STATUS REPORT #1

Review of Marketing Plan

Industry and Company Review

“The story of IKEA began in 1943 in the small village of Agunnaryd, Sweden, when

Ingvar Kamprad, the founder, was just 17. Since then, the IKEA Group has grown into a global

retail brand with 127,000 co-workers in 41 countries generating annual sales of more than 23.1

billion dollars” (Facts & Figures). With little competition in the self-serving furniture industry

the key factor of Ikea’s business is unparalleled low-price products and focus on functionality

and design appeal; Ikea has truly found a way to monopolize their industry. Europe dominates

Ikea’s market with 79% of sales and 204 operating stores; North America is second with 15%

sales and 48 stores, last Asia and Australia consisting of 6% sales with 28 stores. Current trends

include moving into a multi-channel network including print, internet, and in-store retailing.

With such a vast line of product including everything needed to complete your home from

bedroom to kitchen and bathroom; Ikea appeals to every demographic.

Brand/Product Review

“Ikea's mission is to offer a wide range of home furnishing items of good design and

function, excellent quality and durability, at prices so low that the majority of people can afford

to buy them”( Barnes, Buck, Beard). Ikea was ranked twenty-eighth most valuable brand in the

world (The Swedish Wire). In the past ten years Ikea has been able to lower prices in stores by

three percent and total revenue, at the year end of 2010, increased by 7.7 percent which revenues

totaled 23.1 billion dollars. In the last year twelve new stores were open in eight various

countries and sales in comparable units fell by 1.1% globally (Ikea Group). As for market shares

stated by the Swedish Wire for September 2010 “IKEA only has five-10 percent market share,
but its awareness levels are incredibly high for a business of its size, which speaks to the high

affinity for the brand.”

Strengths of Ikea’s include a strong internationally known brand. The unique

construction of Ikea’s business model allows them to have little direct competition. They have

found success in their cost efficient methods and also value and functionality shown to

customers. Also Ikea’s knowledge of key product areas where purchases are more considered

and require assistance, such as kitchen installations, has lead them to more sales on the floor

(Business Teacher).

Weakness comprise of a dependants on the European market because ninety percent of

stores are based there. With low prices in stores comes a low level of customer service if

improved a complete shopping experience would ensure repeat business. Finally in recent years

the need to move into a more technological and multi channel retailer has moved away from the

fundamental vision of the customer being able to see and touch the product (Business Teacher).

Current threats of Ikea include a growing competitive retail market mirroring the low cost

value and flat packaged furniture and the rising living costs and depleting disposable income is

threatening performances in the UK and American market unparticular (Business Teacher).

Current opportunity for Ikea has been to move into a mid and higher price point to

include a greater demographic and to increase levels of customer service as the additional

transactions increase business (Business Teacher).

Buyer Analysis

Ikea with their long lines of product and unlimited choices of all necessities needed for

home furnishing, decorating, and functional uses appeals to many market segments. These

segments include, but are not limited to, students furnishing dorms and apartments during
college, single persons living on their own and young couples, single families, and also empty

nested couples and older single individuals. The user profiles of all these segments are the needs

they have to furnish their living areas with affordable and quality products.

In the bases for segmenting Ikea consumer’s geographic factors play a large role.

Although Ikea is a global brand name ranging in thirty-eight countries (Facts & Figures) majority

of their stores lie in Europe. As for Kent Ohio the closest store location is two hours away

located in Pittsburgh Pennsylvania. Ikea stores in the United State lie few and far between with

only thirty-seven stores located in the country. As for demographic factors, all ages shop at Ikea

and both men and women do too. Education levels vary from high school drop outs to graduate

and master degrees. Furthering that same idea, income and social class varies also. Income

levels range from zero to one hundred thousand dollars plus, with average levels varying from

sixty to one hundred thousand dollars annually (Quantcast Corporation). Psychographic and

behavioral factors also range across the board. The main point of these characteristics stress the

idea that Ikea has created a strategy that disregards typical marketing trends. They are able to

bypass divisions of markets and appeal to all customers shopping for home furnishings.

During the decision making process after customers of Ikea recognize a need, they may

shop around at stores similar to Value City Furniture, Pottery Barn, Ashley Furniture, or Target

and Wal-Mart. But, because of the values customers find at Ikea and stylish designs they resort

back to the products found in the Ikea stores.

During the purchasing stage of the decision making process the decision maker and the

influencer vary within each individual situation. If a single family is buying new cabinets and

counter-top for their kitchen the father may be considered the decision maker where as the

mother would act as the influencer picking colors and materials. In another case if a college
student is shopping for a new bed to be used in his or her new apartment the mother may act as

an influencer to the student and the student would act as the final decision makers.

Ikea is a store that carries everything for the home from kitchen cabinets, to bathroom

sinks, to bedding, and couches. With there being such variety to choose from purchases range

from being extended problem solving when buying a new bedroom suite verses limited problem

solving when picking up some new kitchen utensils and cups. Also is the same with categorizing

high-involvement and low-involvement purchases.

Key factors that influence buyer behavior for this brand, which have been stated above,

are aesthetically pleasing designs with focus upon form and function that are made to be cost

efficient allowing prices to be affordable.

Barnes, K., Buck, M., Beard, S. (2008). IKEA:“Affordable solutions for better living.”

[PowerPoint slides] Retrieved from www.pages.drexel.edu

Business Teacher (2009) Ikea SWOT Analysis. Retrieved from

http://www.businessteacher.org.uk/business-resources/swot-analysis-database/ikea-swot-

analysis/

Ikea.com (2010). Facts & Figures. Retrieved from

http://www.ikea.com/ms/en_US/about_ikea/facts_and_figures/facts_figures.html

Ikea Group (2010) Welcome inside. Retrieved from

http://www.ikea.com/ms/en_GB/pdf/Welcome_Inside_2010.pdf

Quantcast Corporation (2010). Ikea-usa.com. Retrieved from http://www.quantcast.com/ikea-

usa.com

The Swedish Wire (2011). IKEA ranked 28th most valuable brand. Retrieved from

http://www.swedishwire.com/business/6208-ikea-ranked-28th-most-valuable-brand