Contemporary marketing strategy

Roger Penguino. He won the $4000 dollar gift certificate for the opening of the new Atlanta store. He is the typical IKEA customer who was willing to camp out in front of the store for seven days. The typical IKEA customer is that person either a student, young executive, or family man/woman who wants furniture that is trendy, contemporary and at the same time cheap and cheerful.

Customer behavior is a strong predictor of your future relationship with a customer because it displays the typical manner in which customer purchases goods or services in terms of amount, frequency and timing. Profiles can be demographically or behaviorally based, which include family size, age, income, sex, occupation, location.

Started in 1943 by Ingvar Kamprad to sell a random assortment of products that he could sell at a cheap price from his house ,IKEA has grown into a multinational furniture store. IKEA's rapid growth continues to be driven by a strong attention to what their customers want: contemporary products that are affordable and functional. This isn't a concept that is integrated into an aspect of the business plan. It is the driving force behind all decisions. The products are simple in design but visually appealing; they are simple to build, eliminating the need to hire an installer. IKEA obsesses over finding the perfect fit between manufacturer, product, and pricewhen they needed bent wood arms for a chair, they turned to ski manufacturers.

Even though not every aspect of the in-store or out-store experience is great and in some aspects even induce pain in customers, it remains effective in generating positive memories and delivering the brand values of IKEA -- The natural outcome of a branded experience. On the contrary, a branded experience requires you to allocate your limited resources to create significant "pleasure peaks"(those that perform way above average like products, prices, nursery for shopping mothers, restaurant) and limit pain to an acceptable level(the queuing for a store opening, DIY, the far car park)

This attention to cost conscious customers doesn't stop at the products, but extends to other aspects of the customers' lifestyles. Understanding that most New Yorkers don't own cars as they are inefficient and not cost effective, when IKEA opened their Elizabeth, N.J. location right outside of New York, they offered free shuttle service between Port Authority and the store every half hour. For cost-conscious customers, such a trip would have otherwise been too expensive.

Knowing that functionality is a big part of their customers' buying decisions, when IKEA was designing their Chicago store they didn't only ask for customer input on what they wanted in an ideal store, they asked them to work alongside with designers in conceiving the final product. After it was finished, no one rated the experience as poor or fair, and 85% rated it as very good or excellent. Return visits increased dramatically.

Functionality differs between regions, and IKEA takes it into account when designing their products. They don't just have people complete surveys to figure out what they want. They go into their homes and see the ways they live. Visiting people's houses in Italy and the United States led to the understanding that Americans store more clothing in drawers. The result: deeper drawers for their American products.

This attention to incorporating what their customers want is not lost on the customers. In one forum message, a user identified as Bcbaird commented, "I like the IKEA cabinets because the money you spend goes towards the things that count ... and not the things that don't." And, the attention has paid off: from 1997 to 2005 IKEA doubled its market share and tripled its sales from $600 million to $1.7 billion to become the seventh largest furniture store in the United States.

Brands have become increasingly important in a global hyper-competitative business environment. Brands are critical for a firm's in mature markets and strong brands enable a firm to place itself in a leadership position in a new emerging markets. Building strong brands that provide long-term competitative advantage involves many actions include developing a brand, positioning a brand character, a brand identity(name, logo, visual and other aesthetic symbols for the brand) and a brand custodians(evangelist) so that they can consistently deliver the brand's promise to customer. The ambassador of Kul promotion, for example, gives essay contestant winners the chance to camp out in store before it opens. That excites shoppers and bring about huge publicity. IKEA always played on its Swedish credentials from the outset with the yellow and blur branding(same colors as featured in the national Sweden flag) products are identified by single word names, with most coming from Scandinavian origin. With this view therefore branding is a culture whose on and only objective is to deliver a clear promise made to the customers.

IKEA vision, business idea and marketing position statement provides a framework for all IKEA marketing communication worldwide.

IKEA vision "to create a better everyday life for the many people

IKEA Business Idea " To offer 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 Marketing Positioning Statement " Your partner in better living. We do our part, you do yours. Together we save money"

By communicating this content of this framework and encouraging customers to experience the IKEA concept we are building the IKEA brand. The IKEA brand is the sum total of the emotional and rational values that consumer associate with the IKEA trademark.

IKEA Pricing Strategy is to maintain good quality and design while keep cost as low as possible passing on a significant save for the customer. Prices are 30 to 50% lower than competiting products. The penetration pricing enables IKEA to gain significant market share. Low prices are as a result of large-quantity purchases, low-cost logistics, store location in suburban areas and a DIY approach to marketing. This Pricing Strategy will be sustainable for an long time because IKEA benefits from a healthy supplier-firm relationship by entering into long term contacts, provide lease equipments and technical support in exchange for exclusive low-cost manufacturing from suppliers.

Value Chain Strategy best describes the activities that take place in business and relates them to an analysis of the competitive strength. These activities are grouped into 2 including

Primary Activities: those directly concerned with creating and delivering a product. They include:

Inbound Logistics, Operations, Outbound Logistics, Marketing and Sales, Services

Support Activities: which whilst they are not directly involved in production, may increase effectiveness or efficiency. E.g. Procurement, Human Resources Management, Technology Development, Infrastructure.

Like most transnational corporations, IKEA sources its supplies from numerous suppliers spread over several countries at present it sources from over 1300 suppliers spread over 53 countries and employs directly and indirectly 76,000 workers.

IKEA also pursue a welfare trajectory that ensures the well being of its employees, suppliers and the environment as well. That's why it challenged 28 of its designers to find innovative uses for discarded and unusual materials resulting in a storage system made from recycled milk cartons also for every card swiped, 50p goes to the forest conservation. The key concept behind IKEA's organizational moves is its attempt to provide well-designed, functional home furnishing products at affordable prices. The concept is bound to influence the sourcing, production, and distribution methods adopted by IKEA across its supply network.

REFRENCES

  • http://www.customerthink.com/article/ikea_branded_experience_important
  • http://www.tutor2u.net/business/strategy/value_chain_analysis.htm
  • http://www.inmotionmagazine.com/global/lasamy_ikea.html
  • http://www.cult-branding.com/cbprofiles/ikea-cult-brand-profile.html
  • http://www.oppapers.com/essays/Ikea-Marketing-Mix-Analysis/188478
  • http://www.inmotionmagazine.com/global/lasamy_ikea.html
  • http://blog.brandcrystal.com/category/brand-positioning/
  • http://www.scribd.com/doc/12444170/Product-Launching-and-Brand-Positioning-Strategies
  • http://www.utalkmarketing.com/Pages/Article.aspx?ArticleID=10357&Title=How_IKEA_persuaded_Brits_to_shop_Swedish
  • http://backpocket.prophet.com/tag/topic/brand-positioning
  • http://www.ikea.com/ms/en_GB/about_ikea/press_room/student_info.html
  • http://www.oppapers.com/subjects/ikea-value-chain-analysis-page1.html

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