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IKEA

How IKEA achieves its competitive advantage
by

Ghadeer Al-Safi

on 7 May 2013

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Transcript of IKEA

How IKEA achieves its competitive advantage Who is IKEA? The Furniture Industry Their pricing Their customers' buying behaviour Their promotion & marketing Competitor trends Industry trends Largest furniture retailer in the world
Founded in 1943 by 17-year-old Swedish Ingvar Kamprand
IKEA- Ingvar Kamprand Elmtaryd Agunnaryd Competitive pricing- embedded in mission
"affordable solutions for better living"

Achieving cost efficiency through:
material
design
location & layout
self-service

Aggressive price-cutting when necessary Core customers:
General buyers: concerned about price & function
Middle-class buyers: concerned about design & craftsmanship Buying behaviour:
For Home Furnishing: dissonance-reducing behaviour
For Home Decor: variety-seeking behaviour Through media: television, newspapers, online... The IKEA Catalogue Word-of-mouth Some competitors:
Fortune Brands
Howdens
Home Center
Pan Emirates Similar in:
diversified product line
range to suit customer needs
adaptation to regional preferences IKEA competitive advantage
-low-price
-ease of assembling & transporting
-Lock-in Manufacturing in low-cost locations
Demand-based production
Environment-friendly IKEA stores around the world Analysis using Porter's five-forces model: Rivalry
HIGH Threat of New Entrants
LOW Bargaining Power of Customers

STRONG Bargaining Power of Suppliers

WEAK Threat of Substitutes
LOW Their Products Wide range
About 12,000 products ranging from living room, bedrooms, kitchen & appliances, textile & rugs, and kids' furniture Contemporary and modern design
Flat packaging- practicality and ease of mobility
Quality IKEA's unique product naming Swedish place-names Norwegian place-names Finnish place-names Women's names Terms from music, chemistry & meteorology Names of mammals, birds and adjectives The company founder being dyslexic found the names easier to remember when they were based on words rather than codes. Use of light-weight, low-cost material IKEA designers working from the factory floor Flat packaging Proving durability Self-service at IKEA References Czinkota M & Ronkainen I, 2006. Part 1 Cases . In: International Marketing. 8th ed. USA: South-Western College. p170-175.
Edvardsson B., Enquist B & Hay M, 2006. "Values-based service brands: narratives from IKEA", Managing Service Quality,vol. 16, no. 3, pp. 230-246. Retrieved October 28, 2012, via Proquest database.
Frayer J , 2012. Beijing Journal: There's no place like...Ikea?. Retrieved November 10, 2012 via http://www.ctvnews.ca/ctv-national-news/beijing-journal-there-s-no-place-like-ikea-1.941709
Hansegard J, 2012. ‘IKEA Says Paying Chinese Suppliers in Yuan Reduces Risk’, Wall Street Journal, 25 September. Retrieved November 1, 2012 via Factiva database.
Hansegard, J & Molin A 2012, ‘IKEA to Accelerate Expansion’, Wall Street Journal, 18 September. Retrieved November 1, 2012 via Factiva database.
Howard, JA. & Sheth JN, 1969. Theory of Buyer Behavior. USA: John Wiley & Sons. p85-209.
Ikea 2011, Haymarket Business Publications Ltd, London, United Kingdom. Retrieved October 28, 2012, via Proquest database.
John Dudovskiy, 2012. IKEA Porter's Five Forces Analysis, Research Methodology. Retrieved November 24, 2012, via http://research-methodology.net/ikea-porters-five-forces-analysis/
Karun, S. 2012, Cherthala's 40-year Ikea connection [Kochi], New Delhi, India, New Delhi. Retrieved October 28, 2012, via Proquest database.
Leonarski, T 2007, “Improving Your Supply Chain – Where Do You Start?’ Manufactoring.net. Retrieved November 1, 2012 via Factiva database.
Reynolds J, 1988. IKEA. International Journal of Retail & Distribution Management. 16 (3), p32-34.
Shaw H, 2005. Ikea slashes prices to maintain market dominance, Don Mills, Ont., Canada. Retrieved October 28, 2012, via Proquest database. In-store experience There's no place like...Ikea?. INVADING IKEA!
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