IKEA marketing concept - Essay Example

Marketing Basics The main aim of every business is to make profits. For this goal to be achieved, several things are involved. The business must have the target group that it aims as the potential market base and it has to produce or sell products that satisfy the customers’ needs. Selling of these products needs marketing. Marketing refers to any endeavors of a firm to induce buyers to buy its products. Marketing in a business can be done by applying five concepts; marketing concepts, sales concepts, product concepts, holistic concepts and production concepts. All these concepts are aimed at attracting potential buyers. The increase in sales has a corresponding increase in profit margin, the main goal of any business firm. In IKEA Company, the marketing concept is used to reach out to the customers. According to Pride and Ferrel, “marketing concept is the management philosophy according to which organization goals can be best achieved through identification and satisfaction of the customers’ needs or wants” (7). The concepts require that the company undertake a research on the needs of the potential customers before production of the products. The customer needs are then incorporated in the production of the products. The company starts by identifying the target group. The target group is the group that the company aims as the potential buyers of the product. The target group of IKEA Company is the young buyers with a taste for fashionable but affordable furniture and household accessories. A research is then conducted on the targeted group to determine its needs. During the research period, the company establishes proper networks and relationships that help to identify the current and future needs of the target market. Production of the commodity then follows. The needs of the targeted group are incorporated in this stage to ensure that the product satisfies the customers’ wants. This is achieved by designing stylish low-cost modular furniture that is ready for assemble by the customers. The customers assemble and transport the products themselves and this reduces the prices of commodities. This ensures affordability of the commodity to the potential consumers. Market segmentation is the subdivision of the market into several units with every unit having similar or common preference regarding the product (Mochis 27). Information on what encompasses a target group is crucial in coming up with ideal market segmentation. Characteristics such as lifestyles, language, climate education background, gender, family size, race, nationality, interest and religion of the target group helps in the segmentation process. The market segment in the target market of IKEA Company is accessible, measurable, profitable and market responsive. The target market is mainly located in urban centers. This has made the company to open most of its outlets in urban centers for easy access. The products are designed to meet the needs of both the middle and wealthy. The market segments of the target market are quantifiable in terms of the estimated population size and the estimated disposable income. Generally, the large size of the market segment and their average disposable incomes promises good returns. The target market has in the past shown some positive response to the products. Penetrating the market space will require communicating to the market segment in a way that corresponds to their relevant needs. Every market segment has distinct characteristics such as lifestyle, fashions, tastes and preferences. Communication based on these characteristics can help to reach out to a wider market base. IKEA Company utilizes catalogues and advertisement through the mass media to penetrate the market segments. The diversified commodities which are of different styles, tastes and fashions are the key to the penetration of the market space. Maintenance and protection of the market space requires the company to constantly review on the customers’ needs. To oversee this, the company has customer success team comprising of designers and craftsmen who monitor the changing customers’ needs and come up with better products. This keeps the company onboard with the changing customer needs. Currently, the customers view IKEA Company as a growing multinational company that provides stylish, high quality and affordable furnishing products. It is also viewed as a company that only targets the middle and upper class communities. The future goal of the company is to create a prospects mentality of a company that offers a wide range of home furniture that are fashionable, durable and of high quality at a low price that is affordable to all. It also aims at creating an image of a dominant company that is the price leader in the market. The two major competitor companies need to be outdone in order to achieve and maintain the desired company image. This is achievable through price leadership and product differentiations which shall enable the company survive the stiff competition. 2. Marketing Mix Marketing mix is an integral marketing tool used in the marketing. It incorporates the four P’s that are Product, Place, Price and Promotion. Marketing mix involves combining these four parameters to achieve the desired sales result. The proportionality of combining these parameters determines the final sales results. IKEA Company prefers locating the shops in suburb areas since they have low operating cost. The products are differentiated from those of other competitors which help to maintain the customer base. Advertisement through media and use of catalogues are the preferred product promotion of the company. It is the company policy to keep the prices at affordable levels (Shapiro 73). This gives the market mix of the company. The strengths of IKEA Company have been facilitated by use of the four P’s marketing mix. The strengths range from low prices of products, suitable location of outlets, strong brand name and differentiation of the products. The company enjoys a large market base which facilitates economies of scale. Consequently, the production cost is reduced leading to low prices of products. Furniture designs are made such that they can be assembled and transported by the customers themselves which further contributes to the low prices of products. IKEA shopping premises are located in suburbs which have low operation cost and facilitates offering of customer services such as ample parking playing grounds for the children who accompany parents during shopping. The products are diversified and differentiated and this maintains the customer base. The company has been successful in product promotion by use of catalogues and the mass media in penetrating the target market. The company has also been experiencing marketing mix problems. IKEA is a multinational company with its main center at Sweden. It is therefore hard for the company to fully understand the market characteristics of the other foreign countries where their branches are. It becomes hard selling some foreign furniture designs to the natives who may not adopt them. The low price concept of selling the products is not appealing to all. Some clients do not prefer this minimalist design and it becomes hard for them to adopt the products. The policy of selling the products at minimal prices could lead to compromises on the safety of the products at the expense of cost saving. Some safety precautions of the products could be underrated in attempt to save the production cost. The product designs and styles are also limited within the scope of low production cost. The company avoids complex designs that could result to high production cost which would in return lead to higher prices. The company should adopt the following strategic recommendations in order to tackle its burning marketing problems. Firstly, it should adopt a decentralized departmentalization system of management. This will oversee that every distribution center has its autonomous management that oversees the sales and production of commodities. In the foreign countries, the decentralized management will understand better the culture and taste of the natives. The management shall then have the power to alter the designs of the furniture to suit the taste and preferences of the natives. The company should also consider introducing ostentation products alongside the minimalist policy good. This is because some customers prefer the complex designs that may not be readily available within the IKEA shopping complexes. 3. Consumer Buying Behavior Consumer buying behavior is the process that a consumer engages in making decisions regarding the purchasing of commodities to satisfy their needs and wants. Different consumers have different tastes and preferences of commodities. Individual consumers behave differently based on the individual attitude towards a commodity and the financial ability. There is no standard of behavior but generally, consumers tend to undergo a series of steps in identifying and purchasing a commodity. A typical customer will start by recognizing the need to acquire or replace a particular furnishing product so as to satisfy the existing need. The existence of the need can also be revoked trough advertisement of IKEA products over the mass media, through the catalogues or through sales promotions. The consumer then caries out the information search either in the catalogues or in the IKEA website. The consumer seeks the relevant information regarding the price, quality, design and durability of the product (Solomon 11). The customer is therefore in a position to evaluate from the diverse products and make a wise choice. The consumer will then proceed to make the purchase decision. The customer chooses the preferred outlet where to purchase the identified product. The customer makes the purchase using the preferred payment method. The final step involves the use of the product to satisfy the intended need. Satisfaction implies that a right choice was made in choosing the commodity. Dissatisfaction means that a wrong choice was made hence a need of improvement. Customer behavior in the market environment can be authenticated through provision of customer care access points, suggestion boxes, visitors’ signing books, public relations office and using company agents to gather customer feedback. The customer care and public relations office helps the company to learn how the customers feel and behave toward the company and its products. These sources have enabled in learning how the customers behave in the company’s market environment. The customers have generally indicated satisfactory behavior towards our products by positive comments from the visitors’ book and the comments from the public through the customer care and public relations office. A commodity undergoes a process before being fully adopted by the consumers. The commodity undergoes the awareness stage, interest and information search evaluation or the trial stage and finally the adoption stage. There are some factors that determine the rate of adoption of a commodity into the market such as the quality, affordability, accessibility and durability. The furniture products provided by the company have diverse design, are of high quality and are available at affordable prices. Affordability of the commodity has been the key to the fast adoption of the product into the market. The company policy insists on low production cost which has a consequent result of low price of products. This implies that both the middle and the upper class of the society can afford the products. IKEA market cuts across a global market which has a diverse culture and different tastes and preferences. The product designs do not fully meet the many existing tastes and preferences. The company should establish design centers in the various countries so as to design products that meet the tastes and preferences of the country natives as each society has its unique tastes and preferences. 4. Branding and Product Lifecycle A brand is an image or an idea that has been propagated by a company towards recognizing its products. The customers develop a certain mindset towards a company by seeing the image or hearing the idea. Chasser and Wolfe points out that a brand can be in form of an image such as logos or designs or in form of ideas such as slogans, sayings and specific sounds (27). The aim of branding is to ease recognition of product to the consumers. Branding is normally done in a systematic way that involves careful consideration of several factors such as simplicity, uniqueness, attractiveness and portraying the business essence. IKEA is an acronym made from four words. I stand for Ingvar, the founder’s first name, K for Kampard which is the founder’s second name and E for Elmtaryd, the farm where the founder was brought up. A stands for Agunnaryd which is the village near the founder’s birthplace. The brand is unique and simple to the customer which enhances their remembrance. The IKEA Company brand is a strong brand. This is mainly due to its unique cultural branding that portrays the fashionable design and value to ensure the creation of affordable and contemporary furnishing products. The brand symbolizes the unique and tasteful household products that offered at an affordable price that inspires customers. It also stands for the competitive prices offered by the price leader. IKEA Company cuts across the diverse cultures of different countries and so the brand represents the meeting point where global tribes that mind the cost and design converge. The shopping premises of the company are similar and share similar architectural designs and interior designs. They are easy to recognize to its distinct yellow and blue coloration. These combinations make the IKEA a strong global brand. The weakness of the company’s brand is that it is rarely seen and most unknown. The company’s activities are largely concentrated in some countries especially in Europe. The brand is therefore popular and frequently seen within these countries. For the citizens of these countries, it is rarely seen and to most, it is absolutely unknown. This implies that the company has not fully penetrated the target market. There is the potential unexploited market space. The competitiveness of the brand can be heightened by creating awareness of the brand existence in the unexploited areas. Awareness could effectively be done by use of mass media that reaches most people in a continental level. It can also be done through international trade exhibitions that bring international communities together. Sponsoring international activities such sport can also be opportunities of reaching out potential buyers. The company should also come up with an extensive plan on how to spread its products worldwide. Brands undergo different stages within the product lifecycle. The stages are development stage, introduction stage, growth stage, mature stage and finally decline stage. The IKEA Company brand is in the maturity stage. At this stage, stiff competition exists in the market and entrance of other competitors is difficult. The company has to constantly differentiate the products to survive the stiff competition. Diversification of products has also necessary to accommodate the changing customer demands and to maintain the customers. Work Cited Chasser, Ann and Jennifer Wolfe. Brand rewired: Connecting Intellectual Property, Branding and Creativity Strategy. Wiley: Hoboken, 2010.Print. Pride, William and Octon Ferrel. Marketing Concepts and Strategies. Princelon: Recording for the Blind & Dyslexic, 2003.Print. Shapiro, Benson. The Marketing Mix. Boston: Harvard Business School, 1984.Print. Solomon, Michael. Consumer Behavior: Buying, Having and Being. Englewood Cliffs: Prentice Hall, 1996. Print. Read More