IKEA has a distinct market segment in the home furnishing arena. It has created a niche market with innovative designs, quality, and low price structure. IKEA has employed the cost leadership and product differentiation strategies through low price structure and innovative designs, respectively. Additionally, the uniqueness of the disposable furniture concept allowed IKEA to capitalize on the first mover advantage (Harrison & Enz, 2005).…
On January 01, 2009, Modern Material Handling announced that IKEA Group3 (IKEA), world‟s largest furniture retailer4, had won the Modern‟s Productivity Achievement Award5 for the Warehousing/Distribution segment for the year 2008-09. Founded in 1943, in Sweden, IKEA focused on offering a wide range of good quality, stylish, well-designed, and functional furniture at a low cost so that more people could afford it. IKEA kept cost reduction at the center of any decision making. It made efforts to improve its internal supply chain processes like packaging, warehousing, and transportation which contributed to its cost cutting objective. Its most differentiating factor was its flat packaging system which had significantly improved its operational efficacy. IKEA was ranked 35th in the list of the top 100 brands by Business Week6 for the year 2008-09. The company‟s brand value was estimated to be US$ 10.9 billion in 2008. For the financial year 2008, IKEA registered sales of US$ 28.8 billion. According to industry experts, IKEA‟s supply chain management was the key factor for the success of the company. The company considered factors like carriers used for transportation and pallets used in warehouses to base its decisions like furniture design and packaging. As a result, IKEA was managing its costs better than its competitors and was able to offer products at 30% lower costs. IKEA maintained a long-term relationship with its suppliers and assisted them in improving their processes so that it would help in cutting costs further. The company did not offer free…
IKEA increased its growth rate by taking its products developed at home and selling then internationally. This expansion allowed the company to offer its products not only to the Swedish consumer, but also to other consumers around the world, in an effort to increase profits and further develop the company. The company had a defined strategy when it chose to make a move on the international market, a strategy that focused on cost reduction that allowed its offerings to be sold faster at a discounted rate. The Klippan, Ikea’s best selling item had such a success that the company decided to work with suppliers in different markets of the world to avoid the costs associated with shipping the product all over the world. This also allowed the company to be closer to its consumers in different market around the world, and to better understand the culture of each of the countries that IKEA sold its products.…
IKEA was founded in by Ingvar Kamprad. Kamprad started the company at the young age of 17, and as the company began to grow and flourish he focused on certain ideals which he later used to build the company’s vision statement. Kamprad wanted a business that could “create a better life for the many people”. He worked to achieve this goal by offering low prices to consumers whenever possible. Innovation within the company always led to savings for customers which only helped increase his consumer following.…
When furniture titan IKEA finally consolidated its business strategy in the US by the mid-90s, customers where typically defined as well-traveled, sophisticated yet practical in taste, likely risk-takers, technologically-savvy, and connoisseurs of fine food and wine. Customers at IKEA look for a shopping experience that fulfills and exceeds their expectations by finding multiple types of furniture and other compliments (i.e. kitchenware, decorations, etc) that are practical and can accommodate a “good-living” standard.…
This paper looks at IKEA, one of the global leading furniture retailers and a very…
One of IKEA’s long-term advantages is its brand. To many consumers, IKEA means low-priced furniture, Scandinavian design and style, shopping convenience. IKEA’s cheap furniture does not make consumers feel cheap but rather beautiful, convenient and well-designed. IKEA has a unique shopping culture that makes consumers feel a “real Scandinavian design and style” when they shop. Thus, brand awareness gives IKEA a great power in the US market. However, IKEA’s motto is “low price with meaning”. “With meaning” for US market is different from the other markets. If IKEA cannot capture what US customers want, its offerings will become “low price and no meaning”. IKEA already listens to US customers’ needs but it should focus more on local market point of view.…
The IKEA concept began when Ingvar Kampard, an entrepreneur from southern Sweden, had an innovative idea. In their province the soil is thin and poor, the people have the reputation for working hard, living frugally and making most out of the limited resources. So when Ingvar started his furniture business, he applied the lessons he learned to the home furnishings market. Ingvar’s innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible except on ideas and quality.…
IKEA runs a diverse range of 9,500 products which involve home furniture and accessories (The Time 100, n .d). This international home products company design and sells ready-to-assemble furniture such as bed and desks, appliances and home accessories (Rah man et al, 2013). According consumers perspectives and IKEA’s promotion mix, it clarifies products into outdoor furniture, eating, desks, mirrors, children’s IKEA, cooking, bathroom storage, beds and mattresses. IKEA provider extensive…
Strengths Significant market presence Ikea is one of the largest furniture retailers in the world. The group sells approximately 9,500 home furnishing products in about 287 stores in 26 countries / territories. Apart from this, Ikea has 29 trading service offices in 25 countries, and 26 distribution centers and 11 customer distribution centers in 16 countries. The group's emphasis on providing home furnishing products at low prices has been the main reason for the wide spread customer acceptance…
IKEa is a Swedish low cost home design firm. The core competencies of this firm are that you don’t get much service but you can buy the products at a low price. In every store of IKEA are there showrooms where you can see the furniture in a real life setting before you buy the products. After you went trough the showrooms and you found something for yourself. You can pick up the products in the warehouse downstairs. This warehouse has a self-service base, so you buy immediately your products and you don’t have to order them. The products that you can pick up in the warehouse are very flat packed so they are easy to transport. The end products of IKEA are home design product as furniture, decoration and kitchens. The competencies are linked with the end products in a way that it is easy to buy the products because you don’t have to order and the product are for sale for a verily low price.…
[ 1 ]. Landry Capdevielle, Min Li, Paulina Nogal, “Dissertation in Marketing” (2007) University of Halmstad. (1-75) **link/URL**…
IKEA obtains customer loyalty by continuously maximizing customer value with greater customer benefits and less customer costs. First of all, it offers customers leading-edge Scandinavian design at extremely low prices. IKEA has grasped the attributes and benefits that their customers look for, which are high quality, fashionable design and convenience with low price. It can offer these because it adds the country of origin effect to its products, for instance, fashionable bargains of products with unusual Swedish name. It is also because all the products can be transported easily either by the company or the customers themselves which reduces the cost and contribute to the convenience benefits of both parties. In addition, IKEA sources from multiple suppliers around the world which ensures the lowest price possible and passes on savings to the customer. While offering well designed and quality products, IKEA also takes care of customer value by reducing prices annually, which becomes a very important factor in building customer loyalty.…
This paper is an analysis of IKEA’s business structure and plan per the operations management book page 65 and page 66. Four questions were presented at the end of the case. I answered the questions below.…
Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a need or want. According to Pan (2005) it covers more than the physical goods the company wants to sell, it is the goods and an attractive assortment of products for consumer to buy in the store combination. IKEA make itself attractive by offering wide range product. Their product range focuses on good design and function at a low price.…