The Analysis and Comparison of IKEA’s ‘bricks’ and ‘clicks’ Operation by 4Ps
1. The background of IKEA
IKEA has been founded by Ingvar Kamprad in 1943. After more than 60 years of vigorous development IKEA has become the world’s leading multinational company and is the world’s largest company of household goods and retail (Kling & Goteman, 2003). On February in 2010 IKEA has 313 large stores in 37 countries and areas in the world. The annual printing volume of IKEA catalog is up to one hundred million. And IKEA catalog contains approximately 12000 goods. On August in 2012 IKEA disclosed the financial and economic situation for the first time. By the 2011 August the net profit is €2.97 billion and the income is €251.7 billion (Ikea, Business, the Guardian, 2012).
Retail and e-retail should learn from each other and match with the other. Retail should consider the timely online information. E-retail is mainly the role of a timely and effective sales channel (Gray, Peltier & Schibrowsky, 2012). This paper will firstly introduce the IKEA’s “brick” operation using 4PS. Following this, it will analyze IKEA’s “click” operation using 4PS. Finally, through the analysis and comparison of “brick” and “click”, it will advance some recommendations for the retail and e-retail of IKEA.
3. The analysis of operation of IKEA’s ‘bricks’
➢ Accurate market positioning
IKEA’s business philosophy is to provide a wide range of beautiful and practical products at an affordable price. From the beginning, IKEA has decided to provide products for the majority (Edvardsson, Enquist & Hay, 2006). ➢ The style of products is unique and that makes products conductive to sales. All products sold by IKEA are designed by IKEA lonely. The style of product is distinctive. IKEA emphasizes the style of products that are simple, natural, fresh and unique.
➢ IKEA has many kinds of products.
IKEA has many kinds of products and there are more than ten thousand kinds of products for customers to choose. Basically, the customer at any taste can buy the needed household good in IKEA (Baraldi, 2008).
➢ IKEA improves the product performance and reduces the price through continuously taking new materials and new technology.
➢ IKEA is in close cooperation with OEM in order to reduce the cost. In the process of product development and design, the design team keeps close cooperation with OEM. Under the OEM’S help IKEA is likely to find a cheaper alternative material and reduce costs. In the production process IKEA may convince OEM to invest equipment. IKEA may promise OEM some orders. IKEA will save investment (Baraldi, 2008).
➢ The global production management and logistics system of IKEA is conductive to reduce the cost. In order to further reduce the price, IKEA adjusts the production distribution in the global scope. According to the change of product sales IKEA continuously adjusts its production orders distribution in the global scope (Lewis, 2005).
The channel strategy of IKEA is to open stores independently in the world and monopoly self-designed products. Through the way IKEA directly faces the consumers and control the terminal sales channels of the products. IKEA has more than 180 chain stores in the world and these stores are distributed in more than 40 countries (Lindqvist, 2009).
4) Promotion strategy
➢ Catalog display
Catalog display has greatly facilitated the IKEA product sales. The list not only lists the photos and prices of products, but also can comprehensively perform the product characteristics in functionality and aesthetics (Lewis, 2005).
➢ The skillful product display in store can promote purchase The product display in IKEA store is skillful. In the IKEA display area there are many separate display units and the effect of matching different furniture in the different functional areas is played in each unit (Baraldi, 2008).
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