IKEA Office Furniture Marketing Plan

IKEA is a well-known producer of furniture for homes and businesses all around the world. IKEA is introducing a new range of office furniture that is distinguished by simplicity and excellent durability after years of successful work in the market for home ready to assemble furniture (Inter IKEA Systems, 2011). The company is prepared to introduce a new line of ready-to-assemble office furniture after years of successful sales of ready-to-assemble home furniture. IKEA thinks it will be feasible to successfully capture a brand-new developing segment that other businesses have not been able to target by focusing on the high-end consumer market. In case, IKEA is able to implement the new marketing focus outlined in this plan, it will position new product line as the high-quality, stylish alternative to mainstream office furniture in modern offices. The ability of the company to mix emerging technologies in the design, offer complimentary pieces for a total set, and ergonomic ready-to assemble office furniture will provide the opportunity to stabilize and improve the company’s influence in the market of furniture and provide consumers with modern ready-to- assemble furniture pieces.

Table of Contents

1. Current Situation in the Market of Office Furniture 4

2. SWOT Analysis of Office Furniture Market in the USA 5

2.1 Strengths 5

2.2 Weaknesses 6

2.3 Opportunities 6

2.4 Threats 7

3. Objectives 8

4. Marketing Strategies for IKEA office furniture 8.

4.1 Price 8

4.2 Product 9

4.3 Place 9

4.4 Promotion 9

5. Communication channels 10

6. Communication mix 11

7. Conclusion 12

8. References 13

Current Situation in the Market of Office Furniture

In average segment, IKEA takes one of the first places among the manufacturers of furniture. The advantage of the company in the global market is primarily due to the high degree of flexibility and its innovative ready –to-assemble designs, which have become the visit card of the company. This is what allows it to compete successfully in foreign markets. Italian furniture factory, as world leaders in the market, are mainly cooperating productions, which work like car factories: contractors make parts, and the company makes the product and sells it under its brand. However, it is not always able to meet the individual needs of customers. IKEA furniture in all stages of the process, from raw materials to the ready-to-assemble product, is performed at the same factory. This allows taking into account the needs of almost any client, creating a truly unique product.

The key vendors of the office furniture in the US market are: Haworth, Herman Miller, HNI and Steelcase. Among other prominent and popular vendors, it is possible to mention Global Upholstery, Kimball International, Knoll and Teknion (Reportlinker,2015). In general, in the United States, utilization of office furniture increased to around 14.88 billion U.S. dollars in 2000 and reached almost 13 billion US in 2015. The data proves that the demand for the office furniture has increased considerably and is going to increase in the next several years (Reportlinker, 2015). It is also forecasted that the office furniture market in the US to rise at a CAGR of 11.27%, in terms of consumption, during 2016-2019 (Reportlinker, 2015).

Note: reprinted from Historical Industry Growth Data by Bifma, retrieved from , Copyright 2015

SWOT Analysis of Office Furniture Market in the USA

Strengths

The knowledge of customers and market needs. One of the key competitive advantages of modern office furniture market is its extensive knowledge of customers. The companies, representing furniture manufacturing industry, understand what the customers want to buy and try to do their best to trigger this decision. Understanding the needs of the customers, the companies present a wide product range, which, added with a pleasant atmosphere of shopping, help the market to flourish and opens huge opportunities. In addition, the growth of business has resulted in the increase of new businesses, which needs development of their offices; therefore, the demand for office furniture is increasing (Lewis, 2005).

Use of innovations and technologies to reduce costs and increase quality of furniture. Low prices and numerous options and wide choice of product are key business ideas of many furniture companies for attracting consumers. With the increased popularity of technologies and its availability, the companies use them as a means to improve their business model. Moreover, use of innovations, available in the market, make the process of production easier and help access the consumers faster.

Stable development and growth of the market.The market of furniture manufacturing is quite stable with the opportunities to continuous growth. It allows the companies making projections for future development and elaborating strategies that will provide more opportunities.

Fast reaction to the changes in the market. In order to go ahead of the competitors, the companies try to be aware of the latest changes in the market in order to react to them by offering new products and decreasing prices.

Flexible pricing policy. Due to the fact that pricing policy in this market is flexible, the companies have the opportunity to set and control prices themselves, adjusting them to the needs and demand of the consumers.

Weaknesses

Drawbacks in the advertising policy (the lack of style in the formation of commercials, the deficit of street advertising).Many companies, dealing with furniture manufacturing, do not pay enough attention to the advertising and attracting consumer’s attention, thus leading to the lack of attention to the needs of the industry and market.

Products standards. Lower prices and standard products are the major means of competitive advantage of many office furniture manufacturers. However, standard products attract fewer consumers. As a result, the business cannot offer good quality goods that many competitors can allow doing in order to support their position in it (Mittal, 2008). In other words, not all companies in the market can offer individual approach to customers.

Opportunities

Expansion in developing countries. The market of office furniture is ever-changing and expending, therefore, the companies, operating in it, have the opportunity to operate in foreign countries and attract more customers worldwide.

Cooperation with new suppliers. Attraction and cooperation with new suppliers, predominantly from the countries, where furniture market has not yet developed, will help the companies to expand globally and use the ideas and experience of foreign markets (Mittal, 2008).

Increase of on-line shopping opportunities. With the use of internet and modern technologies, the furniture market received more opportunities for financial growth. Most customers prefer doing shopping online, as it saves time and costs, therefore, most companies see huge competitive advantage in offering more opportunities for consumers to buy their items via Internet.

Expansion in growing market. The demand for high quality and low cost furniture is increasing, thus opening new opportunities for the companies. Most US furniture producers are now searching for the ways to minimize production costs and use natural materials for the furniture production.

Threats

Increasing competition. There are many manufacturers and huge retailers, which specialize in selling the products for home and offices.

Patenting and certification of innovation in the manufacture of furniture. This is a potential threat for the producers of furniture, as the process of patenting is time and finance-consuming.

Reducing the cost of substitute products. It can decrease the level of demand of the products of furniture manufacturers, as consumers will switch to the use of cheaper and more available products.

Changes in consumer behavior. The changes in consumer choices and tastes can affect the work of most furniture manufacturers negatively, as the companies have to constantly update their product range to meet the ever-changing needs of the consumers. However, this is economically unprofitable (Mittal, 2008).

Objectives

Taking into account high competition in the market of office furniture production, the company sets objectives related to market share, revenues and growth. These projections are made, based on the prices and profits of competitors to make necessary calculations.

Price

Growth Rate

Market Share

IKEA

$41,666

12%

32%

Average

$500,000

Profitability Objectives for IKEA office furniture

To achieve a 20% return on capital employed by December 2017.

Market Share Objectives

To gain 32% of the market for IKEA office furniture by December 2017.

Promotional Objectives

To increase awareness of new IKEA furniture from 25% to 75% by December 2017.

Sales volume objectives

To increase sales volume to USD 500,000 by December 2017

Growth rate objectives

Increase the growth rate by 12 % by December, 2017

Marketing Strategies for IKEA office furniture

Marketing strategies of the company is based on the marketing mix of 4 Ps. This part of the report will deal with the discussion of 4 Ps of IKEA for the presentation of new line of office furniture. In general, IKEA is characterized by its unique business model, connecting the needs of consumers with the possibilities if the company.

Price

When the company introduces new product in the market, it realizes that the starting point of marketing mix is price. Together with IKEA’s skilled suppliers, the company tries to make out of the possibilities in its manufacturing plants. In general, the products of IKEA are characterized by optimal size and construction so that they can be convenient to transport. IKEA office furniture is not an exception. Moreover, the limited range of office furniture articles and expected big volume sales, make it possible for the company to decrease the costs and prices. Therefore, in case with new office furniture introduction, prices are set comparatively low. Moreover, the company emphasizes that its customers also contribute to the lowering of the prices, assembling furniture items themselves.

Product

New line of office ready-to assemble furniture is characterized by:

-office products of all types to satisfy the needs of customers in this area

-products are available for all sections of society

-products are adapted to market terms and conditions

- the concept of flat packaging is preserved so that the customers could assemble furniture items in the offices themselves

- products meet the needs of the target market

-products are designed by IKEA designers

- variety of stylish office items to offer

Place

The company is planning to offer its products globally and expand into international market. Taking into account that the market of furniture is extended and highly competitive, IKEA is going to conquer new markets in Europe, where the company is planning to set up 10 new stores, where new furniture items will be presented. Although, American market is tough for IKEA, because of high level of competition, the company is planning to open 5 more stores in North America to present its new office furniture product line.

Promotion

Since the company is pioneer in the market, IKEA managers and marketing specialists realize the importance of promotion and adverting in the process of presentation of a new product. Among a wide range of means of promotion, IKEA concentrates on online shopping. Fortunately, new era of technologies and internet offers more opportunities for doing shopping. Online shopping is a leading option, offered by most leading manufacturers (Davies & Ward, 2001). All new pieces of IKEA office furniture are going to be presented on the company’s website for the convenience of the users. The second step of promotion strategy is home delivery option and after sale service.

Promotion is an increasingly significant part of any marketing campaign, as it either ensures stable demand for the product or foresees its failure in the market. When launching promotion campaign, IKEA managers realize the necessity of correct setting of communication objectives. The first communicative objective is formation of the demand in the product (Davies & Ward, 2001). IKEA realizes that office furniture is not a first-need product that is why the company tries to persuade its consumers that this item is necessary. This objective will be achieved through increasing awareness of the necessity of the high-quality office furniture and telling the consumers that IKEA products are easy to buy and assemble. The second communication objective is building of awareness of the brand. This part of the promotion strategy is easier, as IKEA has already recommended its brand in the market. In this case, the company has to build consumer awareness about a new product line. This objective will be achieved through means of advertising. Finally, the third communication objective is to motivate consumers to buy new product. This can be achieved through advertizing and promotion channels (Gilbert, 2003).

Communication channels

IKEA uses a wide range of promotion channels to reach each customer from the target market.

-Television advertisements,

-advertising in news papers and magazines,

-hoardings,

-exhibitions and other promotional methods are adapted by IKEA to reach its target consumer market. In order to present its new office furniture line and introduce it to consumers, catalogues will be designed with products pictures and major information.

- advertising in stores and shops

-advertising in television and radio in order to inform consumers about new office furniture and attract attention of the target audience

Communication mix

Source: Armstrong & Kotler, 2008

Communication mix of IKEA is an inevitable part of the company’s campaign, forwarded for promotion of its new line of office furniture. It comprises several important elements, such as advertising through all means of channels, including social networks, television, press and street advertising (Belch and Belch, 2012). Sales promotion comprises the use of the means of marketing communications, which denote measures for sales promotion along the way of the movement of IKEA products from manufacturing plant through distribution channels to the target consumers, with the aim to accelerate the distribution of goods (McGoldric, 2002). Personal selling is a way to promote IKEA products straight to the target consumers. IKEA representatives meet with the managers of companies to offer them new products and show catalogues to demonstrate the items. Public relations is another important means of promotion, which utilizes different means of spreading information about new IKEA product among the target customers aimed at attracting attention to the product (Levy, M L & Weitz, 2007). IKEA uses public relations tools to inform people about their new ready-assemble furniture. Finally, direct marketing, including a set of activities through which IKEA builds successful communication personally with every target consumer of their products and services in order to establish long-term mutually beneficial relationships with them. This type of communication has bilateral nature: using the tools of direct marketing, the company not only appeals directly to customers, but also establishes effective feedback, receiving a response to suggestions from its consumers (Levy & Weitz, 2007). It helps the company be aware of the desires of the target consumers and adapt its quality in accordance with tier needs.

Conclusion

Marketing plan allows the IKEA brand offering its products to a large number of people. IKEA aims to bring its proposal up to the maximum number of target consumers in the market. The main objective of this marketing plan is to convey information about the brand IKEA and offer information about new office furniture with the ready to assemble characteristics, peculiar to all IKEA products in order to create consumers’ demand.

References

Belch, G., and Belch, M. (2012). Advertising and Promotion: An integrated marketing communications perspective (9th Edition). New York, NY: McGraw-Hill Companies

Davies, B. & Ward, P. (2001). Managing Retail Consumption. Chichester: John Wiley & Sons

Gilbert, D (2003) Retail marketing management. 2nd edition. Prentice Hall.

Inter IKEA Systems B.V. (2011). International Sales

Retrieved from

Kotler, P. & Armstrong G (2008) Principles of Marketing. New Jersey: Pearson Prentice Hall

Levy, M L & Weitz, B A. (2007) Retailing management. 6th edition. NY: McGraw-Hill International edition.

Lewis, E (2005) Great IKEA! A brand for all the people. LA: Cyan Books.

Mittal, B. (2008), “The role of affective choice mode in the consumer purchase of expressive products”, Journal of Economic Psychology, 9 (65), 499-524.

McGoldric, P. (2002) Retail marketing. 2nd edition. NY: McGraw-Hill.

Reportlinker (2015).Office Furniture Market in the US 2015-2019. PRNewswire. Retrieved February 6, 2017 from