The IKEA home furnishings

IKEA home furnishings is a renowned top-tier furniture company. The business was founded in Sweden in 1943 by Kamprad Ingvar. Situation analysis, including PESTEL and SWOT analyses, is covered in the article. The main objective is to reach potential customers and educate them about the items. This can be accomplished by running marketing campaigns on social media and with visual media, as well as by leveraging exclusive customer offers and incentives. Redefining IKEA furniture as lifestyle items as opposed to distinctive products. This lifestyle approach added furniture and non-furniture items to the product mix. The company was the first to produce, design and market products based on unified ideal that mixed form, materials, marketing as well as costs. IKEA company is driven by values and ethics. The firm seeks to make their customers lives easy by offering them inexpensive, innovative and modern products which they use to tackle home activities.

Introduction

The IKEA home furnishings is a well acknowledged leading furnishing firm. The company was established in the year 1943 by Kamprad Ingvar in Sweden. The company’s business idea is to offer wide range of product of functional as well as well-designed home accessories and furnishings at low prices in order to attract many consumers (IKEA, 2012). The marketing plan for the firm is to involve the consumers in delivering suitable products and services in the market. The firm has managed to build its reputation across the world due to its high quality products, stylish furniture, low cost as well as home furnishings (Baraldi, 2008). The IKEA firm consist of 351 stores functioning in 43 nations. The firm has many branches in Europe and it is continually penetrating into the other nations. As of now the company is looking forward to penetrate into US market. This paper presents a marketing plan for the firm and creating marketing objectives that will allow it to perform well in the US market.

PESTEL Analysis

Political forces:

IKEA carries out its activities in more than 41 nations. The political environment exists in every nation and affects the company. Political volatility leads to economic instability and in turn it shows loss and poor sales (IKEA, 2011). The vice versa is true. Apart from that, the attitude of the government towards foreign products and its strategies too matter. The policies of the nation influence how favorable the environment will favor the company’s brand. Political stability is likely to promote favorable working environment, which can as well promote supply chain. In the past few years US has acted to lower the political bottle neck for the foreign brands leading to upsurge of global brands in this market. As of now IKEA is planning to dominate this market.

Economical:

Economic environment plays a crucial role in the business environment. The status of the global economy decides the amount of income and profits the firm will make. Many big brands performed poorly during recession. It was due to the fact that recession had caused the decline of persons buying power. Several workers lost their jobs and were compelled to reduce living costs. IKEA company has been able to manage its price appropriately. This has helped to deal with the rising pressures from economic variations. Still, economic variations can be harmful to big brands. Appreciation of dollar makes US products to lose their profits (IKEA, 2011). Because the economic situation is suitable and level of employment has kept on increasing, the IKEA brands are likely to enjoy higher profits.

Social:

Social-cultural factors too can affect the company and its market share. Before going into global market (USA), it is vital to understand local distinctions correct. It is critical to obey the socio-cultural values of the local souk. As of now IKEA has not gotten some of these local distinctions right. For example, the firm was under fire for Photo-shopping females out of its directory in Saudi Arabia and for eliminating a lesbian couple from its magazine in Russia. While printing directory for distribution internationally, IKEA has to make sure that the erroneous things don’t show up in the right culture. Furthermore, social inclinations as well as other factors can affect sales (IKEA, 2011). If specific styles are in trend, then the business must concentrate on them.

Technological:

Currently, technology has become essential closely to everything in the 21st century. From finance to marketing besides customer service everywhere industries are using IT to offer better service to the clients. Brands such as IKEA are concentrating on providing experience from their digital networks that feels like real life shopping practice sales (IKEA, 2011). IKEA is similarly using improved reality to expand the number or customers it provides. Now, consumer anticipations are sensitive and the emphasis has to be on better customer service. It is due to the fact that study has also demonstrated that better customer service also leads to effective delivery.  Technologies such as Cognitive Intelligence and Artificial Intelligence have allowed the retailers to understand the behavior of consumers better and to give them new experience.

Environmental:

Sustainability is currently significant aspect in company brands. This is because it helps to create appropriate brand image. It doesn’t decrease the operational cost of the brand, but improves the firm’s overall experience. IKEA has well shown some focus on sustainability. The company has invested in climate change and renewable energy which have assisted poor countries to cope up with the danger of climate change. The company has a vision that by 2020, it wants all energy used in IKEA branches comes from the renewable energy sources.

Legal:

Legal pressures are normally a main challenge in the large business. This is because rules and regulations are very tough and small interference with law can be costly to the firm. Labor laws as well as other laws require compliance and can upsurge operational cost. IKEA has faced few cases of death and tipping over in the past caused by its furniture. Furthermore, laws vary from one country to the other. In US, it has been tough for foreign companies to penetrate due to tough laws against foreign firms. This causes IKEA to face red tape in penetrating to US market (IKEA, 2011).

SWOT Analysis

Strengths

Low cost arrangement: low cost structure and low prices is the basis of IKEA Company strategy and its success. The low cost structure has helped the firm to maintain its profitability even during tough economic times and has given it a competitive edge in the market (Edvardsson & Enquist, 2011).

Broad Customer awareness: IKEA firm has wide customer awareness that has given them a competitive advantage over its rivals. The firm understands and uses numerous buying aspects that influence consumers to purchase. The approach of do it yourself lowers firm expenses and gives clients a diverse experience of furniture shopping. The business provides variety of furniture’s at low prices (William, 2009).

Business culture: IKEA functions are directed by philosophies that consider the protection of environment and staffs and anti-bureaucracy. This culture is predicated on values like cost awareness, simplicity, intimacy and respect. The business believes significantly in keeping workers happy by encouraging wellbeing and job satisfaction. This culture and work ethic made IKEA to be ranked as one of one hundred best firms to work for (Ferrell, 2011).

Weaknesses

The approach of “Do it yourself”: The discreet strategy of do it yourself notion doesn’t interest everyone. The target market for IKEA small and time conscious clients who likewise need convenience may think that the time involved in purchasing and gathering furniture is more (Jurevicious, 2013).

Inadequate custom-made products: IKEA has standardized its products in an attempt to maintain low cost structure. These products are the reason the IKEA expansion in the USA encountered problems because of the uniqueness of American customers who need more color, style, accent and options (Williams, 2009). The clients prefer customization and value sellers that address individual needs and tastes.

Inadequate advertising expenses: The marketing for IKEA firm is done by the use of word of mouth and catalogs and thus doesn’t spend numerous resources on advertisings (Jurevicious, 2013). Many customers do not respond to catalogs making this tactic less effective in marketplaces like the USA. Many Americans prefer advertisement that appear on TV watching and on the internet.

Opportunities

Economic conditions: The present economic environment provides an opportunity for the progress of with the budget spending. Most of customers are looking for varied ways of reducing personal expenditure and IKEAs high quality stratagem as well as low cost fits with that. This signifies that many cost sensible clients will choose IKEA as the most reasonable option. Many American customers need to buy high quality products at a rational cost and expedient as well as saving time (IKEA, 2011).

Demand for accessibility by consumers: In this contemporary era fast passed atmosphere, the consumers deciding for online buying is increasing. Technical knowledge customers are considering the accessibility and ease of online buying as their priority (Grant, 2010). Providing an appropriate online buying practices of low cost and quality furnishings could permit IKEA to penetrate in the sector.

Growing famous through globally stylish and sustainable products: The Swedish product design that is edgy, simple, as well as sustainable produced by the business have up surged in approval making other competitors target similar products. The shift towards going green has made consumers more interested in products that enhance the sustainability of natural resources. The firm’s use of production leftovers of fabric and wood are used to create additional product and use of natural colors reduces cost of production and upsurge ecological obligation is a win amongst going green consumers Zentes, Morschett & Schramm-Klein, 2007).

Threats

Increasing Competition: the other firms like Wal-Mart are copying the approach o do it yourself furniture market. These big retailers are likewise low-cost and as clients become more sensible on cost the offering from old stores such as Wal-Mart and target pose serious rivalry (Zentes et al., 2007).

Fluctuations in purchasers’ needs and tastes: The tastes and needs of consumers are continuously changing meaning that the consumers interest in IKEA furniture will decrease (Grant, 2010). As populace continues to grow income reduces meaning such customers will purchase less of lower quality and low cost products and as an alternative change to the shops providing high quality products.

Product/service features, benefits and brand identity

Furniture

Instead of being sold as pre-assembled, most of the IKEA furniture are designed to be self-assembled. The firm argues that this assists to cut on costs and use packaging. The amount of bookcase for instance, is considerably less if it is transported unassembled instead of assembled. This is also useful for numerous of the Chain’s European consumers, where public vehicles is usually used due to the flat-pack methods that permit easy transport through public transportation (IKEA, 2011).

Houses and flats

IKEA has similarly extended its product base to comprise apartments and flat-pack houses in an attempt to reduce prices involved in a first-time buyer home. the IKEA product named BoKloK was initiated in Sweden in the year 1996 (IKEA, 2011).

Solar PV systems

The firm made an announcement in the year 2013 that solar panel packages also known as residential kits for houses will be sold at 17 United Kingdom stores in mid-2014. The resolution followed a successful pilot project at IKEA lakeside store, whereby one photovoltaic system was sold each day. The solar CIGS panels are produced by Solibro GmbH a Germany-based supplementary of Chinese firm. This solar panel permits the users to be able to order them online (IKEA, 2011).

Product names

The products of IKEA are identified by two-word and one-word names. Many names are Scandinavian in basis. Though there some exceptions, many names of the product are based on a special naming system created by IKEA. Upholstered furniture includes media storage, bookshelves and Swedish placenames (IKEA, 2011). For instance: carpets, Bookcase, Chairs, Dining tables Beds and Wardrobes.

Marketing plan objectives

Raising product and brand range awareness in the nation

This marketing objective will help IKEA to make awareness of its product range to individuals that are outside the company. This will be critical in intensifying the consumer base. The main goal is to reach possible clients and make them understand the products. This can be done through using marketing campaigns using social media and visual media as well as through special promotions and offers to customers (IKEA, 2011).

Improving product adaptation and development to suit custom-made needs

IKEA should address the problem of limited custom-made products by acclimatizing its offerings as well as stores to the local customer tastes. This is a dominant marketing plan that will allow the firm to upsurge its competitive edge its sales with old furniture retailers. Making sure that many of the tastes and preferences for many of their consumers are provided to make sure that they seizure a broader market range (IKEA, 2011). Although the present product choice has attracted an extensive market for the firm, doing this will upsurge its significance and therefore, performance.

Competition analysis including

Greycork is a ready-to-assemble furniture firm that’s giving IKEA a run for its cash. Greycork struggles to make furniture more affordable and easy to set up. It is easily accessible with features like a chaise ($300), sofa ($450) side table ($75), bookshelf ($180) and coffee table ($125). Each piece of the company is directly transported to the customer in a flat box. The simple and contemporary pieces come from American/Japanese influence and were made with easy transportability. Most significantly, the Rhode Island-based start-up brags high-quality resources for long-lasting permanency as well as 4-minute assembly without any tools.

Differentiation and positioning

Redefining IKEA furnishings like lifestyle rather than unique products. This lifestyle method extended the product mix into non-furniture and furniture items. The company was the first to produce, design and market products based on unified ideal that mixed form, materials, marketing as well as costs. IKEA recognized that product design could resolve and address systemic inefficiencies that had become ingrained into production and distribution over the past century (Williams, 2009). For instance, IKEA firm acknowledged that the most effective global production sites were removed from the largest retail market distribution places; furniture was a heavy product that couldn’t be shipped effectively over long distances. The usage of low cost engineered wood products and plastics for furniture had been shunned by many consumers because of general perspective of unacceptability inferior quality (Williams, 2009).

Based on differentiation, knowledge needs to locate the products in order to meet the needs. To accomplish this, the products are aimed to suit the requirements of this differentiation (Blome, 2015). This is seen through the minimalist and simple method from the IKEA products. IKEA doesn’t target to offer the highest quality product which is made up of firm resources that are capable of lasting for long time. Instead IKEA targets to offer the simple products which are tested against durability.

Target market profile

IKEA company is driven by values and ethics. The firm seeks to make their customers lives easy by offering them inexpensive, innovative and modern products which they use to tackle home activities. On targeting the audience, the company focuses on people’s lifestyle, needs, home, good taste care for environment, lovers, personality, quality of life and self-expression. The company motivates people who need to decorate new houses, buy furniture’s for the kids, replace out dated furniture, consumer behavior and impulse buying (IKEA, 2011). The company targets age group of 18-35 years, both male and female, middle and low income consumers.

Distribution plan

Enhancing online knowledge for both new and returning consumers. This marketing distribution plan will assist in up surging the traffic of internet to the IKEA website. This will be critical in appealing to and maintaining consumers that prefer online buying. This will upsurge online transactions as individuals in cities with no store will be capable of accessing the products. This can be achieved through enhancing website support to make sure customer ease as well as satisfaction during ordering (Zentes et al., 2007). The other way is by having social inventiveness through providing promotions as well as building an online store for customers.

The company will also use physical stores as the distribution channels. The chain will start from producing company, wholesaler, agents, retailer and finally consumer. By establishing many outlets in US, the consumers will be able to access to the products without much hassle. It is also likely to construct distribution center for its products.

Media plan

Media plan comprises marketing and advertising which constitute a substantial share of wholesaler’s yearly expenditure and television has been prominent mode of campaigning till online marketing began appearing in the market.

IKEA will use Facebook in which the company has about 1.5 million fans on every nation page. The US page has largest number of followers measuring about 3.4 million. The wholesaler social teams pose queries as well as links to photos.

Twitter, IKEA has distinct twitter feeds for all of its nations hence it will adopt it as media plan. The USA page has 222,000 million followers while IKEA in Canada has 666,000 followers.

Google +: IKEA’s US page entered Google + on January, 2014 and has the lowermost following out of all of its pages. The seller has seemingly not been capable of making much use of this platform as the foremost page was initiated in December 2011.

Outdoor Campaigns: While advertising of its catalogue through online approach comprises about 70% of its yearly marketing expenditure, IKEA similarly makes sensible use of Out of home by making high commitment outdoor campaigns.

Billboard-fitted wardrobes: IKEA made an advertisement about the pros of its specific flexible wardrobe by ”dressing“ a Gewista billboard with a PAX door that pedestrians could slide open to determine IKEA’s belongings that fit anything into the wardrobe.

Marketing Mix

Product:

Products produced by IKEA cover broad range and the products are in the firm’s marketing mix. The products can be divided into desks, dressing mirrors, bathroom stage, mattresses, beds, safety products, chairs among others (IKEA, 2011).

Price:

IKEA firm competes with many global local supermarkets and retail chains. Low prices create the IKEA vision, perception and business idea. IKEA manufactures low cost furniture for homes. It concentrates on control of expenses and effectual functioning details. This permits the company to lower its prices over 10 years during a period of worldwide extension.

Place:

IKEA firm has exceptional place as well as distribution strategy. Distribution is predicated on the following ideologies. IKEA firm has a worldwide distribution system for example big distribution system. It has large amount on production side and flat packages for example it is valuable in increasing worth to weight fraction (Edvardsson & Enquist, 2011). IKEA has about 25 and above distribution centers and has business processes in about than fifty nations.

Promotion:

IKEA concentrates on a lot of its marketing activities. The company will use promotion tools like billboards, online adverts, TV and print in its marketing mix. IKEA initiated a UK-wide promotion campaign that was named home is the more significant place (Williams, 2009). A tunnel train duplicating IKEA in style was presented in Novosibirsk.

References

Baraldi, E., (2008). Strategy in Industrial networks: experiences from IKEA. California Management Review, 4(50), pp.99-126.

Baraldi, E., (2008). Strategy in Industrial networks: experiences from IKEA. California Management Review, 4(50), pp.99-126.

Blome, M. (2015). Visualization and establishment of product design regulations as interactive modules: An interaction design study at IKEA. Journal of Systems and Information Technology, 17(1), 20-34.

Edvardsson, B. & Enquist, B., (2011). The service excellence and innovation model: Lessons from IKEA and other service frontiers. Total Quality Management & Business Excellence, 22(5), pp.535-51.

IKEA, 2011. (2011) Company Report. IKEA

Jurevicious, O., (2013). SWOT analysis of IKEA. Strategic management insight.

Williams, C., (2009). Management. Mason, OH: South-Western Cengage Learning

Zentes, J., Morschett, D. & Schramm-Klein, H., (2007). Strategic retail management: Text and international cases. Wiesbaden: Gabler.