IKEA global marketing strategies

1. ORIGIN OF NAME
The IKEA name combines the initials of
IKEA founder, Ingvar Kamprad, (IK) with the
first letters from the names of the farm and
village where he grew up - Elmtaryd and
Agunnaryd (EA).

2. INTRODUCTION
• IKEA is a multinational group of companies that
designs and sells ready-to-assemble furniture (such
as beds, chairs and desks), appliances and home
accessories
• January 2008, it is the world's largest furniture
retailer
• Founded in Sweden in 1943 by then-17-year-
old Ingvar Kamprad
• As of March 2016, IKEA owns and operates 384
stores in 48 countries

3. IKEA VISION
“To create a better everyday life for the many people. We
make this possible 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.”

4. IKEA CULTURE
”Maintaining a strong IKEA culture is one of the most crucial
factors behind the continued success of the IKEA Concept”

5. IKEA VALUES
• Cost-consciousness
• Togetherness and enthusiasm
• Humbleness and willpower
• Accept and delegate responsibility
• Constantly being “on the way”

6. MAIN CONCEPT
 Designed around a "one-way" layout which leads
customers along "the long natural way”
 Stores always on major access roads
 Garage for petrol and van rental area
 At entrance, Crèche for small children
 Trolleys and blue plastic bags available
 Pencils, notebooks, paper measures
 At the end of children room located a Restaurant

7. FIRST TEMPTATION-
IKEA CATALOGUE
 First published in Swedish in 1951
 Initially distributed free to stores
locality
 In 2010, it featured proportion of 9500
products range (198 million copies,
27 languages for 38 countries)

8. CORE BUSINESS OF STORE
• Store manager had two central tasks
To turn as many visitors to customers
To encourage customers to purchase
• Customers at home got frustrated trying to follow the
instructions for their flat-pack furniture
But still
• In UK almost 10% of furniture spend was on IKEA goods
• 3rd of UK population purchase something every single
year from IKEA
• In 2009-10 2 Billion Meat balls were eaten in IKEA
Restaurant

9. HOT DOG STRATEGY
• Edible hot dogs were available just after the
checkout counters
• Sold for just 50 cents
• Although profits were small but they sold
millions of them

10. MALLEN
• Clip was IKEA successful product strategy
• Designed to hold magazines in bathroom
• Best part was they didn’t get wet
• One of bestselling articles in Mallen Range
• A journalist described the experience:
• “ It had never occurred to you that you might want to hang
up magazines in your bathroom BUT IKEA had already
decided that you would”
Combined aspects of IKEA concept and strategy
ensured continued success

11. ORGANIC GROWTH-
EXPANSION
• IKEA pursued self-funded organic growth strategy
• Initially focused on German speaking countries because
these were largest furniture market in Europe
• In 1975, opened its First store outside Europe in Australia
• Although they call itself a Global company but their
footprint was still European focused
• In 2006, opened a store in Minneapolis, US-retailer Target
was headquartered
• Staff from Target visited IKEA store everyday
• Six months later, Target launched range of furniture
products at low price points ONLINE similar to IKEA

12. GLOBAL BRAND
RECOGNITION
In 2003, it was ranked 44 of all globally recognized brands
Attracts loyal customers due to
In 2010, re-invested 2.1 Billion Euro to build new stores and
develop existing ones
Quality Furniture
Low prices
Special Promotions

13. • Forward Horizon Planning and solid
revenues helped them to speed up its
expansion plans
• In 2011, planned to open six stores in
Bulgaria, Thailand, Serbia, Ukraine, Abu
Dhabi and Denver
• Location experts began looking for
appropriate sites in New Zealand and
Philippines
But
• Not all expansion went according to plan

14. CHALLENGES
• Invested US$4 Billion in Russia while opening first store
But
• Russians created artificial obstacles for them
• Kamprad told Swedish radio that Russian utilities had not
provided them electricity as promised
• In 2007, decided to open store in India
• IKEA management tried to pursued Indian government to
ease foreign investment restrictions on retailers so that to get
ownership limit from 51% to 100%
• In 2009, IKEA finally quit its attempt and stores never
materialized

15. GLOBAL STRATEGIES
• So far they went on with same concept and culture where
ever they went but Adaption is still a question for IKEA???
• Entering the US market, IKEA was forced to adapt
Furniture
• Beds were measured in
centimeters rather than in King
Queen
Drinking
Glasses
• Drinking glasses were too small

16. DIVERSE CUSTOMER BASE
• IKEA realized that they were missing Hispanic population
in US market
• Designers visited homes of Hispanic staff
• Discovered that Hispanics don’t like subdued palettes but
prefer bright colors with warmer hues
• They also like dining tables more than two seated

17. PRICING
• Price and volume were the essence of IKEA
• Price levels were set 30-50 % below competitors
• Pricing rule of thumb was
One third to suppliers
One third to purchasing company
One third to the store

18. IN HOUSE DESIGN
• In house designers based in Sweden
• On average IKEA products took 2 years to develop
• Each of 11 business section worked in Three year cycle
• The cycle determine when meetings would take place and
who should attend
• Each of their product is designed with a range matrix
system

19. DIVISION OF RANGES
Country
Scandinavian
Modern
Young Swede

20. DESIGN DECISION
• Small town of Almhult, in southern Sweden
• IKEA make design decision of their entire
product range of 9500 items
• Almhult was not only spiritual heart of company
but the guardian of IKEA design
• Every year in September management present
entire range to Kamprad for his approval on new
items and design for next cycle

21. SUPPLY CHAIN
MANAGEMENT
• Integrated supply chain strategy
• Alliances with 1000+ suppliers
• In alliances they offer technical and financial support so
that they insure the quality
• IKEA supplies alliances were not ownership agreements
but preferred, sourcing
• IKEA purchasing strategy was to build long term
relationship with suppliers
• 27 distribution center serve IKEA stores

22. COMPETITION AND IMITATOR
• Its competitors were localized furniture retailers
but they could not match footprint of IKEA
• In Denmark, BIVA, discount furniture chain were
close competitor
• In US,TARGET created similar furniture range
• US direct imitator was purchased by IKEA
• In JAPAN, Nitori.Co offer low cost furniture
range
• In FRANCE their was FLY

23. FUTURE CHALLENGES
• As IKEA was in strong position but their were
some key question that need to be reflected?
• Could IKEA continue to grow successfully?
• Increasing search for raw material is also major
challenge
• IKEA is a clear success story but could it
continue this in decades to come