ANALYZING CONSUMER MARKETS

Analyzing Consumer Markets

This presentation is about IKEA currently the largest retailer in the world. It has done this by successfully decoding the consumer and his world. So lets trace its journey.1

Trivia- Details, details, detailsFounded In 1943 by Ingvar Kamprad a 17 year old in Almhunt, Sweden

It sells ready-to-assemble furniture, accessories and home appliances.

It all started when a 17 year old Ingvar Kampradfounded IKEA in 1943 who used to sell pens. It began to sell furniture five years later.The first store was opened in Almhult Sweden and it now operates as The IKEA museum.The Ikea logo and most of the IKEA stores are blue and yellow representing the national Swedish colours.2

The Rise And Rise Of IKEAIkea has become a retail titan in home furnishings.It is the largest furnish retailers currently.In fiscal year 2016 it sold a $37.8 billion worth of goods.As of December 16 it has 392 stores spread out over 48 countries.

Throughout the years it has continued to successfully grow its buissness in 48 countries of which the majority are developed. On the backdrop of 2016 it had profits of about $3.8 billion.3

Ikea For You..The Companys Vision is to create- A BETTER EVERYDAY LIFE FOR THE MANY PEOPLE.

The companys vision is to create and I quote A BETTER EVERYDAY LIFE FOR THE MANY PEOPLE on which it has created a successful brand.4

Questions Addressed1.What are the product offerings, segmentation and positioning strategy of the company to fulfill its vision?2. What are some of the things IKEA is doing well to reach consumers in different markets?

We will see through the answers of these questions how it has successfully understood the consumer market and how it has expanded to different countries and adapted itself to cater to the local markets.5

Ikea-for the customers, of the customers, by the customers

Ikea has established itself as the quintessential cult brand and the buissness week has described it as global cultural phenomena. It has a massive following from its customer.6

1. Product Differentiation2. Cost leadershipIkea has been able to generate remarkable levels of interests and devotion from its customers.It does it through:-

Generating a remarkable levels of interests and devotion from its customers.It has been able to achieve this through 2 factors:-Product DiffrentiationCost leadership.7

Product Differentiation

IKEA boasts of over 12000 products foraying into all of the possible furniture category.To keep its content fresh it replaces about 1/3rd of its furniture every year providing the user a new array of options in each turn of the year..

The Billy Bookcase

Ikea provides a lot of variety for its different type of consumers. It has its own designing centers who roll out new products every year attracting new customers.It replaces 1/3rd of its products every year to stay relevant.8

Each product is recognized by its unique name.ex: The Billy bookcase, Hektar lamps, Lack side table

LACK side table HEKTAR lamp

Since the founder was dyslexic he found it easier to remember product by its name rather than using a complex code giving IKEA a uniqueness of a kind.

It has a procedure for naming all of its products for example it uses Danish city names for naming its carpets,Chairs and desks after mens names.

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Cost Leadership IKEA reduces prices across all its products annually. It is able to achieve it through:-

Flat packaging DIY(Do it Yourself) Higher customer involvement in every step of the buying process and hence intervening in the whole Buying Decision Model.All of the above factors allow IKEA to reduce cost for its offerings.

What allows IKEA to gain so many customer is by having extremely low prices and it does this consistently through the years.Achieving this seemingly impossible tasks is done through using the customer in almost every process of buying the furniture and hence intervening in the whole Buying Decision model.10

IKEA is famous for its DIY concept ofselling furniture where the users themselves have to transport, assemble furniture reducing costs.

It has concepts of flat packaging and Do it yourself where customers themselves have to build their furniture from pieces given by IKEA.So they come buy and themselves transport and assemble the furniture reducing the costs for IKEA.11

IKEA in DIFFERENT marketsIKEA has always tried to offer and created new ones depending upon the tastes of its customers be it the its rooster theme placemats for Chinese customers or a larger dining table for its Hispanic loyalists.

It has adapted itself differently in different markets. Recently it is entering emerging markets like china where it had to remove the concept of do it yourself as the Chinese customers did not want to assemble it itself. It introduced new products that became successful locally. 12

They have altered their store policies, products according to the customer in every possible segment be it through geography, culture, age.

It has maintained effective communications with its customers post-purchase to understand how the furniture works for them introducing changes or new products to satisfy their needs. Ikea is coming to india in 2017 in Hyderabad.13

THE IKEA STORE

The IKEA store is a world in itself. It is designed in a manner that the customer is enticed to buy.IKEA store has its own food catalogue serving Swedish as well a local delight.People come to the store and are able to spend a full day in it and hence often enticed to buy.

IKEA is famous for its larger than life stores. They are in a sense a world in themselves.It is designed in a winding one, way format so the customers have to go through the entire store to get out. Being large customers usually have to spend a full day on it and hence are more enticed to buy the product.

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Ikea has its own resturants in the store serving Swedish as well as local delicacies. IKEA even has its own food catalogue.15

AdvertisementsIKEA has been very unique in its advertisements and promotion campaigning which includes:-Prizes, promotional vouchers to the Ikea store.A recent example of a campaign AMBASSADOR OF KUL where customers had to live in an IKEA store for three days to win prizes.Has massive online presence.

It has been very unique in its advertisements and promotion campaigns.Example being the Ambassador of Kul contest where the customer had to spend 3 days in an Ikea store to win prizes. It often offers vouchers to first customers and has online campaigns as well.16

It often uses quirky, witty tag lines and engages its customers to take part in the campaign.An example being the campaign who is the messiest men or women?Now which gender wouldnt like to save their face?17

Nearly 70% of its marketing revenue goes in the print media in creation of its phenomenon catalogue.

The all famous IKEA catalogue has become a must have.It uses up nearly 70% of IKEAS marketing revenue.It has become available across different formats.Members of IKEA get the special edition too.18

Pros-1.Created a cult of a following of its customers who are loyal and a great influence on the buying decisions of the rest of the public

2. A ready assortments of successful and innovative products which are ready to pounce upon the new markets.

Cons-1.A huge investment is required for the whole IKEA process to work.

2. With IKEA targeting the emerging markets the potential customers here are entirely different than IKEA has dealt with before and hence their strategy may not work here.

Ikea has essentially changed the way people shop for furniture.The pros and cons of this strategy are:-

The pros and cons of its marketing strategy areFirst the pros:-It has the so called bees as its loyal customers who often influence others to buy.So many markets are left to be entered that may give an idea how massive IKEA may become.Cons:-A new store requires a huge investment and uncertainties always remain.19

SummaryTriviaThe Rise and Rise of IkeaIkea For YouThe CustomerAdvertisementPros and Cons Of Marketing Strategy

So we saw some facts and trivia about IkeaHow it expandedWhat was the companys visionHow it designed its offerings for the customerIts Advertisement StrategyAnd We ended by Analyzing the marketing strategy of the company.

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Disclaimer Created by Mayank Deepak Thar of JIIT Noida, during a marketing internship Under Prof. Sameer Mathur, IIM Lucknow.

So in this presentation we focused on how IKEA understood the consumer market well.I am very thankful to Professor Sameer Mathur for giving me this Oppurtunity to intern under his guidance. 21