Ikea Business Strategy

Topics: IKEA, Marketing, Strategic management Pages: 5 (1565 words) Published: January 23, 2013
The Study of Ikea’s Business Strategy
Price and promotion
 Ikea is not only a furnishings market brand, but also a furniture brand. Through a series of operations, in people's eyes, Ikea is not simply a purchase house ware places, it represents a way of life. In our mind, Ikea's success not only depends on its integration of the trade, logistics, but it used to integrate the core idea of trade, logistics-lifestyle (Margonelli, Lisa 2002). As we said before: using Ikea’s products is just like eating McDonald's, drinking starbucks coffee, becoming a symbol of a lifestyle. Ikea's management idea is "provide various kinds, beautiful and practical products, promising that most people can afford the household articles for use". In Britain, Ikea position himself into the provider of the household articles for the mass. Because of its relatively low price and effective promotion, Ikea is well received by the low- and middle-income families. Ⅰ. Pricing decision

According to Pratt, Alex, an key point to effective pricing is to find ways of placing yourself in the shoes of the customer, patient enough to spend the indispensable time to consider that what it is that they worth enough to cost, accordingly , then to build your pricing model(Pratt, Alex. 2007, p.20). Therefore, Ikea lists prices that are 30 to 50 percent lower than completely assembled competing products. Ⅱ. Price strategies

It is the low price that based of Ikea’s ideal, business inspiration and conception (Kumar, Nirmalya. 2006). All the production of Ikea is involved the basic idea that low price can make household items, various in kind, attractive and useful, reached by everybody. So Ikea is always emphasizing the strategy of low price (Åsa Thelander 2009). Thus, it constantly strives to put every one thing to do better through more simple and efficient way, in order to make it more cost-effective. It is difficult to set at a very low price by the designers themselves to finish a designing,. Behind Stylist, there is a team, which is consisted of designers, product developers, purchasing personnel, etc. These people cooperate together to determine the best solution in the range of cost, making various performance variables within the scope of the optimal solution. They debate about product designing, used materials, and choose appropriate suppliers. Ⅲ. How to make low price

How to realize the strategy of low price while keeping the quality of the products is not only a slogan. Actually, low price strategy is put in effect throughout from product design to model, selection, OEM choice, logistics management design, store management and the whole process (De Melim, Rrchard 2007). Ikea’s designing concept is "the same price products, whose design cost less". Ikea created "module" type of furnishings designing technique .Ikea furniture is divided into assembly goods, distributed into different modules and block designing. Different module can be based on costs in different area production; simultaneously, some module in diverse furniture can also be used (Brian Leavy 2004). Thus not only lower the costs, the entirety cost of products can also get reduced. To cut down the cost, Ikea makes a close cooperation with OEM, mainly manifested in two points: the process of merchandise design and the construction (De Melim, Rrchard 2007). With the aid of the factory, it is possibly that Ikea has found cheaper substitute material, easier to lower the price of figure, dimension, etc. When product designing is completed, to persuade the OEM to invest the equipment, Ikea promised them a certain quantity of order (Burt, S, Johansson, U, Thelander, A 2010). So this factory is willing to purchase equipment for Ikea production. For Ikea, it saves investment. IKEA products are packed in flat packages, compact, which helps reduce transport costs and the direct reduction of carbon dioxide emissions from land transport (Eleanor R.E, O’Higgins 2003). The...
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