Ikea Case Study

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Forth one is what the experts calls as “IKEA Effect”. The IKEA effect has been described as follows: "The price is low for IKEA products largely because they take labor out of the equation. With a Phillips screwdriver, an Allen wrench and rubber mallet, IKEA customers can very literally build an entire home's worth of furniture on a very tight budget. But what happens when they do?" They "fall in love with their IKEA creations. Even when there are parts missing and the items are incorrectly built, customers in the IKEA study still loved the fruits of their labors.” (1)

Other factors that I find useful are corporate citizenship and culture such as managers are using buses instead of taxis. Equality between employees regardless of their positions and smart flat packaging which fits through narrow doors and stairways and hard to copy over all concept.

Despite its success, there multiple downsides to shopping at IKEA. What are some of these downsides? IKEA's Vision Statement describes how the company seeks to build a "partnership" with its customers. What do you think of this vision statement?

I personally find their vision statement very successful. Calling customers “partners” rather than “customer” is a very smart and very appropriate since customer is creating its own value by simply taking distribution and assemble function upon IKEA. Few down sides shopping at IKEA are having product assembly burden on customer, less longevity of their products, less physical interaction with seller (less humanized) and comfort being secondary comparing to price.

Some industry observers have suggested that IKEA should open small, satellite stores across the United States (e.g., in shopping malls, strip malls, etc.). By offering a more limited range of IKEA products, these "IKEA Lite" stores would presumably give consumers who do not otherwise have access to a traditional size IKEA the opportunity to experience the brand. Additionally, consumers who do live near full-size IKEA stores would be able to use these "lite" stores to make minor purchases (coffee cups, hangers, etc.) more easily Do you agree with this idea? Why or why not?

Yes, I definitely agree with this idea. IKEA stores are usually far away from the city center and most people have a hassle to go to their stores or even sometimes give up purchasing. Customer expectations with technology is changing therefore way of shopping is changing. Opening smaller Lite stores can make IKEA closer to their customers which will end up increase in sales. To make costs even more efficient and to stay on competition with e-commerce giants, customers can place their orders online and pick up their items from those city center hubs.

References

1. "Are Your Ideas Really That Good? Beware the IKEA Effect". Freeman XP. Freeman XP. Retrieved 21 March 2017.