Marketing Plan: Ikea Estate - Assignment Example

Marketing Plan: Ikea E Introduction Marketing plan can be regarded as the blueprint of different activities and strategies which are directed to help in the marketing of the new or existing products and services of the organisation. In relation to this, a sound and proper marketing plan enables the organization to know what is to be done. When it should be done? And how it can be done? (Soundarapandian 2002). In respect to this, the marketing plan presented in the paper is aimed to present some crucial action plans and strategies regarding improve the current market position of Ikea Estates in the market of the UK. The plan will cover different external as well as internal environmental analysis of the company for the purpose of having long term sustainability in the market and attain a better competitive position. About Ikea Estates Ikea Estates is a sister concern of Inter IKEA Holding. The company operates in a decentralised manner in which each division of the company owns its own responsibilities. In addition to this, different business lines and operations are handled by their own managements. In this context, Ikea Estates is a separate and independent concern under the flagship of Inter IKEA Holding. This division of the group deals in real estate properties like housing. The prime quest of this division is to create long term value for the division as well as entire group with the help of making investments in properties. In addition to this, the overall operations of the organisation includes the development of new properties, land banking and undertaking of the active management the portfolio of properties that can be proved quite efficient to retrieve maximum amount of returns from the investments (Property Division 2013). Ikea Estates was recognised as a separate division of the entire group in the year 1990, when housing and real estate market was on boom phase. This division of the country is quite expended and geographically diversified. There are 8 different European countries in which, the company has registered its footprint quite intensively. These countries are Spain, the Netherlands, the UK, Poland, Latvia, Belgium, Romania, and Lithuania ((Property Division 2013). The company is well known for its factory built housing schemes offered to the customers after the recent financial crisis. The concept of wood cladded and wonky roofed houses emerged by the company was exceptional and proved as one of the most successful business ideas after the recent financial crisis that has made the perception of people regarding real estate as an investment avenue, quite negative. In upcoming period the company is aimed to market the business idea of selling mass buildings with wood cladded and wonky roof among its target customers (Hatherley 2012). Objective of the Marketing Plan For a marketing plan it is quite essential to have some intensive and focused objectives. The setting of objectives is quite essential from the perspective of planning as it leads to focus the directions of the entire business, operational and marketing activities. In this regard, for the future planning of Ikea Estates for the period from 2012 to 2015, some crucial objectives can be set out: To establish the Ikea Estates as a highly reputed brand in the field of real estate industry of the country To enhance its existing profits and revenues by 25% by the end of the first six months of the setting of the plan To enhance the existing customer base of the company by 30% by the end of the existing financial year To establish new branches in the foreign countries also for the purpose of cultivating the profits earned in the domestic market and establishing an efficient property portfolio for minimizing risk in the most effective manner To find out the most suitable and effective marketing strategies for the organisation that will help it to attain maximum amount of returns of the investments All the marketing activities of the organisation are directed to achieve such crucial objectives. External environmental analysis The external business environment is one of the major factors that affect the strategic orientation of the business organisation. In this context, before undertaking the market planning, it is quite crucial for the organisation to conduct an intensive analysis of the surrounding business environment. In this regard, adoption of PESTLE framework can be considered as one of the most effective tools available for the business organisation. In the UK market Ikea Estates is required to face some intensive amount of challenges due to external market factors, discussed as below: Political In the UK, the political restrictions over real estate related operations are quite strict as in the country there is a need of availing planning permission before having new real estate projects. This permission is granted by the government after making some intensive cost benefits analysis for the project. However, attitude of the government towards housing projects have become quite favourable and positive after recent financial crisis. In order to address housing shortage, provide low cost accommodation, and establish the planned colonies, the government of the country has eased the planning restrictions for real estate companies (OECD 2011). Economic Economic conditions of the UK are posing challenges to the company. After the recent economic crisis, the economic conditions of the country are in reconstruction phase, where conditions of the lower availability of mortgage loan, and high interest rates are prevailing. Owing to this reason, these conditions have become quite critical for the individual to purchase house and real estate properties. These conditions have directed to enhance the positive intention of the buyer towards low cost housing (Hatherley 2012). Social As house is one of the basic needs to human being, the socio-economic environment for the country is quite positive for the real estate industry. In relation to this, the low cost housing schemes as offered by Ikea Estate have been preferred by the population. Moreover, after the recent financial crisis when availing of mortgage loans on real estate properties have become quite complex, the concept of low cost and mass housings scheme have become quite popular as there is no need of having heavy loans (Rudlin and Falk 2012). Technological In the UK market, the existing disposition of the technological development is quite positive. In the country there are a number of different new technologies available with the help of which, the construction of house schemes have become quite easy and efficient. Especially for the company Like Ikea Estate, which is quite focused on developing innovative and less expensive housing schemes, this trend of the UK market is quite favourable (Hatherley 2012). Legal After the recent housing bubble the legal norms of the country for availing loans for purchasing real estate properties have become quite strict. The legal procedure for applying and availing mortgage loans from banks has become quite critical and complex. The increased legal formalities have made it quite difficult for the individual to have loans for buying properties (Rudlin and Falk 2012). Environmental: Along with other crucial factors, the real estate business organisations are required to follow different regulations related to the acquisition of land and use of green practices while undertaking the real estate housing projects within the territory of the country. In addition to this, for the business organizations such as Ikea Estates which undertakes the projects like wooden houses, it is quite essential to be in compliance with environment related regulations levied by the government and legal authorities of the organisation (Mulvaney 2011). Internal environmental analysis (SWOT) For the purpose of analyzing the situational factors for the business operations of the business organization, it is quite essential for the management to understand and reveal some of crucial information regarding internal business environment of the organization (Partridge and Sinclair-Hunt 2008). In this context, the framework namely SWOT analysis can be utilized in the most effective manner. The SWOT analysis for the company can be discussed as below: Strengths: The major strength of the organisation is its new and innovative product concept presented to the customers. The company is well known for its wood cladded and wonky roofed houses. This is a new and effective concepts which is lesser expensive in comparison to traditional houses. After the recent credit crunch due to real estate property bubble in global financial, taking mortgage loans from financial institutions became quite hard for individual. Moreover, enhancing rate of interest was also an important factor that put emphasis on low cost housing. Owing to this reason, the concept of low cost wooden houses was proved quite effective for the company (Hatherley 2012). Weakness The main weakness of the company is that lack of well diversification of the business across different markets of European market. In existing period of time, the company has expanded its business operations across only 8 different sights of in the European market. Despite having growth, the company can not be able to expand itself over different crucial and prominent places, which is a major weakness of the organisation. In addition to this, as the real estate projects require a significant amount of capital investments, the lack of enough financial resources are some of the major weaknesses of the organisation (Property Division 2013). Opportunities The prime opportunities availed by the company is that there are a number of different locations within the Europe in which the company can get entered and get success. Moreover with the help of its low cost housing schemes, the company can be able to cater the lower middle class of customers, which contains a significant portion in the society. In addition to this, increasing rate of interest of mortgage loans will also prove quite opportunistic for the low cost housing scheme providers like Ikea Estates (Lund 2011). Threats The first and foremost threat available for the company is due to recent conditions of global economy, after recent global sub prime crisis the perception of individual and institutional investors towards real estate projects as the investment avenues have become negative. This is the major threat faced by the company (OECD 2011). Personnel requirements For the purpose of accomplishing the plan in the most effective manner, there is a need of having effective workforce and team. In direction to this, for the upcoming 3 years, new recruitments will be taken into account. In direction to this skilled, unskilled and semiskilled employees and worker are planned to be appointed. Around 15 marketing executives that pursue good marketing skills along with effective communication skills will be appointed. In addition to this, 3 new marketing managers who pursue minimum of 2 years experience in the real estate fields will also be employed so that marketing of the product can be made quite effective and strong. Along with this, as per the objectives of the plan, the business operations and market share of the organisation is expected to be enhanced. For the purpose of accomplishing such requirements, there is a need of employing a large workforce of unskilled workers also. In this regard about 50 new unskilled workers will also be employed. In addition to such permanent workers, some temporary workers, on contract basis will also be employed within the organisation. Marketing Mix Marketing Mix for the wooden housing schemes offered by Ikea Estate will be consisted of 4 prominent elements that can be presented as below: Product: The products offered by the company in its marketing plan will be wooden wood cladded and wonky roofed houses. The company has developed a colony in which, wooden houses are made for family accommodations. These houses will be well furnished and well equipped. The facilities of electric and water supply will also be provided to the customer so that he can be settled into the new house easily. Along with this other auxiliary facilities such as parks, community centres, hospitals and schools will also be developed in the colony (Hatherley 2012). Price In the starting, the company will go with penetration strategy for setting the prices of the houses. The company will keep the prices of the property low so that it can be able to cater mass market in the most effective manner. As per the existing economic conditions in which, having loans for real estate property is not easy, the low costing of houses will be able to cater the high workforce in the most effective manner (Meyers, Lubliner and American Marketing Association 1998). Place Another important factor for the marketing mix of the organisation is the place. For such kind of housing project convenience is one of the most crucial factor for which, it is required for the company to start projects at the most suitable place. In this regard, the housing scheme offered by the company is started nearby the Olympic village. This place is selected as during the recent Olympic this area is provided with better and effective connectivity with the main city area. In this way, the place for this project is quite convenient and developed (Lydall 2011). Promotion The last marketing mix for the project is promotion of the product offered by the business organisation. For the purpose of promoting the wooden housing schemes, Ikea Estate will undertake direct marketing measures in which, the marketing executives of the business organisation will have direct meetings with different investors and individuals who have shown interest in the housing projects offered by the organization (Hill and Jones 2007). In addition to this, advertising through televisions and radio are also some of the major and effective measures adopted by the company for the purpose of making the product effective and attractive for the potential customers (Scott 1994). In addition to this, for a successful marketing campaign, there is a need of selecting the most efficient target market and segment and position the product in the selected market. Marketing segmentation There are two specific target markets which will be targeted by the business organisation within its marketing plan in the long run. Industrial customers: The industrial customers of the company will be business organisations that will purchase the housing schemes of the company for investment purpose. This customer segment is the mass buyer of the real estate. The segment demands for low cost property with high growth rate. Individual customers: The individual customers of the company will be households, who purchase houses for accommodations. Customers of this section focus on facilities and services provided by the company. Targeting and positioning: Newspaper advertisements will be done for the first three months to create the awareness of the new housing schemes developed by the company. This is one of the low-cost methods, which will help to stick to the promotional budget. Further, the company will also employ different road shows and direct advertisement methods for creating awareness regarding the product. In addition to this, different pilot programs and incentives scheme will be introduced to the potential customers who undertake regular transactions in real estate property business. Financial Forecasting The financial forecasting is an important part of the marketing plan which leads the marketer to have some intensive amount of knowledge regarding all the potential marketing expenses as well as returns. On the basis of the financial projection the management can easily reveal the success of the business organisation in the most effective manner (Kugbei, Turner and Witthaut 2008). In regard to this, for the Ikea Estates financial projections for next three years are presented as below: (Note all the figures are in $ millions) Evaluation Strategies of the plan For a successful plan it is quite crucial to have some intensive and effective facilities for evaluating the effectiveness and efficiency of the plan. In the long effective evaluations allows the management to reveal both positive and negative aspects of the plan. In this regard, evaluation of the marketing plan is one of the most crucial and integral part of the marketing plan. In the context of the presented marketing plan for Ikea Estate, benchmarking method is used for the purpose of having effective evaluation of different marketing activities as illustrated and described in the marketing plan. In this method, for the purpose of revealing and analyzing the success of the marketing plan and its effectiveness for the business organisation, there are some specific standards for performance will be determined. This benchmarking will be done on the past performance of the organisation and industry specific trends (Hill and Jones 2007). In this method, the performance will be judged on the basis of the revenue and profits share of the company. For this purpose, there are some specific target profits and revenue has been set for the business organisation. In comparison to this standard performance, the actual performance of the organisation will be recorded. This performance will be revealed in terms of sales revenue, profit margin, costing and so on. After having both standard and actual figures of performance, a critical and in depth comparison between them will be taken into this account. In comparative study will drive the attention of the top level management of the organisation towards the week areas of performance, where actual performance is not able to meet standard performance. The management is required to work quite intensively for the purpose of addressing such crucial shortcomings of the business organisation. Conclusion The marketing plan has presented some of the crucial and effective marketing strategies which are required to be followed by Ikea Estate for the purpose of be sustainable and successful in next three years. On the basis of in-depth analysis of the entire marketing plan it can be concluded that for the business organisation, there are various challenges prevailing in the external business environment of the UK. Different political and economic aspects of the external business environment of the country have become quite strict and tough for real estate industry. In such changing business environment low cost wooden houses offered by the company to its customers are quite helpful for the company to gain competitive position within the existing market place. In direction to this, it is quite crucial and essential for the business organisation to attain a well structured and rational marketing plan. In regard to this, the presented marketing plan will be proved quite helpful for the organisation to be effective and success in the period of upcoming three year. The company should concentrate on adopting different strategies stated in the plan in the most effective manner. References Hatherley, O. 2012. Could Ikea burst the housing bubble? [Online]. Available at: http://www.guardian.co.uk/commentisfree/2012/aug/31/could-ikea-burst-housing-bubble [Accessed on: 2nd March 2013]. Hill, C.W.L and Jones, G.R. 2007. Strategic Management: An Integrated Approach. Cengage Learning. Kugbei, S., Turner, M. and Witthaut, P. 2008. Finance and Management of Small-Scale Seed Enterprises. ICARDA. Lund, B. 2011. Understanding Housing Policy. 2nd Ed. The Policy Press. Lydall, R. 2011. Ikea to sell eco-homes for Olympics. [Online]. Available at: http://www.standard.co.uk/news/ikea-to-sell-ecohomes-for-olympics-6359572.html [Accessed on: 2nd March 2013]. 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