Ikea Study Case

Topics: IKEA, Product management, Marketing Pages: 8 (2937 words) Published: August 24, 2013
“IKEA invades America“
Case Study

27.11.2012
Marketing II
Saskia Jaeger, David Varnai, Lukas Razmilić

Table of contents
1What factors account for the success of IKEA?4
2What do you think of the company’s product strategy and product range? Do you agree with the matrix approach described in Figure B of the case?5 3Despite the success there are many downsides to shopping at IKEA. What are some of these downsides? IKEA’s vision statement (in Figure C of the case) describes how the company seeks to build a “partnership” with its customers. What do you think of this vision statement?6 4The fact that IKEA plans to have fifty stores in operation in the USA by 2013 is an indication of how optimistic the company is about the viability of its value proposition in this country. Do you think IKEA is being overly optimistic in its growth plans? How would you improve IKEA’s value proposition to make it even more attractive to American consumers?7 5To achieve the kind of growth IKEA is hoping for, should the company change its product strategy? If so, in what way(s)? What about its product range — are there limitations to the matrix approach? Should the company expand its product lineup to include a greater number of styles and price points? In what other ways should the company consider changing its product lineup?8 6If you had to predict, what do you think IKEA’s value proposition and product lineup will look like in ten years?9 7Industry observers have suggested that IKEA should open up smaller, satellite stores across the United States ( e.g. in shopping malls, strip malls, etc.) By offering a limited range of IKEA products, these “IKEA Lite” shops would presumably give consumers who do not otherwise have access to a full size IKEA the opportunity to experience the brand. In addition, consumers who do live near a full size IKEA would be able to use these mini outlets to make minor purchases (e.g. purchase a set of mugs as opposed to an entire living room set). Do you agree with this idea? Why or why not?9

What factors account for the success of IKEA?

There are several factors for the success of IKEA. Firstly, IKEA is known for its product differentiation and cost leadership. Although they have high sales revenues they do not become less sensible for cost-cutting which means that they try to save costs in as many areas as possible. Costs are kept under control starting at the design level of the value-added chain, by packing items compactly in flat standardized emblazes and stacking as much as possible to reduce storage space during and after distribution in the logistics process. Besides, employees are constantly reminded to save energy by turning of the light or computers if they are not being used. Additionally, since the furniture comes unassembled, people have to build up their furniture on their own at home but therefore pay way less money than at other retailers. Therefore they especially reach price-conscious customers. This actually means that they are operating in a niche market because normally Scandinavian furniture stands for high quality and therefore high prices, but they achieved to combine simplicity, design and space – and of course low prices. Secondly, IKEA’s store concept distinguishes itself from other furniture retailers. Its stores are self-service and feature special amenities such as a childcare center, Swedish cafés and often also stores where you can buy typical Swedish food. Therefore the shopping experience itself is very appealing to customers. Besides, although the IKEA stores are huge, the store layouts are carefully designed. There is always a light and bright atmosphere and the model bathrooms, living rooms, etc. are decorated in a cheerful and tasteful way. Moreover, it seems that the working atmosphere for employees is very personal and close since they all call each other by their first name, no matter which hierarchic position the person holds.

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