Ikea Marketing In-Depth Analysis

Executive Summary

This paper aims to study IKEA’s competitiveness in the market and various strategies used to achieve and maintain its market share. In this report, the first scope of the discussion will be on the segmentations and target market segments on how IKEA is based according to their company standards and its strategies against competitors. IKEA’s vision of the company and its business plans are also briefly mentioned.

The second scope will be an analysis on IKEA using the Porter’s Five forces that discusses the threat of new entrants, bargaining power of suppliers and buyers, threats of substitute, as well as the rivalry amongst current competitors such as Scanteak.  

Thirdly, this report will focus on the introduction on IKEA’s new campaign including a in-depth analysis on its product characteristics, branding, positioning, distribution, pricing, promotion and marketing strategies. Different communication tools to target audience such as social media and mobile platforms will also be discussed.  

 A detailed and exploratory research will be done over the net using relevant websites and various academic journals to understand how IKEA will introduce its new campaign and how it strives to achieve success of this campaign through various marketing tools.  

1. Introduction to IKEA

IKEA is an internationally known home furnishing retailer. It has grown rapidly since it was founded in 1943. Today it is the world's largest furniture retailer, recognised for its Scandinavian style. IKEA carries a range of 9,500 products, including home furniture and accessories. This wide range is available in all IKEA stores and customers can order much of the range online through IKEA's website (IKEA/SG, n.d.).

IKEA is the world’s most established furniture retailer, owning 393 Stores in 48 countries, providing a wide range of products about 12,000 products and accommodating about 410 Million shoppers per year (IKEA, 2017). Majority of the its stores is in developed countries such as Europe, America and Asia which mainly focus on operating in highly lucrative markets. The most unique features of IKEA are providing their ready-to-assemble furniture services, which the customer is required to assemble the flat packed product into Furniture (Nilesh Vasani, 2017).

1.1 IKEA’s Vision and Business Plan 

The IKEA vision is 'to create a better everyday life for the many people' puts this concern at the heart of the business. IKEA business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them (IKEA/SG, n.d.). It is a value-driven company with a passion for life at home. Every product we create is an idea for making home a better place. Its supply chain operation and inventory management work together to support its main goals and help IKEA to succeed worldwide (Lu, 2014).  

1. Current Market Audience    

IKEA’s segmentation, targeting and positioning of its target audience involve a set of connected marketing decisions that constitute the core of the company’s marketing strategy. Segmentation is the means to divide the population into groups based on their common traits and characteristics such as old and young people. Target market involve choosing a specific group that is identified as a result of segmentation and is the targeted consumer for the specific brand or product.

IKEA segmentation, targeting and positioning involves a set of consequent marketing decisions that constitute the core of company’s marketing strategy (Dudovskiy, 2017).  Segmentation refers to dividing population into groups based on their common traits and characteristics (Wind, Bell and Sheth, 2014). Targeting involves choosing specific groups identified because of segmentation as consumers for the brand.

2.1 Competitors  

IKEA’s main competitor consist of retail and online furniture stores whom they should

gain advantage through sustainable supply chain management. The areas that are

important to the success of IKEA is to ensure high quality of products and operation,

maintaining efficiency in managing resources and providing services, increasing

customer attraction and developing sustainable stakeholder relationships,

accomplishing annual financial goals and improving the brand image (Sandybayev,

2015).

One example is Scanteak, which is one of Singapore’s largest furniture chain store retailers with over 14 showrooms across the island. Its global footprint consists of more than 100 retail outlets and flagship stores in Brunei, Japan, Taiwan, Germany, Canada and the United States. Its strong branding, established over its 42-year history, has carried the home-grown business far and wide (Scanteak.com.sg, n.d.). Scanteak’s product offerings includes reclaimed teak wood pieces, retro upcycled treasures, designer vintage one-offs, and quirky art, lighting and accessories from right across the globe (Expat Living Singapore, 2018).

A store could probably duplicate one or two of the things which compose IKEA's atmosphere, but they would fail in other aspects. For example, a store could try and copy the Scandinavian design niche, but it would be hard and unauthentic as IKEA is the result of true Scandinavian heritage.

1. The IKEA approach to sustainability

IKEA strives to minimise negative impact on the environment by applying innovative thinking in every step of the supply chain, from the very first idea for a product to when the customer no longer has use for it (Ikea Sustainability, 2011). Cost-consciousness is part of their culture, and it inspires them to try to make more from less resources and minimise waste in every form. For example, reducing greenhouse gas emissions and minimise waste and water consumption in society by offering products that help customers live a more sustainable life at home (GreenFutureSolutions, 2011).

3.1 Strategic approach to forestry challenges

All IKEA solid wood and board product suppliers must live up to the IKEA supplier code of conduct “IWAY” as well as forestry requirements (Ikea Sustainability, 2011). Forest management in our wood sourcing areas must not threaten high conservation values. In sensitive areas, forest managers are required to have a certified management plan that respects conservation values. IKEA suppliers are required to document the origin of their wood and places high importance on supplier monitoring as well as wood supply chain audits on high-risk suppliers and areas (GreenFutureSolutions, 2011).