Will We Still Love Ikea?

Topics: Price, Cost, IKEA Pages: 3 (675 words) Published: November 13, 2011
1. Explain, in detail, the aspects of Ikea strategy that make it a Hybrid strategy

Hybrid strategy becomes very important and more and more popular as global competition increases. Companies which are using this strategy are more able to adapt quickly to environmental changes and learn new skills and technologies. It helps to produce products with differentiated features or characteristics that customers’ value and provide these differentiated products at a low cost, compared to competitors' products.

Low prices and creation of value is IKEA’s winning strategy. Differentiation enables the company to charge premium prices and cost leadership enables the Swedish firm to charge the lowest competitive price. Thus, the company is able to achieve a competitive advantage by delivering value to customers based on both product features and low price. In a word, IKEA sells a wide range of functional and well-designed furniture at a very competitive price that majority of people can afford to buy. IKEA really considers customer’s expectations (good quality products at low prices) and even succeed to add more value by involving them in the assembly of the furniture. IKEA targets middle class population, more precisely what Hogsted calls “Smart As”, the ones who buy wisely. The value of IKEA’s brand also appears through a cost-cutting culture or even a Spartan one. IKEA’s hybrid strategy cost reductions are available outside its differentiated activities (marketing, product range, logistics and store operations). Achieve cost leadership through multi level competitive advantage on supply side with low cost logistics and large retail units in suburban areas allow them to sell products 20 to 40% cheaper than other competitors. IKEA’s customer expectations of service levels are low allowing for cost reductions as customers are prepared to transport and build their products. A unique cost structure flat pack (with a reduction of the storage space) gives IKEA as low cost...
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