This paper analyzes the case article entitled “IKEA: Design and Pricing”. It aims to analyze IKEA’s business strategy of introducing its “good quality at low price” products in North America and identify the factors and strategies that IKEA must consider and apply to ensure its success.
IKEA’s Challenge: Products Success in North America
IKEA is known for its product strategy of providing low cost household items. This is made possible through IKEA’s constant process of driving costs by having efficient supply chain and business processes such as finding low cost suppliers, optimizing design of products and minimizing distribution and logistics costs. With its success in 32 countries, IKEA’s current business strategy is to expand its market by introducing its products in North America. The main concern that IKEA faces with its action is whether its product strategy of providing good quality household items at low price will succeed in the North American market.
IKEA’s Plan and Strategies for the North American Market
Immediate Action Plan and Strategies
Understand Customers’ Requirements: Product Re-design and New In-store Experience IKEA must conduct an extensive market research to determine whether the North American market will be receptive to its existing product designs or not. For example, in furniture products functionality is an essential feature; however, it is craftsmanship or design that sells them. By conducting the market research prior to product introduction in North America, IKEA can already detect such problem and modify its product design to fulfil customer requirements. This shows that IKEA understands its customers’ requirements. Also, these product design modifications can also be reviewed and tested in existing market to determine if there will be demand on these products. This will allow IKEA to synergize its product design ideas coming from the different market demands.
Aside from conducting market...