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IKEA Case Analysis

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by

Simon Bouquet

on 20 May 2013

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Transcript of IKEA Case Analysis

IKEA's background Table of content IKEA Looks to Further Penetrate the U.S. Market Emilija Magdic
Marina Tomic
Mikko Meronen
Simon Bouquet Operational excellence Production: Focus on cost to offer cheapest products

Supply chain: Cost control and efficiency (1400 supliers)

Communication:
Word of mouth ahead with catalogs
TV, radio and internet medias are also used Problem Definition Main Ambition: Expand to the U.S and succeed as good as in Europe

About the current U.S market:

It is moving to a cost conscious mentality
The melting pot of cultures and tastes present in the U.S may represent many opportunities.

To be able to offer quality products at low prices, customers have to assemble products by themselves.

Successful in Europe - difficulty in the US

Self assembled products and cheap products = lower quality


IKEA has to pay attention how to change American consumers’ perceptions of its products.
Basic and simple product design and structures

Easier to assembly

American customers claim more style, accent and color Weak online support American consumers are the strongest Internet users.

IKEA's web content is suffering from a lack of online purchasing.

IKEA's limited web pages do not answer to American consumer's habits by forcing them to come to the little amount of shops that exist.

Remark: IKEA is losing valuable sales. Marketing strategy is focused on product design, catalogs, advertising and PR.

But American consumers:
do not respond to catalogs
are tending to be more aware to TV advertising
are not responsive to controversial advertising ("edgy" reaction)
have a high usage of Internet

IKEA's marketing promotional focus is not optimum to reach a larger potential customer base.

Repositioning on promotional strategy needed as well as on content. Mature market preferences When time goes by, customers’ needs and tastes change. That can threaten IKEA’s position in the U.S. market, because younger generation may appreciate more convenience than DIY approach offers.

That is way they might go elsewhere to look more convenient options. Where are we know? Established in 1947 in Sweden

Present in 25 countries trough 301 stores.

Really popular in Europe

Ikea's vision: create a better everyday life for people.

Mission: To Offer stylish, quality, low-cost, self-assembled, home furnishing
+ Convenient services in stores. ? ? Global issue:
How U.S market features and preferences risk to failure the core concept of IKEA?

Problem factors:
The individuality of U.S consumers who have distinct needs.
Market positioning: IKEA is perceived as low quality products where competitors are implanted
Responsiveness to specific promotional tools
High use of internet and online purchasing
Product design issue

More generally, one can wonder if the IKEA's model of low (and reducing) prices/high quality activity will adapt to the U.S market? Do it yourself approach Many large retailers
Walmart is focused on reducing prices
BluDot is a direct brand competitor with value-based pricing strategy,offering unassembled furniture via online.
Furniture. com is using traditional store concept, allowing online price and product comparison

Thus, in order to succeed in the U.S. market, IKEA must also respond to its competitors’ strengths. Finally, majority of American consumers have biases of quality when they are buying special furnishing products. Certain companies in the U.S. have created strong brand awareness in high-quality furnishing products, and even though IKEA also offers high quality products, it might have difficulties to change customers’ perceptions. Limited customization Weak promotional expenditures Competition Changing customer needs/tastes IKEA should continuously keep improving its already existing competitive advantages; convenience in stores, sustainable products and low-cost structure.

IKEA is successfully using aggressive approach in Europe where it possesses many strengths and opportunities.

IKEA should focus on:
Developing a diversification approach
Customer intimacy
Franchising concept
Raise brand awareness with comparative advertising and bu using public relations
Adding online capabilities as comparison and purchasing.
Switch printed catalogs to e-advertising Recommendations Thank you for listening! ? ? 1.Background
2. Operational excellence
3. Problem definition
4. Where are we now?
5. Analysis
5.1. Do it yourself approach
5.2. Limited customization
5.3. Weak Online support
5.4. Competition
5.5. Changing customer needs/tastes
6. Recommendations List competitive advantages within the U.S market Conclusion

efee How to convert weaknesses and threats to strengths and opportunities?
Full transcript