IKEA: Entering Russia - Case Study Example

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The paper dwells upon the popular company IKEA. The company’s top-level managers attribute its global success to effective pricing strategies, product differentiation, and its excellent experience in furniture retailing…
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IKEA: Entering Russia
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Download file to see previous pages The company has put into consideration various marketing elements in its efforts to meet its customer needs including the product, distribution strategy, price, and communication strategy. IKEA’S pricing strategy is based on its desire to be the global price leaders in furniture items. Its products retail at prices 30 percent below the market rates. The company’s pricing is standardized and applies to all its stores across the world; and the only difference is due to exchange rate fluctuations. The company has been able to achieve competitive prices because of economies of scale attained while purchasing raw materials, locating its retail shops in suburban areas, and its effective distribution strategy. Low pricing has contributed significantly to the company’s market share growth. Another key contributor to the low pricing is its long-term healthy relationship with its suppliers.
The company products are not only less expensive, but also stylish and of high quality. High quality and durable products have strengthened the company’s relationship with its customers. The company has a strong relationship with its suppliers and the benefit is mutual. In other words, the supplier benefits from the company being their customer and the company benefit from the suppliers being its customers. Additionally, the company has a wide range of products which depicts is focus to diversity. Through diversification, the company minimizes the business risk. In other words, if demand for some of its products goes down, decrease in profitability is offset by increase in demand for other products. The company also focuses a lot on product differentiation. By making it products different from its competitors, the company ensures a sustainable market share by winning its consumers loyalty. Additionally, the company has incorporated standardization in its production thus ensuring that its products are similar across the globe as opposed to tailor-making products to suit customers’ desires. The company has designed an effective communication strategy. It uses both traditional, as well as, modern medium of communication. Its catalogue is the most valued marketing tool costing 70 percent of the marketing budget. The catalogue is produces in numerous languages and auditions to reach a wider audience. Other tools of communication include magazines, television, social media, and radio. For example, numerous of the company’s products are posted on its website. Its promotion strategy is meant to enhance brand awareness, products usage, stores locations thus driving traffic to them, as well as, showing how their products are different from competitors. The company also uses the word of mouth to market its products in Russia. The company’s distribution strategy has contributed a lot in its effort to cost cutting thus being able to charge low prices. The company’s stores are located outside big cities, which enable it to reach its target customers including customers willing to transport their products home themselves. Theirs stores are also big ...Download file to see next pagesRead More
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