IKEA Case Study: Pestel & Swot Analysis with Solution

IKEA Case Study: Swot Analysis, Business Model, Marketing and Advertising Strategies

IKEA is a Sweden-based global retailer offering assembled furniture, home decor, and kitchenware. Initially, the brand offered wallets, pens, and jewellery for 5 years before it started selling furniture.

If you take IKEA case study help, you will know that IKEA uses the price-leadership business model. The 5c analysis of business model explains its revolution around offering a wide selection of useful and beautifully crafted home furnishings at reasonable prices.

IKEA mainly uses social media platforms for advertising, and its digital presence is impressive.

The business model of IKEA is renowned for its creative designs for a range of appliances and services. The IKEA case study solution explains that interior design service is high due to its emphasis on sustainability. The success of IKEA's business model is founded on its focus on cost management, regular product development, and operational aspects that enable the business model to lower its product pricing.

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List of Sections:

• IKEA History and Origin
• IKEA Business Model
• IKEA Mission Statement, Core Values, and Strategy Statement
• IKEA SWOT Analysis
• IKEA Marketing and Advertising Strategies
• IKEA Distribution Strategy and Pricing Strategy
• IKEA 5C Analysis
• IKEA Case Study Questions and Answers

IKEA History and Origin

The history of IKEA

IKEA is named after the founder, Ingvar Kamprad, the farm where he was raised, Elmtaryd, and the nearby village of Agunnaryd.

The IKEA history timeline at a glance

If you want an extensive explanation of IKEA origin and history, ask our professionals for IKEA case study help. We will provide you with the best IKEA case study solution per your requirement.

IKEA Business Model

The IKEA business model is built to create financial and commercial value. It includes each essential element needed to run a business successfully.

IKEA Value Proposition

IKEA value proposition is an original strategy used to expand the market for its products.

• Flatpack DIY system: This system can be put together anywhere to fit the dimensions of the current apartment.
• Use of renewable resources: It helps in keeping a balance between business and the environment.

IKEA supply chain

To create a product, IKEA first determined a target price. IKEA designers had to account for all costs, including raw materials, manufacturing, and shipping, until the product arrived in the stores at the specified target price. Our IKEA case study help experts can make you understand the supply chain by providing you IKEA case study solution.

• Supply Chain Planning

At IKEA, IoS was crucial to decision-making. IoS handled the majority of the supply chain planning process. (Refer to Exhibit II for Supply Chain Planning Process at IKEA)

• Relationship Management with Suppliers

Trading offices worldwide were given instructions to locate suppliers in their respective regions and request bids from them after the product's design and the material to be used had been decided.

• Storage Management

The DCs at IKEA were highly automated, utilising conveyor belts and automated storage and retrieval systems (AS/RS). Using AS/RS significantly increased IKEA's warehousing operations' efficiency.

IKEA cost efficiency price strategies

• IKEA product designers consider pricing. In other words, IKEA decides what it wants to charge for a product and then collaborates with suppliers and designers to make that price possible.
• IKEA explains that it layers wood sheets like a honeycomb structure to create its furniture.
• Everything is produced in bulk at IKEA. IKEA can obtain production discounts and maintain lower prices by large volume production.
• There aren't many employees which saves money and sustain lower prices.
• Product information is typically on the price tag rather than hiring more staff.

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IKEA Mission Statement, Core Values, and Strategy Statement

Mission Statement for IKEA

“Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”

IKEA mission statement reflects the course of action and strategy to be used by the entity to achieve the prescribed vision from a long-term perspective.

In IKEA case study solution mission is to achieve sustainable long-term growth through investment in the future, ultimately benefiting its employees, suppliers and clients

IKEA Vision Statement

IKEA's vision statement is a brief one-liner that reads as follows:

“To create a better everyday life for the many people.”

Further reflecting on it, the company's business idea and model are consistent with this vision statement. IKEA case study help experts can demonstrate this. They explain that the business concept of the entity supports this vision by offering a extensive selection of useful and beautifully designed furniture at competitive prices.

IKEA Core Value (Analysis)

The following is a list of the shared values that govern actions and operations at IKEA:

• Humility and Resilience: IKEA has a reputation for being a humble brand in its business operations, which is especially clear in how it treats suppliers and customers.
• Cohesion and Enthusiasm: Cohesion and enthusiasm are essential, and they are of greater value because they help resolve problems in a big way.
• Constant Need for Renewal: The desire to seek innovation and creativity is a significant core value at IKEA. IKEA continues to innovate as it can guarantee that its customers will always receive high-quality goods at reasonable prices.
• Cost Awareness: Regarding the application of IKEA's daily core values, cost consciousness is, in fact, a key value and an important part of the IKEA sustainable competitive advantage.

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IKEA SWOT Analysis

A SWOT analysis is useful for examining the factors that support a company's growth or success. Strengths, Weaknesses, Opportunities, and Threats are referred to as SWOT. While IKEA opportunities and threats are external factors, IKEA strengths and weaknesses are internal ones.

STRENGTHS

1. Design And Creation
2. Affordability
3. Brand Recognition
4. Market Research

WEAKNESS

1. Poor Product Quality
2. Difficulty For Assembling
3. Shipping Problem
4. Negative Press

OPPORTUNITIES

1. New Market
2. Online Shopping
3. More Storefronts
4. Expansion

THREATS

1. Strong Competition
2. Disgruntled Employees
3. Sustainability Problem
4. Lower Market Penetration

IKEA competitive advantage in the furniture retail industry

IKEA's long-term competitive advantage stems from various factors, includes:

• Operational effectiveness
• Strong network of suppliers
• Brand recognition
• Cost leadership
• Wide range of products

Comparison of IKEA with competitors

IKEA faces fierce competition from a number of businesses, including Amazon, Tesco, Wayfair, Home Depot, American Woodmark, etc., despite having a strong reputation as a brand. To offer products that appeal to a wider range of customers, IKEA must keep innovating.

IKEA is a major player in the retail furniture industry. Its ability to satisfy customer needs by utilising a broad product portfolio and cutting-edge design concepts gives it a competitive advantage.

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IKEA Marketing and Advertising Strategies

IKEA is among the world's top producers of accessories and furniture for homes. IKEA's marketing case study examples are explained on the basis of sophisticated customer and market research. Because of its stylish, economical products and innovative marketing strategies, the company has built a strong reputation.

IKEA sends design experts into people's homes to listen to their concerns and provide feedback. This enables IKEA advocates to base marketing choices on consumers' experiences rather than just data or surveys.

IKEA marketing and advertising campaigns

IKEA frequently releases heartwarming advertisements. If you've been paying attention to the advertisements and IKEA marketing campaigns, the goal isn't to sell a product so much as an idea. The advertisements put together the IKEA case study help solution that can be used for better understanding.

The power of a ‘bookbook’

Moving? Ikea’s there to help

IKEA’s Take On Augmented Reality

Hyper-Localised Campaigns

Let play unwind your mind

IKEA target audience and brand positioning

Ikea caters to the specific practical requirements of each target market, focusing on adults between the ages of 16 and 34. It offers answers for:

• Bachelors
• Singles living away from home
• Recently wed couple
• Families with children
• Older parents with dependent children
• Nuclear Families
• Members of army
• The retired
• Students
• Professionals

Following are the categories of IKEA brand positioning:

• Mono-segment positioning: This kind of positioning is linked to appealing to the requirements and desires of a specific customer segment.
• Adaptive positioning: This positioning strategy is founded on routinely shifting the positioning of goods and services to consider shifting consumer preferences.
• Aesthetic positioning: The biggest furniture retailer in the world creates its products using the "democratic design" idea.

IKEA advertising & marketing case study examples

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IKEA Distribution Strategy and Pricing Strategy

IKEA distribution strategy and store layout design

IKEA's suppliers ship their goods to different IKEA sites using outside logistics firms as part of the distribution strategy.

• Transport plays a significant part in enabling goods to move between these organisations' facilities by acting as the vital link between them.
• The Swedish furniture and home accessory division at the IKEA distribution centre in Valls, Spain, is managed by the international logistics services provider Maersk Logistics.
• A similar collaboration between Maersk Logistics and IKEA exists in Malaysia and Sweden.

The layouts of many IKEA stores are comparable, and they generally have the same amenities and spaces.

• Parking lot
• Smaland Children's Corner
• IKEA Family booths
• Food counter
• Self-service checkout options
• Showroom
• Market Hall
• Self-serve area
• As-is section
• Counters for home delivery
• A station for merchandise pick-up
• A counter for exchanges and returns
• Recycling service

IKEA pricing strategy and price positioning

IKEA incorporates the following into its selling strategy:

1. Cost leadership: The cornerstone of IKEA's pricing approach is competitive prices. "At prices so low that as many people as possible will be able to afford them," the business says of its product prices. Due to the pricing scale, the business enjoys a global reach, and the home improvement and furniture chain can maintain its cheap prices.
2. Psychological pricing: IKEA's pricing explained in IKEA case study solution approach includes psychological pricing as a key component in which the retailer appeals to customers' emotions rather than their rational side.
3. Geographical pricing: Geographical pricing is used by IKEA, so prices vary among the chain's various home furnishings and renovation stores.

Comparison of pricing strategy with IKEA’s competitors

According to Statista.com, IKEA made 1.189 billion euros in net profit and 39.6 billion euros in total sales in 2020.

And its competitors

1. Wayfair

It was the largest online furniture vendor in the USA in 2019, with a market share of 33%. In 2020, Wayfair generated $14.145 Billion in sales and posted a net profit of $9.127 billion.

2. Amazon

According to Statista data, about 30% of the market share was owned by Amazon in 2019. Wayfair was responsible for about 33% of all online furniture purchases in the same year.

3. Tesco

It generated a total profit of 7.961 billion British pounds and 53 billion British pounds in sales during the fiscal year that concluded in 2021.

4. American Woodmark

The company increased its sales from $1.65 billion in 2020 to $1.74 billion for the financial year that concluded in 2021, according to Marketwatch. The market capitalization on Ycharts as of August 16 was $79.23.

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IKEA 5C Analysis (Company, Customers, Competitors, Collaborators, Climate)

The 5C model is focused on 5 important "C's." Each C stands for a significant component of your overall company model.

The 5 C's of Marketing include:

1. Company
2. Collaborators
3. Customers
4. Competitors
5. Climate

You can get a broad overview of your company by analysing these aspects of it.

The 5C Marketing Analysis Process

1. Company

An evaluation of a company might be a smart place to start if you want to learn more about it. During this process, it's also crucial to be open and truthful, particularly about your flaws and the areas where your rivals outperform you.

2. Collaborators

Include a list of all the people and services your company works with. Consider it your company's directory; you can consult it to determine who to contact to have it fixed swiftly. Note each collaborator's main contact person, email address, phone number, and any other pertinent information.

3. Customers

Of the 5 Cs, customers are the most crucial. You'll be much more successful in delivering products your customers want to purchase if you clearly understand who your customers are, what they want, and how well your product meets their needs.

4. Competitors

As important as knowing your own business is understanding your competitors' businesses. You'll have a huge advantage if you know your competitor's general market position, strengths, and flaws; after all, you can't compete successfully if you don't know who your actual competitors are.

5. Climate

Focus on variables outside of your own company that might have an impact on how you conduct business when analysing the environment. Industry patterns, societal trends, legal trends, and emerging or new technologies will all fall under this category. As for example you can consider how people feel and think, as well as the kinds of things that are essential to them, when examining societal trends.

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