Analyzing IKEA's Marketing Strategy And Recommending A Better Approach.

You are required to write a report.

1. Select a firm
2. Discuss the effectiveness of the current strategy
3. Make recommendations regarding a more viable strategy and the rationale for that choice.

IKEA is one of the largest companies established in 1943 in Sweden. The main aim of the company is to design and sell furniture, home appliances and accessories.  Ingvar Kamprad is the founder of the company and the CEO is Jesper Brodin. IKEA is present in 37 countries and has 30 stores. The store of the company is located in Europe, Asia, North America and Australia. IKEA is the company which is owned by Dutch registered foundation and also the overall transactions are maintained by the Kamprad Family. The vision of the company is to create a better everyday life for the customers (Helmefalk, 2016). The idea of the business is to support the vision by providing a wide range of well-designed and functional home furnishing products at low price. The prices of the products are kept low so that every segment of the customers can afford or purchase the products.

 So, in this report focus will be given on the various factors related to the company in the competitive market. Also, the product which is selected is desk and computer desk.

The current marketing strategy adopted by the company is related with promotion desk and computer desk in the market. It can be stated that there are various channels of marketing communication like print and media advertising, sales promotions, public relations and direct marketing. The company emphasizes on promoting the products through promotions. It can be stated that the company consider various promotional techniques to promote its brand in the market. The best tool which is considered by the company to promote its brand in the market is promotional catalogs (Brown et al., 2016).

It is one of the best concepts which are considered to boost the overall communication in the competitive market. By promoting the products through promotional catalogs, the company is able to attract limited target audience but it enhances the sales of the products and services of the company offered in the market (Baier, Rese and Schreiber, 2016).

 It has been seen that the catalogs of the company are printed in various languages and also there are different catalogs which are served in different markets. It can be stated that branding is considered as one of the elements in terms of marketing.  The company focuses on the CSR activities which empower the co workers and assisted the company to generate the awareness in the market about the products and services. There ae various famous advertising campaigns like “Home is the important place on the global platform”. The television campaign by the company has assisted the company in maintaining the image of the company in the competitive market. So, this is one of the current strategies of the company which should be improved as it can help in accomplishing the set goals in the workplace (Benozzo, Koro-Ljungberg and Carey 2016).

Current marketing strategic

It can be stated that it is important for the company to focus on the overall market analysis as it can help in boosting the entire sales of the company in the market. The best strategy is related

Threat of substitutes – Low

The threat of substitution is low as there are many products and services present in the market which satisfy the requirement for furniture and home appliances.

a.)  Also, there is increase in the number of online applications and internet-based products which showcase indirect substitution of the products.

b.) For instance:  due to increase in the e – books there is decrease in the overall requirement of IKEA book shelves (Laurin and Fantazy, 2017).

Rivalry among the company – high

a.) It can be stated that there are big supermarkets like Walmart, Tesco and Sainsbury who are offering similar types of furniture in the market.  There are also direct competitors of the company who are present in the market. The competitors are Argos, Ashley furniture and also rooms to Go.

 b.) There are also large number of local small sized manufacturers of the furniture and these are considered as the competitors with the online retailers like Amazon and eBay.  On the global furniture industry, it can be stated that the rate of the industry growth is not substantial and also there are many players present in the competitive market (Vahlne and Jonsson, 2017).

Threat of new entrants – moderate

a.) In the industry related to furniture and home appliances it has been seen that there are limited legal and regulatory barriers required at the time of entering into the market. Also, the new entries will not be able to take advantage from the economies of scale on the initial stage of the activities (Sarstedt, Neubert and Barth, 2017).

b.) Also, the distribution channel and capital requirement are considered as the barriers for the companies who want to enter into the market. In the furniture and home appliances sector it can be stated that cost leadership strategy has an important role in the overall economies of the scale (Cosmo and Yang, 2017).

Bargaining power of customers – moderate

a.) In the 21stcentury the customers are more aware about the different sectors present in the market.  Also, with the competition level, technological growth has brought the change in the entire activities.

b.) The company also focuses on digital marketing and ecommerce so that it can be simple to boost the overall shopping experience of the customers in the market. The factors that emphasizes on the moderate aspect consider the low prices so that it can be easy to enhance the demand in the market (Garvey, 2017).

Strategy intent analysis

Bargaining power of suppliers- low

a.) It is low as the number is large but small size is one of the factors which is considered by the company. IKEA also switch the cost of one supplier with the other and also many times the suppliers loses their business with IKEA.  

b.) IKEA also focused on the code of conduct with its suppliers named by IWAY.  These are the suppliers through which proper code of conduct is declared with the sub suppliers. The company also made the rules in relation to child labor, minimum wages and safe working environment (Daunfeldt et al., 2017).

The strategy considered by the company will sometime not be able to achieve success in the competitive market. It is due to the changing mindset of the people. It has been seen that people think to see the product and their quality before purchasing it from the market. So, by marketing the products can be promoted but satisfaction level will not be able to be boosted. It will not be able to achieve success and can fail in the market due to high level of competition prevailing in the market. The competition level prevailing in the market can also grab the attention of the customers from the products and services. So, it is important for the company to focus on enhancing the satisfaction level of the customers. If the competition level is not reduced then it can impact the overall activities of the company and can also reduce the demand of the products and services in the market.

So, by analyzing the paper it can be recommended that it is important to consider the right marketing strategy so that goals can be attained by the company in the competitive market. It is important for the company to offer the products in the low prices so that it can be simple t boost the sales of the product in the market.

 Also, social media is one of the best and latest sites which can help in enhancing the demand of the products and services of the company. Through social media sites the pictures of desk and computer desk can be promoted by the company. The social media is one of the popular sources that can help in enhancing the demand.

Also, one of the best strategies that is recommended for the company is related with the sponsorship of events and show. It is important for the company to take sponsorship in the events so that people can get aware about the products and services in the market. This will positively impact the overall activities of the company and with the sales can be enhanced in the market. So, on two strategies it is important for the company to focus. The first is related with low price products, social media and also by sponsoring into the events.

So, it can be concluded that it is necessary for the company to focus on considering these strategies as it can help in enhancing the market share and can also help in attaining the overall growth in the competitive market.

References 

Baier, D., Rese, A. and Schreiber, S., 2016. Analyzing online reviews to measure augmented reality acceptance at the point of sale: the case of IKEA. In Mobile Computing and Wireless Networks: Concepts, Methodologies, Tools, and Applications(pp. 1714-1736). IGI Global.

Benozzo, A., Koro-Ljungberg, M. and Carey, N., 2016. Post author/ship: Five or more IKEA customers in search of an author. Qualitative Inquiry, 22(7), pp.568-580.

Brown, B., Bleecker, J., D'Adamo, M., Ferreira, P., Formo, J., Glöss, M., Holm, M., Höök, K., Johnson, E.C.B., Kaburuan, E. and Karlsson, A., 2016, November. The IKEA Catalogue: Design fiction in academic and industrial collaborations. In Proceedings of the 19th International Conference on Supporting Group Work (pp. 335-344). ACM.

Cosmo, D.E. and Yang, K., 2017. A Further Strategic Move to Sustainability-A Case Study on IKEA. Journal of Strategic Innovation and Sustainability, 12(2), pp.39-47.

Daunfeldt, S.O., Mihaescu, O., Nilsson, H. and Rudholm, N., 2017. What happens when IKEA comes to town?. Regional studies, 51(2), pp.313-323.

Garvey, P., 2017. Unpacking IKEA: Swedish Design for the Purchasing Masses. Routledge.

Helmefalk, M., 2016. Congruency as a mediator in an IKEA retail setting: products, services and store image in relation to sensory cues. International Journal of Retail & Distribution Management, 44(9), pp.956-972.

Laurin, F. and Fantazy, K., 2017. Sustainable supply chain management: a case study at IKEA. Transnational Corporations Review, 9(4), pp.309-318.

Sarstedt, M., Neubert, D. and Barth, K., 2017. The IKEA effect. A conceptual replication. Journal of Marketing Behavior, 2(4), pp.307-312.

Vahlne, J.E. and Jonsson, A., 2017. Ambidexterity as a dynamic capability in the globalization of the multinational business enterprise (MBE): Case studies of AB Volvo and IKEA. International Business Review, 26(1), pp.57-70.