Process, to penetrate there brand and products into different markets. Their marketing strategy can be viewed as Born Global. Liliya and Veronika (2010) defines Born Global as business organizations that are from or near their founding who seek superior international business performance, from the application of knowledge-based resources to the sale of outputs in multiple countries. IKEA’s supply network operates throughout the entire world and has become increasingly complex; due to their basic strategy to design and purchase products that entail low production and transportation costs (Enrico, 2008). They have accomplished the global strategy by creating scale economies which determine the reduction of operational costs, improving quality and knowledge transfer between markets (Dana and Gabriel, 2009). This has made IKEA a global brand that applies a global concept to offer a wide variety of furniture and home furnishings of good design and function, at prices so low that the majority of people can afford to buy them (Dana and Gabriel, 2009). This is a major selling point that would attract a lot of consumers, as they are combining low cost prices with good quality products. Market Entry Mode
IKEA is very experienced globally and would be entirely prepared to enter the Brazilian market; they have 1,300 direct suppliers and about 10,000 sub-suppliers distributed over 60 countries and 26 distribution centres shared over 12 countries (Enrico, 2008). Furthermore ironically enough research...