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Marketing Plan - IKEA to enter NZ Market

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Afzal Khan

on 4 July 2015

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Transcript of Marketing Plan - IKEA to enter NZ Market

Thank you!
Furniture Industry in New Zealand
Around 1790 enterprises and 10280 workers

Large concentrations in Auckland and Christchurch

Annual turnover of $1.3 billion

Segmentation, Targeting and Positioning
IKEA Segmentation - Factors to Consider

Strategic locations for making their products available around housing localities.
Furnishings are absolutely essential and are one of the primary requirements of any household or business establishment.
Come up with Innovations and trendy designs to attract customers.

Reason for market share?

Ikea's Pricing strategy = Quality home furnishings at affordable prices

IKEA low pricing strategy
30-50% lower than its competitors internationally
10-15% lower in India

Does this FIT with the targeted customers?

Target Market - "Do not be like your parents", a theme that seems to speak directly to IKEA's target group of young women 25-35 years old (Lewis, 2005).

How to enter the market

Biggest competitors for Ikea in New Zealand include:

Big Save furniture
Target furniture
Harvey Norman
Freedom furniture

Their low pricing strategy would work well to undercut the New Zealand businesses.
Need to implement a broad range of strategies to affect the small market which New Zealand offers.

• Types of products New Zealanders want
• How to market products to New Zealanders

Marketing Plan - IKEA to enter NZ Market
Group three (Kauri)
Marketing Communications
The world’s largest furniture retailer.
353 stores in 46 countries.

IKEA's mission: “To create a better everyday life for the many”

Key Strength: High Quality products at a lower price.

Market competitors in New Zealand:
Freedom, Big Save (Primary)
Warehouse, K-mart (Secondary)
Background of IKEA
Renowned brand globally with a wider market presence
Well Diversified product portfolio

Decrease in the quality of products and services offered
Negative publicity: Cost vs Quality

Demand for eco-friendly low priced products
Growing online sales

Intense competition in furniture industry (New Entrants)
Increase in the cost of Raw materials

The level of corporate and consumer taxation
The level of political stability within markets

Labor cost in different markets
Inflation rate

Local cultural factors in different markets
Lifestyle changes

Innovations in information technology
Low investment in Research and Development

IKEA (Targeting)
Customers from the lower to middle income groups.
Target early adopters.
Customers demanding trendy designs at affordable prices.
Target large business establishments and educational institutions.


• Bathroom
• Bedroom
• Children's IKEA
• Cookware
• Decoration
• Dining
• Food
• Hallway
• Laundry

Living room
• METOD Kitchen
• Outdoor
• Secondary storage
• Small storage
• Tableware
• Textiles
• Workspaces
• IKEA FAMILY products
Product Range
Source: NZ Furniture Online Industry Report 2015
Source: NZ Furniture Online Industry Report 2015
What fits the New Zealand market?
Market share
Market Share in 4 largest markets by sales
1st in Germany with 23%
11th in US furniture market (not including houseware) with 3%
1st in France 26 stores with 16.3% vs Conforama 180 stores with 14%
2nd in UK with 6.1% vs Argos with 6.4%

Market share in new emerging markets
1st in fast growing China market with 43% of houseware market

Sales per region
Asia and Australia 5%
North America 15%
Europe 80%

Source: Ikea group yearly summary FY14 & Laffiteau, C. (2014). Brand Audit Project. Business.
Retrieved from http://www.slideshare.net/CharlesLaffiteau/ikea-mba-brand-marketing-study

Source: Arshad, F. (2014). Comparison of marketing mix of ikea in four countries.

What channels will be used
Efficiency to be successful within New Zealand
Set up costs
Market presence

Ikea -> Consumers NZ (Efficiency: Medium)

Ikea (Aus) -> direct shipping -> Consumers (NZ) (Efficiency: Low)

Ikea - Franchise in NZ - Consumers NZ (Efficiency: Medium)

Source: Ikea group yearly summary FY14
Investing in NZ Online Marketing - A good option?
Ikea offers products with 'HI' design which appears to be expensive, but on a 'LO'wer price
Source: Integrated Marketing plan for IKEA
Television commercials
Radio advertisements
Social Media Advertising

Communication channels
IKEA should use direct communication style.
Investing in NZ Online Marketing - A good option?
Source: NZ Furniture Online Industry Report 2015
Bring IKEA to NZ
Control measures
High Quality
Low Quality
Low Price
High Price
Expected market share: To be in the top 5 NZ Furniture brands (3 - 5 years)

Next Steps:
Establish brand image then invest heavily.
Reduce cost of imports by setting up production units either in Australia or New Zealand.

Growth in next 3 years:
Slow growth, Return on investments will take time.
Current scenario of NZ furniture industry is booming.

Existing competitors.
Isolated country with a population of 4.5 Million.

Market Size: 1.3 billion dollars in New Zealand out of which 960 million is from furniture that are made in New Zealand
Source: NZ Furniture Online Industry Report 2015
Operated by Local corporations
IKEA Saudi and Emirates stores are operated by Al-Futtaim Group
Locals are aware of "What to do and what not to do"
Source: http://www.thisismykea.com
(Based upon consumer's perception)
Local dairy shops
Full transcript