I K E AI K E AMarketing ResearchMarketing Research

IKEA – The BasicsIKEA – The Basics

Founded - 1943 in Smaland, Founded - 1943 in Smaland, Sweden By Ingrav Kamprad Sweden By Ingrav Kamprad

Stores Located Outside Cities In Stores Located Outside Cities In Europe, Asia, US, and CanadaEurope, Asia, US, and Canada

Sells Furniture, Kitchen Needs, Sells Furniture, Kitchen Needs, Decorations, etc.Decorations, etc.

IKEAIKEA In The U.S. In The U.S.

IKEA IKEA –– Management DecisionManagement Decision

Should IKEA Open Smaller Should IKEA Open Smaller Satellite Location In The Satellite Location In The Christiana Mall?Christiana Mall?

Processed Research Processed Research DesignDesign

SurveySurvey

Focus GroupFocus Group

Shopped at an Shopped at an IKEAIKEAShoppedtherebefore

31 25.2 25.2 25.2

92 74.8 74.8 100.0

123 100.0 100.0

No

Yes

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Age Of ParticipantsAge Of ParticipantsAge

34 27.6 27.6 27.6

43 35.0 35.0 62.6

17 13.8 13.8 76.4

19 15.4 15.4 91.9

10 8.1 8.1 100.0

123 100.0 100.0

16-20

21-24

25-30

31-40

40+

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Distance TraveledDistance TraveledDistancetraveled

41 44.6 44.6 44.6

10 10.9 10.9 55.4

33 35.9 35.9 91.3

7 7.6 7.6 98.9

1 1.1 1.1 100.0

92 100.0 100.0

1 Hour

1/2 Hour

2 Hours

3 Hours

4 Hours

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Last Time Shopped Last Time Shopped ThereThere

Lasttimeshoppedthere

8 8.7 8.7 8.7

3 3.3 3.3 12.0

41 44.6 44.6 56.5

40 43.5 43.5 100.0

92 100.0 100.0

Month

Week

Year

Year+

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Distance Discourage Distance Discourage Visit?Visit?

Discouraged

75 81.5 81.5 81.5

17 18.5 18.5 100.0

92 100.0 100.0

No

Yes

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Visits To The MallVisits To The MallVisitstoMall

2 2.2 2.2 2.2

61 66.3 66.3 68.5

21 22.8 22.8 91.3

8 8.7 8.7 100.0

92 100.0 100.0

>1xMonth

1xMonth

1xWeek

2xWeek

Total

ValidFrequency Percent Valid Percent

CumulativePercent

Focus GroupFocus Group

3 Focus Groups: 3 Focus Groups: – University of Delaware Students - DormsUniversity of Delaware Students - Dorms– University of Delaware Students - Off CampusUniversity of Delaware Students - Off Campus– Homeowners in the Newark AreaHomeowners in the Newark Area

Wanted Overall View Of: Wanted Overall View Of: – How These Groups Made Use Of Current IKEA How These Groups Made Use Of Current IKEA – Would Consider Using Smaller Branch Of IKEA Would Consider Using Smaller Branch Of IKEA

Stores Stores

Focus GroupFocus Group

Topics of DiscussionTopics of Discussion– Frequency Of VisitsFrequency Of Visits– Intentions Prior To Entering StoreIntentions Prior To Entering Store– Experience Received At IKEAExperience Received At IKEA– Factor Of TimeFactor Of Time– Feelings Of A Closer IKEAFeelings Of A Closer IKEA– Feelings Of A More Accessible, Scaled Feelings Of A More Accessible, Scaled

Down IKEADown IKEA

Focus Group - ResultsFocus Group - Results

Group 1 – UD Students – DormsGroup 1 – UD Students – Dorms– Seldom VisitedSeldom Visited– Went For Smaller Items (Lamps, Chairs, Went For Smaller Items (Lamps, Chairs,

etc.)etc.)– Time Was FactorTime Was Factor– Liked Idea Of Closer StoreLiked Idea Of Closer Store– Caught In Middle With Proposed IdeaCaught In Middle With Proposed Idea

Focus Group - ResultsFocus Group - Results

Group 2 – UD Students – Off CampusGroup 2 – UD Students – Off Campus– Frequently VisitedFrequently Visited– Went For Larger Items (Beds, Tables, Went For Larger Items (Beds, Tables,

Desks, etc.)Desks, etc.)– Time Was FactorTime Was Factor– Few Showed Extreme InterestFew Showed Extreme Interest– Hesitant To Proposed IdeaHesitant To Proposed Idea

Focus Group - ResultsFocus Group - Results

Group 3 – Newark HomeownersGroup 3 – Newark Homeowners– Frequently VisitedFrequently Visited– Went For Larger Items (Bedroom Sets, Went For Larger Items (Bedroom Sets,

Kitchen Sets, etc.)Kitchen Sets, etc.)– Time Not Much Of A FactorTime Not Much Of A Factor– Might Take Advantage Of Closer StoreMight Take Advantage Of Closer Store– Extremely Hesitant Of Proposed IdeaExtremely Hesitant Of Proposed Idea

IKEA Decision TreeIKEA Decision Tree

Two Initial DecisionsTwo Initial Decisions

– More ResearchMore Research Estimated Cost: $50,000Estimated Cost: $50,000

– No ResearchNo Research Zero Short Term CostZero Short Term Cost Increased Risk With DecisionIncreased Risk With Decision

IKEA Decision TreeIKEA Decision Tree

With No ResearchWith No Research

– OpenOpen Open Single Pilot StoreOpen Single Pilot Store Open Multiple Stores (4)Open Multiple Stores (4)

– Don’t OpenDon’t Open

• 82.5 M/Yr/Full IKEA• 1/3 For Micro = 27.5 M• 27.5 M – 15 M Start-up Cost• = 12.5 M/Yr Micro IKEA w/ No

Market Research

IKEA Decision TreeIKEA Decision Tree

With ResearchWith Research

– Receive Positive or Negative FeedbackReceive Positive or Negative Feedback

– OpenOpen Open Single Pilot StoreOpen Single Pilot Store Open Multiple Stores (4)Open Multiple Stores (4)

– Don’t OpenDon’t Open

IKEA Decision TreeIKEA Decision Tree

ConclusionConclusion

– Agrees With Group Research DecisionAgrees With Group Research Decision

– Negative Research Says Don’t Open Negative Research Says Don’t Open StoreStore

– Research Is Worth InvestmentResearch Is Worth Investment

IKEA Lessons LearnedIKEA Lessons Learned

Larger IKEA PreferredLarger IKEA Preferred

Focus Groups Elaborated On Survey Focus Groups Elaborated On Survey FindingsFindings

   Time Is Important Factor In Data Time Is Important Factor In Data

CollectionCollection

Research Worth the InvestmentResearch Worth the Investment

Must Be On Look-Out For Overlooked Must Be On Look-Out For Overlooked Variables Variables

THANKS!THANKS!

Bibliography Bibliography

““Furnishing the world” Furnishing the world” – The Economist The Economist

November 19, 1994; Richard Stevenson.November 19, 1994; Richard Stevenson.

IKEA Invades AmericaIKEA Invades America– Harvard Business School Harvard Business School

September 14, 2004September 14, 2004

www.IKEA.comwww.IKEA.com