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Copy of Ikea’s failure and success on the Japanese market

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Brian Luster

on 17 April 2013

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Transcript of Copy of Ikea’s failure and success on the Japanese market

Ikea’s failure and success on the Japanese market
Background information about IKEA IKEA is a furniture retail company established in 1943 in Sweden.
Nowadays, IKEA is the largest furniture retail company that is present in 44 countries around the world. In 1970 IKEA entered Japan and first time in Asia.
In 1986 Ikea had to withdraw their store out of Japan because of difficulties.
2006 IKEA reentered the Japanese
market and have been successful after that. Why Japan? After the Second World War Japan was second largest market in the world.

The growing city population made the demand for services higher. A poor start IKEA had entered only 5 European countries before Japan.
--> International experience was poor.

IKEA is not just selling products, but also philosophy.
-->This is how things are done in Sweden.

IKEA entered Japanese market with the same strategy than in Europe with standardized products. Factors that led to IKEA's failure Lack of cultural knowledge -> Lack of adaptation

There were not any local people employed right from the start, at a high level, that understand what Japan is about.

IKEA didn't know how the Japanese live, how they cook, how they sleep. IKEA offered self-assemble kit or “flat packs”, but Japanese are not familiar with do it yourself kit.

IKEA offered European big size furniture which didn't fit to the small apartments in Japan. Technological factors PEST-analysis Social Factors IKEA tried to adapt the size of the store by making it smaller, but the small size stores didn't attract enough attention among Japanese. Economic factors Instability of Asian economic growth and inflation.
Middle East oil crisis. Political factors Regulations that made it difficult for large retail stores to enter Japan.
Japan's government wasn't so open for foreign investments that time. During 70's technology was not as advanced as today, which hindered communication between Japan and Sweden.
Marketing wasn't as sufficient that it is nowadays due to lack of technology. Research
Bought land Swedish identity
- Quality
- Stores
- Assembled
- Culture
Promotion These four factors and especially the social factors that were caused by cultural differences made IKEA to close their store in Japan in 1986. Why did they succeed? The Marketing Mix Adaption to meet the needs of Japanese consumers Product Selecting the items that suited the small, Japanese homes
Flat-packs and self-assemble kits Price Competitive prices compared to other furniture retailers Promotion Place Standardized
Big size stores with showrooms
Outside, but still nearby big cities Showrooms
Outdoor exhibition
TV commercial Conclusion Unique needs of Japanese consumers
Market has changed
Japanese economy
More international experience Questions?
Full transcript