Marketing Strategy of Ikea - Case Study Example

IKEA: Marketing Strategy IKEA is a famous world retailer for its incredible qualities of home furnishings and furniture. Its global business success lies in its excellence in many areas ranging from production, operations of supply chain to marketing, among others. This paper will demystify the marketing strategy employed at IKEA to remain lucrative in the competitive world market. It will also spell out the challenges faced in the marketing strategy at IKEA. The marketing strategy of IKEA cuts across four sectors including promotion, catalogs, advertizing and design of the product. Printed catalog is the major focus area of IKEA marketing strategy. In fact the company spends most of its marketing budget on this area every year. Catalog entailing 300 to 400 pages is produced in 30 languages in 59 editions. Around 200 million catalog copies were circulated in 2012. In 2013 IKEA catalog incorporated new characteristics of special symbols that could be read by IKEA Android and iPhone apps. When the symbols are scanned, customers are fascinated by the presentation of detailed information about IKEA products. These apps also offer 3D product models and videos explaining ‘how to’ (Copeland and Hartline, 495). Similar real experience applies in the internet as attested by (Copeland and Hartline, 495). Customers are allowed to download programs that guide them in redesigning kitchens, bathroom and bedrooms. Customers can also view products online. Data entailing local events of every store, product and service specials as well as promotions, is also available in the website. This expands customer knowledge of products, services, motivation, events among other concerned business information. However, the drawback with regard to the website is that it does not entirely allow customers to purchase items online. Consumers have to visit the stores to access and purchase products. About 30 percent of the product line is allowed for purchase online. Moreover, in order to reach its target customers, IKEA catalog employs the use of radio, television and communication via the internet. The fact that IKEA lets its consumers to experience shopping experience by themselves, motivates customers towards purchasing items at IKEA stores. The materials that IKEA provides for its customers make it easier to shop. The showrooms in the floor display furniture of the company with several accessories that will make the style noticeable for consumers. This frees the customers from salespersons working on commission, according to Copeland and Hartline, (497). This strategy enables feelings of accomplishments amongst consumers as they are able to do things for themselves and choose from a variety of furniture. Copeland and Hartline (pg 495) hold, “the company’s advertising is intended to increase both brand awareness and store traffic”. However, this is likely to be crippled by critics that contend that some company’s ads portray gay consumers or entail storylines that are sexually suggestive. Its advertisements have even reached the Italy streets (with a campaign of a graffiti) and Paris. In Paris, a furnished apartment completed by IKEA was underground-installed. However, IKEA does not use advertizing as its major promotional efforts. The company’s preference is on communication of word-of-mouth. This has driven the company towards the use of social media. For instance, the Facebook pages of the company provide updated information regarding the company’s local store events, sales as well as activities. The company has managed to garner myriads of fans in their Facebook pages. The company’s U.S. Facebook page has over 1 million fans while the global pages have approximately hundred thousand fans. Other fans follow the local store page. Additionally, the low cost policy that the company employs enables it to garner more target consumers. In fact it is the centrality of the company’s business model. The low cost structure of IKEA has made it lucrative as it puts the company in the front line of the world competition. For instance, in the United States, Pier 1 struggles competing with its competitor IKEA (Copeland and Hartline, 497). Thus, the lower costs structure of IKEA attracts more customers and keeps the company on diligent lines. Local store events are also the major marketing focus for IKEA. On first Tuesday of every month, the San Diego, California store provides birthday parties offers for children. The store of Atlanta, Georgia entails activities such as face paintings, events of culinary testing, events of fundraising for local charities, events of college students among others. Before the big day of Atlanta store opening, the managers of IKEA invited the local population to apply for Ambassador of Kul post. Kul is the Swedish name for ‘fun’. The top five winners were awarded $2,000 in vouchers. They were allowed to stay in the store for a period of three days, use the bedding department and be part of the contest. Regularly, the IKEA group holds weeks of anti-bureaucracy. At such times, the executives of IKEA go out of their way to participate in activities such as loading cars and trucks for customers of IKEA, operating cash registries, working on the stockrooms or shop floors. This simplicity of doing things has upheld IKEA’s culture and boost employee morale as well as that of customers (Copeland and Hartline, 496). Generally, the marketing strategy of IKEA is cost-effective. The company saves more and manages its expenses effectively. For instance, in many IKEA’s stores, only credit cards (inclusive of IKEA card) and cash are acceptable; checks are not allowed. This cuts of the costs of collection operations and also assists in the reduction of IKEA’s accounts receivable. The company’s 10 percent operating margin is one of the best industries of home furnishings and this is attributed to policies such as cost-cutting. In fact, the company aims at cutting the costs every year by 2 to 3 percent (Copeland and Hartline, 495). According to Copeland and Hartline (495), the fact that promotion is an important focus of IKEA when it comes to marketing means grand investment in promotion operations. However, the company is miser in expending on promotion. The company relies on catalogs and word of mouth to reach it consumers. Unfortunately, the U.S., the company’s most important market does not respond highly to catalog marketing dwindling IKEA’s promotion. In conclusion, IKEA has areas such as catalogs, advertizing, promotion and product design incorporated in its marketing strategy. On the one hand, these areas have been useful in branding IKEA as one of the world’s quality, stylish and low-cost home furnishing and furniture industry. On the other hand, the use of these focus areas have attracted critics, especially the use of catalogs, low cost structure and promotion. The challenges associated with the use of catalog marketing in a major market area such as the U.S. may implicate the company in future. The company should delve into the real needs and tastes of its customers and incorporate this in its strategy. Work Cited Copeland Christin and Hartline Michael. Case 17: IKEA Slowly Expands its U.S. Market Presence. Retrieved 14th February 2015 from https://www.dropbox.com/s/hdvfcvjqtpoene4/Ikea.pdf?dl=0 Florida State University. Read More