We all know that Ikea provides products at cheaper prices than other retail stores. But do you know how this Swedish company became so successful? We are here going to explain the marketing strategy of Ikea.
A Short Overview of IKEA
Ikea is one of the largest furnishings firms all over the globe. Ingvar Kamprad, a carpenter, set up this company in Sweden in 1943 when he was only 17 years old.
Ikea is a world-famous retailer which provides kitchenware, ready-to-assemble furnishings, and residence appliances. The organization first began to sell wallets, pens, and jewelry to fulfill the requirements of the consumers within their budget.
After 5 years of starting the business, the company started to sell furniture. From then on furniture has become the main selling product of the company. Now, it has become a world-famous brand.
What is the Meaning of IKEA?
Most people want to know the story behind this name. There is a meaning of the term IKEA. The full form of Ikea is Ingvar Kamprad Elmtaryd Agunnaryd. But it is very difficult to pronounce the full form. But the name has an inner connotation. The initial two letters of Ikea, I and k are the first letters of the name and title of the inventor Ingvar Kamprad. He has used E in respect of the ranch where he developed up which is Elmtaryd. The final letter A is taken from the Swedish village, Agunnaryd where the ranch was situated.
How Does Ikea Earn Money: the Industry Prototype of IKEA
Ikea earns money through the Price-leadership model. The only mission and vision of Ikea is affordable prices. The products of Ikea are named after Swedish villages like Akurum, Aneboda, and Anordna.
But the consumers do not bother about the names. They only care about their prices. Ikea is an ideal place for budget-conscious people. The entire business model of the company is to sell their derivative at reasonable costs.
The industry model of ikea revolves around their opinion which is to provide a lot of well-designed, used residence furnishings derivatives at as low as possible costs that will be affordable for most people.
It is very easy to produce a high-grade derivative and trade them at a high cost and a poor-quality derivative and trade them at a low cost.
But Ikea applies a different policy. They have developed cost-effective as well as unique methods. They decide the price tag before designing the product. Then the designers design the products keeping in mind the price tag. There are 31 distribution centers of Ikea in 16 distinct nations. They supply products to Ikea stores. There are nearly 45 trading assistance headquarters in 31 nations. They have a very good relationship with their 1350 suppliers in 50 nations.
What is the Smart Secret of IKEA?
Do you know Ikea is a non-profit company? After hearing this a lot of questions must be peeping into your mind.
Ikea is a non-profit company: this is the smart secret of the company. Their only vision is to make a good regular life for most people. Their only mission is to provide a wide array of products for home furnishing at the lowest possible prices so that most people can easily afford them. Its primary motive is to display itself as a non-profit company. There are nearly 135,000 employees in the company. Due to the tax rules for non-profit companies, Ikea has to pay 33 times lesser taxes than profit companies.
There is another factor in this entire ikea non-profit company. Capital is not entangled inside the basis of Ikea. Inter Ikea Systems, a private company owns the Ikea trademark and TFS concept.
That is why, to manage the Ikea shops and utilize the brand title, Ikea has to give fees every year to the private firm, Inter Ikea Systems. This implies that capital is instantly disbursed from the earnings of Ikea to the proprietors of this private organization to approve the brand.
What is the History of IKEA?
To make a case study on Ikea it is very important to know the history of Ikea like it started its journey and grew up.
1926
When Ingvar Kamprad the creator of Ikea was born in Smalamd in Southern Sweden in 1926 everything began.
The 1940s-1950s
Ikea introduced furniture in their product line in 1948. The furniture was made by regional manufacturers who are close to the home of the founder.
Ikea thought of making furniture for flat batches in 1956. It began to concentrate on self-assembling furnishings prototypes.
The 1980s
Ikea widened itself incredibly in 1980 into contemporary markets like Italy, the USA, France, and the UK. The Ikea group launched a recent association for consumers in 1984. Now, the Ikea family is spread in 16 nations with more than 167 stores and they have nearly 15 million associates.
Economical Facts and Figures
Types: furniture, customer electronics, shopping, retail, smart residence.
Center: European Union
Date of foundation: 1943
Inventor: Ingvar Kampard
No of workers: more than 1001
Permitted name: Ikea BV Digital links
Website name: www.ikea.com/
Facebook: www.facebook.com/IKEAIndia
Linkedin: www.linkedin.com/company/ikea-group/
Twitter – https://twitter.com/IKEAUSA
Ikea has merely 1 acquisition till now. It gained TaskRabbit on 28th September 2017.
Mobile App and Its Downloads
There are a lot of mobile applications. The most famous one is the Ikea Store. There are nearly 9, 60,333 monthly downloads of the app. The website and monthly traffic of Ikea is rated 166 among websites all over the world. There are nearly 146,040,680 guests per month.
Investments
Ikea is the main investor in 4 organizations. They are as follows:
- XL HYBRIDS – IKEA declared to invest in the company on 12th October 2017.
- MAT SMART – IKEA declared to invest in this organization on 23rd January 2018.
- TRAEMAND – IKEA declared to invest in this company on 19th December 2018.
- LIVSPACE – IKEA declared to invest in this company on 19th December 2018.
Management is the Core Team
- The CEO of the company is Jesper Brodin.
- The CFO of the company is Alistair Davidson.
- The founder of the company is Ingvar Kampard.
- The head of corporate finance and amp; tax is Krister Mattsson.
- The head of digital is Christian Moehring.
- The head of Ecommerce, Southeast Asia is Koen Besteman.
- The head of UK marketing procurement is Maria Malpartida.
- The head of innovation is Jens Heitland.
Marketing Strategy of IKEA
Most public think that marketing and promotion are the same. They think that marketing is something you accomplish to trade your derivative. But that is not at all accurate. Marketing starts before production because it is very important to design a product considering the demand and requirements of the consumers and thus is a kind of marketing. Ikea believes in this. Ikea makes everything from the point of view of the consumers. The different marketing strategies of Ikea are as follows:
Stunning Customer Experience
Have you ever done any shopping at Ikea? If not, we are recommending you shop from Ikea next time if you require furniture. You will get a different experience if you shop from an Ikea store than other furniture stores. When people go out shopping with their children they both encounter a lot of problems.
Ikea has an outstanding solution for this for which people as well as the kids want to spend more time at the Ikea shop. Ikea stores provide a free childcare facility where you may leave your child safely and enjoy your shopping without any hassle and the child will also be able to have a good time go play and make new pals.
Another outstanding fact is that you do not need to stand and discuss which product to purchase and calculate the cost. In place of it, you may have a seat to discuss anything and enjoy your shopping.
These small factors put a value on the consumers’ shopping experience and provide them a justification to shop and recommend others to shop from the store.
Brand Identity
It is very significant to stand out from the crowd or be innovative and resourceful to stay in this competitive market. That is a conkaby that has to be built in a way so that consumers choose you from the pool of organizations. Ikea is vigorously toiling on this. The company aims to come to be the director of every household.
Ikea concentrates greatly on the derivative as well as the consumers which most companies fail to do. By making the products as per your customer’s demands a company may create a strong brand identity. Each of your actions must be an education of your company. Ikea utilizes this tactic in its advertising.
Content Marketing
The digital environment is growing rapidly. Therefore, content has become a very significant part of the digital drive. Most companies use content to publicize their company digitally. You may use picture art or a long-composed blog as content in digital marketing.
In this digital period, the best strategy you may apply is to connect to your consumers directly. By using all kinds of content like videos, images, or textual content, Ikea tries to reach its consumers. It is very vital to detect your potential audience if you want to connect with your consumers digitally. Then you need to define how your possible consumers will find you, whether through social media handles, your website, or both. After that, you have to target them with organic as well as paid advertising policies.
Social Media
We can not avoid social media. Almost every person now uses social media. That is why a company needs to have its presence on each social media platform, no matter whether you are an ancient firm or a recent one. With the help of social media, you may get in touch with your consumers constantly. You may apply various techniques in all your social media platforms to make yourself reliable and create a decent brand image towards your consumers as well as make new consumers.
You may apply the following strategies:
- By posting constantly, you may have a decent content interaction as if you post regularly your consumers will think about you.
- With the help of promotional policies offered by social media firms, you may achieve a recent audience and entice them by depicting your recent derivatives and proposals.
- You may use another strategy which is to comprehend your audience. This is very vital as they are the utmost customers and if you know about them it will be easy for you to plan the products of your company and marketing properly.
Innovation
Ikea is popular for recent plans and derivatives. It continuously adds a new design or product to its product line. That is why consumers visit the stores even when they do not have anything to purchase. They only want to find recent trends and products. By checking their social media handles you will be able to get a lot of content that shows new and creative products. In case they do not make the products count to the carriage, they add them to their wishlist and later buy them. That is why creativity in products and making inventions is very essential.
Inventive Marketing Campaigns
Ikea shows its creativity in marketing. They create so engaging posts that they attract everyone to click on them and check what is there.
Stunning Use of Technology
We are now living in the 21st century. We may provide an outstanding experience to our consumers by making stunning use of technology. We may use augmented reality and virtual reality in these businesses. Ikea uses both.
Augmented reality is the most outstanding utilization of technology that Ikea may have done. With this, you may use your mobile device to check how a specific piece of furniture would look in your home. With the help of this, you may also choose which corner of your house that very furniture would look good. This is just like a trial which allows you to try the products virtually from your home without purchasing them. This strategy is used by Lenskart.
Virtual reality is another outstanding utilization of technology. Most people remain busy using virtual reality for gaming reasons, but Ikea has used it smartly. For instance, if you want to purchase a modular kitchen, you may try the kitchen in a virtual reality headset before purchasing it. You may also try cooking and have a real feel.
Payments Methods
Customers have now become very progressive. They now seek comfort. Due to the evolution of the digital age, a lot of payment methods have been introduced. Each customer has distinct payment options. It is very important a company to have all the payment options available so that the consumers get a great shopping experience without any hassle. Ikea is a price-conscious company and when the consumers get the best price guarantee with all payment options it becomes like a cherry on the top for them.
Unfamiliar facts about Ikea
- Ikea is the third largest wood customer all over the globe. It is a popular furniture company. So, this is not surprising.
- Ikea prints more copies of its annual catalogue every year than the Bible.
- Ikea has very decent food sales. It is popular for furniture as well as for restaurants. It increases income. The all-around sales of the company are $2 billion annually.
- As of 2014, nearly 716 million people have visited their store. This is indeed a massive number.
- Ikea first launched its restaurant in 1956 for feeding its consumers who feel hungry after shopping the whole day.
SWOT Analysis of IKEA
Strength
- The vision of Ikea– is to create a better everyday life for many people.
- Lowest Price
- Economies of scale
- Unlimited designs
Weakness
- Poor press
- Problem to handle standards in all locations.
- Low quality
Opportunity
- Improving social responsibility
- Keys for a sustainable life at home
Threats
- The recession makes customer spending slow.
- A lot of opponents emerges from the low price of home and furnishings.
What are the Key Values of IKEA?
Ikea is very strict about its values. It has a strong belief that every person has something important to provide. Some of the most important values of Ikea are as follows:
Cost – Consciousness
They are mainly concerned with making affordable products so that anyone can easily afford them. They challenge themselves continuously to make the product more reasonable without adjusting the quality.
Renew and Improve
The company always challenges itself to try something unique and to figure out a better way out.
Caring for People and the World
They always care for people as well as the environment. They act as power for optimistic change.
IKEA in India
Ikea first showed its interest in the market of India in 2006 but went back as the Indian laws entitled only 51% foreign licence. When the Indian administration relaxed the rules and regulations for foreign immediate acquisition in place of trademark retail, Ikea declared its wish to launch shops in India in October. Ikea launched its foremost shop in India on 9th August 2018. For entering the Indian market Ikea took 12 years. They launched their first Indian store in Hyderabad. From Hyderabad, it received a warm welcome. Till now over 3 million consumers have paid a visit to their store in Hyderabad and nearly 8 million people have said a visit to the Indian website of Ikea. The company bought land in Mumbai in 2016 and declared that it is planning to launch shops in Bengaluru as well as Delhi. After Hyderabad, Ikea introduced its first online store in Mumbai in 2019. They offered over 7500 products in their online store in Mumbai. It will ship its products to most of the places in Mumbai and will deliver them within 4 to 7 days depending on availability and reach.
Ikea has over 55 suppliers in India. Moreover, it has over 45,000 direct workers and 400,000 public in the extended supply chain. Now, the organization is planning to give over 25 shops in India by 2025.
Conclusion
The marketing strategy of Ikea is an example of a well-thought and well-structured marketing experience. If you want to know more you may get in touch with My Assignment Writing Help.
FREQUENTLY ASKED QUESTIONS
- What is the Business Model of IKEA?
The company follows a price-leadership model. Their only concern is to keep the products in reasonable price ranges.
- Who is the Target Audience of IKEA?
Ikea meets the requirements of each customer. It gives special attention to adults who are 16 to 34 years old. The target audience of Ikea is:
- Single people who do not live at home.
- Bachelors
- Newly married couple
- Older married couples with dependent kids
- Families with the youngest child under six
- No children families
- Retired
- Labor force
- Professionals
- Students
- What are the Marketing Channels of IKEA?
Ikea uses the following marketing channels:
- Mobile apps
- Website
- Telecalling
- Webpage: SMS, Email, and WhatsApp marketing
- Social media
- Commercial
- Stores
- Print ads
