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New Product Management In IKEA

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As a new Product Manager you have been asked to identify a suitable new product/service for your organisation. At this stage, your manager has requested an interim report which identifies a suitable opportunity and a recommended new product concept.




The most significant activity regarding any company is considered being new product management. New products will be taking the form of tangible products or services. After discovering the new product idea as well as approving it in respect of development, the other organizational departments such as sales, engineering, marketing as well as manufacturing will be getting involved in the process to get the new idea to the market in respect of having a successful launch. In this respect, there is the requirement for identifying an appropriate scope relating to the new product concept.

Brief description of the organization and the market it which it is operating

IKEA is a multinational group, having it’s headquarter in the Netherlands. The company is into the business of designing as well as selling ready-to-assemble furniture, appliances for the kitchen as well as accessories for the home. It is regarded as the world’s largest retailer of furniture. The organization is famous regarding its modernist designs of different kinds of appliances as well as furniture and also known for its focus towards controlling the cost, operational details, as well as continuous development of products.

IKEA is operating in 47 countries and is having 389 stores. In March 2013, IKEA did the opening of its first outlet in Qatar, Saudi Arabia. IKEA’s position as the market leader grew stronger as there was an increase in market share by 0.5% to 7.7%. IKEA is having a global presence in the market and more than 600 million customers are visiting the IKEA stores every year. Having a strong brand reputation is ensuring that the customers are mostly selecting IKEA over its competitors.


Selection of a potential opportunity for IKEA

A potential opportunity for IKEA will be to expand further into developing economies. In this context, it can be stated that the retail markets are recently having on an average a minimum of 5% market growth, which assists in opening major opportunities regarding the revenue growth for IKEA. The organization is presently operating in majority of the developed economies but has not yet stepped fully into the developing economies other than China. There are huge opportunities in respect of IKEA for having its expansion into Brazil, Indonesia, Mexico as well as Malaysia in respect of increasing its presence in these markets for sustaining future growth (Peppard 2014).

In this context, there is the requirement for discussing the strategic fit as well as product portfolio analysis. Product portfolio will be allowing the product manager in seeing how effectively a new product will be fitting the strategic product profile or product range regarding IKEA. The portfolio analysis value as well as to understand new products’ strategic fit within the present products family is essential during the early stages of identifying the opportunities. Certain thought can also be provided regarding the strategic fit requirements within the market relating to the preference of the customers in respect of competing products (Hammer 2015).

Generation of two new product concepts

Two concepts that need to be selected and applied to the potential scope for IKEA are ‘Analytical attribute approaches through the introduction and perceptual mapping’ as well as ‘Analytical attribute approaches through trade-off analysis and quantitative techniques’.

Analytical attribute approaches: introduction and perceptual mapping

Analysis of attributes through GAP analysis

There are three significant kinds of attribute analysis, which are determinant gap analysis, perceptual gap analysis using attribute ratings as well as perceptual gap analysis using similarities.

Determinant gap analysis states that at certain times from experience, we have sufficient knowledge regarding the product for completely appreciating the attributes that gets valued by the customers. Depending on this, our own managerial decision can be made regarding the attributes that need to be used to create products and the designing the attribute levels through the use of our individual decision.

In this regard, the current marketplace attributes are taken into consideration and plotted on two dimensions. By the use of judgemental approach, the mapping or plotting of competitors offerings are done on selected dimensions. The unfilled gap in the map can be considered being a potential idea source. The expression regarding qualitative dimension can be done in respect of interval scale for obtaining a more quantified version of the map. Determinant gap analysis is considered as the Attribute Rating (AR) method since the aspect of providing as well as rating of distinct attributes are done. One technique that can be used in connection with determinant gap analysis is considered being factor analysis (Solomon 2014). Factor analysis is an effective technique relating to data reduction and could be effective when there is the consideration of a number of dimensions.


Perceptual gap analysis using attribute ratings states that the perceptual maps might be overcoming this deficiency through the active assessment of the consumer’s insights, placing them on a gap map. Within this evaluation, attributes are found through focus groups for determining the full extent of valued traits, which are then rated in respect of the availability of the brand within the market.

When the attributes are unknown, there occurs the employment of perceptual gap analysis. In this regard, different contributions are subjected to a pair-wise evaluation and there occurs the construction of a map for illustrating the association amongst the offerings.

Perceptual gap analysis depending upon similarities states that the similarities gap map will be advancing the mathematical evaluation level. The reason for this is that the perceptual maps depending upon attribute ratings might not be capturing every trait that will be matter. Mostly within focus groups, individuals are finding difficulties to describe their views regarding the products (Hammer 2015).

Similarity/Dissimilarity analysis is considered being a small modification of the gap analysis wherein the evaluations of the products are done in respect of their similarity/dissimilarity to one another, depending on a given set of attributes. The idea is having a perception relating to the marketplace competitiveness rather than a gap in respect of potential offering. This approach will be consisting of two different evaluations such as similarity analysis as well as dissimilarity analysis. In the similarity approach, there will occur the comparison of each offering with the other regarding a set of defined attributes by the use of “Yes/No” questions. After the evaluation of all the products on similar set of attributes, there will occur the calculation of the percentage regarding same type of responses regarding all the products (Stark 2015).

Analytical attribute approaches: trade-off analysis and qualitative techniques

Trade-off or conjoint analysis

Conjoint analysis is representing an evaluation tool for discriminating within the market buyers through their investigation of their preferences relating to specific characteristics, functional as well as beneficial aspects. This is a very popular process within the developers of new products, since the simulation of the results can take place on a computer and can be used for accurate prediction of potential sales shares of various new ideas regarding products. In trade-off analysis, there occurs the comparison of the traits against the buyer’s willingness to trade-off one for the other (Solomon 2014).


Qualitative techniques for attribute analysis

Regarding qualitative techniques for attribute analysis, there should occur the use of dimensional analysis that is considered being a simple concept that will be used for discovering countless new scopes. There is also the requirement for noting the other processes like checklists, relationship evaluation, morphological as well as analogies evaluation.

For the expansion of IKEA in the developing economies, the above two concepts will be discussed as under,

In respect of determining the gap analysis, IKEA can use their individual managerial decision regarding the attributes that needs to be used to create the new product, and IKEA can do the designing of the level of these traits through the use of their individual decisions (Stark 2015).

Through the help of conjoint analysis, there will occur the discrimination amongst the market buyers of IKEA through the investigation of their preferences in respect of specific characteristics, functional aspects as well as benefits. This process will assist IKEA for the development of a new product (Peppard 2016).

Evaluation of the new product concept for IKEA

The two new product concepts can be evaluated through the use of proper evaluation techniques like, ‘cumulative expenditure curve’, ‘risk/payoff matrix’, ‘A-T-A-R model’, ‘product innovation charter’, as well as ‘conjoint analysis’.

The cumulative expenditure curve is considered being a hypothetical model that will be demonstrating the aspect that on average, IKEA’s expenses will be increasing incrementally closer to the full-scale product launch.

The new product evaluation system flows with the product development. An early expenditures curve does the representation of the product development in the fields of technology in which R&D is considered being the significant aspect regarding the cost package, whereas the cost of marketing is less. Regarding an average curve, a steadily upward-sloping curve will be representing the amassing of costs relating to a distinctive new product project from the start to its complete launch. The late expenditures curve will be representing customer packaged products organization in which technical expenses might be less, but massive television advertisements are required at the beginning (Hill 2014).

The risk/payoff matrix will be highlighting the complex decisions that will be faced by the managers during the process of development, demonstrating where hypothetical errors might be occurring, which will be based on the decision to move forward or stop the project.

At any particular point of evaluation regarding the new product method, the new product will be facing four circumstances, which are considered being two broad results as well as two decisions options. There are four generic strategies related with risk such as avoidance, mitigation, transfer as well as acceptance. The avoidance risk strategy will be associated with the elimination of the risky project completely, although there will take place the incurring of the opportunity cost. The mitigation risk strategy will be associated with the reduction of risk to a suitable, entry level through the aspect of product redesigning for including more backup methods or to increase the reliability of the product. The transfer risk strategy will be moving the responsibility to a different organization. The acceptance risk strategy will be developing a plan of contingency or dealing with the threats as they are coming up (Jones 2015).

The A-T-A-R model might be used for assessing the profitability of the concept. This model is used to design an evaluation method in respect of new project explaining the ways by which sales get forecasted and also the forecasting of profit regarding a new product occurs. The A-T-A-R model stands for awareness, trial, availability as well as repeat. Two aspects are considered significant regarding the A-T-A-R model’s forecasting related to sales as well as profits, which state that each factor is concerned with estimation and an insufficient forecast of profit can get better only through the change in one of the factors (Solomon 2014).


Although, the four aspects of awareness, trial, availability as well repeat are the key assumptions as well as inputs regarding the model for sales forecasting, the A-T-A-R model is having the requirement of more inputs for the calculation of the sales as well as projection of profits. The additional information that is having the requirement is considered being the number of units regarding consumers within the market, the rate of loyalty regarding IKEA’s base of customers in due course of time, the average quality of purchase per purchasing unit, the average price and cost/unit for determining the margin/unit, as well as anticipated budget (Cooper 2013).

The product innovation charter will be considered being a vital strategic document, and is considered being the major aspect of any organized effort for commercializing a new product. It will be containing the reasons for the commencement of the project, the goals, directives as well as limitations regarding the project.

The new product concept that should be recommended for IKEA is the Analytical attribute approaches: trade-off analysis and qualitative techniques.

The Analytical attribute approaches: trade-off analysis and qualitative techniques has been chosen as the chosen product concept for IKEA. Concerning conjoint analysis, the reason for choosing the product concept for IKEA is that it will assist in simulating the results on a computer and will be used for predicting the potential share of sales accurately in terms of various ideas concerning the new product. Concerning qualitative techniques in respect of attribute analysis, there is the requirement for dimensional analysis to occur for IKEA. For the new product, it is regarded to be a simple concept, which will be used for the discovery of various new opportunities. There can also occur the need to take into consideration other methods such as checklists, morphological evaluation, analogies evaluation as well as relationship evaluation (Hill 2014).

Regarding the full screen process, two significant factors need to be considered such as the purposes of the full screen process as well as the scoring model. IKEA is required to explain three objectives relating to the full screen process, such as,

  • IKEA should be taking the decision whether or not to proceed
  • Assisting in managing the process through the identification of the rank order for developing the concepts
  • IKEA is required encouraging the cross-functional communication as well as collaboration relating to the new product concept (Cooper 2013).


To conclude the assignment, it could be stated that a brief description regarding IKEA has been made as well as the market in which it is operating. A potential scope has been selected that the company can use and its selection has also been justified. Moreover, two new product concepts has been generated and clearly explained in what ways they are connected with the opportunity. Also, two new product concepts have been evaluated and the evaluation has taken into consideration factors like strategic fit, technical feasibility as well as marketing feasibility. The two new product concepts can be assessed by using appropriate techniques of evaluation such as, ‘cumulative expenditure curve’, ‘risk/payoff matrix’, ‘A-T-A-R model’, ‘product innovation charter’, as well as ‘conjoint analysis’


According to me, the phases relating to new product development process recognises that there is no perfect development process in respect of all kinds of organizations or products. There should occur a flexible application of the process for suiting a company’s specific conditions, employee skills, situation of the market and so on. It also needs to be stated that there are certain organizational strategies, which are guiding the ideas relating to the new product and also the product innovation charter will be guiding the development of pertinent ideas into product concepts as well as marketable products. In addition, the significance regarding the strategic fit within an organization’s product portfolio needs to be considered. The significance relating to that fit to balance risk as well as promote the development and profit regarding the organizational goals should be taken into consideration as well. It is also to be recommended that the company is required using the top two box score approach, stating how effectively the product has scored on the top two factors related with the market performance that is being expected. Benefit segmentation can be used in this respect. This technique will be requiring computer analysis for clustering the preferences of the customers in respect of product traits



Cooper, R.G., 2013. New products: What separates the winners from the losers and what drives success. PDMA handbook of new product development, pp.3-34.

Fawcett, S.E., Ellram, L.M. and Ogden, J.A., 2013. Supply Chain Management: Pearson New International Edition: From Vision to Implementation. Pearson Higher Ed.

Gmelin, H. and Seuring, S., 2014. Determinants of a sustainable new product development. Journal of Cleaner production, 69, pp.1-9.

Hammer, M., 2015. What is business process management?. In Handbook on Business Process Management 1 (pp. 3-16). Springer Berlin Heidelberg.

Heizer, J., 2016. Operations Management, 11/e. Pearson Education India.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.

Jones, G. and George, J., 2015. Contemporary management. McGraw-Hill Higher Education.

Peppard, J. and Ward, J., 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.

Solomon, M.R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Upper Saddle River, NJ: Prentice Hall.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Stark, J., 2015. Product lifecycle management. In Product Lifecycle Management (Volume 1) (pp. 1-29). Springer International Publishing.


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