Consumer Culture and Advertising in IKEA - Case Study Example

Consumer Culture and Advertising Analytical Exercise for the Michaelmas Term Abstract The paper has discussed the idea of how IKEA operates and what different kinds of options it provides to its customers. There are a number of different benefits or advantages that the shop makes use of and this is why there is a lot of enthusiasm to go visit IKEA on weekends or with a family. Outline I. Introduction to the paper II. Introduction to IKEA III. Critical Analysis of IKEA IV. Michael Porter’s Analysis Introduction to the Paper The paper will encapsulate the main idea of critically analyzing a certain location or a shop on the basis of the products being sold and what kind of products are being sold. The physical layout and the atmosphere along with various other factors will also be discussed in the paper. Introduction to IKEA The main idea of IKEA is to provide home furnishings at a low price so that it is affordable by the maximum number of people in the world. The main idea for IKEA is to allow the people to buy good quality products at a reasonable rate unlike the other competitors that IKEA has. “The IKEA concept began when Ingvar Kamprad, an entrepreneur from the Smaland province in southern Sweden, had an innovative idea. In Smaland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of the limited resources. So when Ingvar started his furniture business in the late 1940s, he applied the lessons he learned in Smaland to the home furnishings market.” (IKEA, 20071) The IKEA concept was laid down to help the people decorate their homes at a lower price and so that there would be less competition for IKEA to face at the time. Till now, there are not many stores that are trying to compete with the store because o its size and its reputation. Critical Analysis of IKEA There are a number of factors that must be critically analyzed for IKEA so that we would know whether IKEA is worth all its reputation and the talks that are going on all around the world. The factors will be talked about in an orderly manner for easy understanding. IKEA believes that “Trends come and go, but combining a low price with a good design and function never goes out of style.” (IKEA, 20072) This means that IKEA does not follow the style that is in or out for the season. But rather follows what the customers would want from the store. IKEA does not have a seasonal change in its furniture. It changes with the preferences of the customers. The main factor due to which the store may change the style of its furniture would be according to the change in demographics of that country in which it serves. If the store believes that there are more children than adults in the country then it would work on children products such as beds and other utilities of daily lives. Whoever, there are times when the country has more people belonging to the older age bracket than the younger one and this is when IKEA would think of making products with more comfort than style in. The architectural design of IKEA is approximately the same all over the world where it would be located in a large area so that it could provide all the products that they could possibly fit into it. These products are placed in a strategic manner so as to help the customers long the shop. The shop is designed in a manner where it keeps all the similar products together. There would be a chairs section or a bed section where all the chairs and beds would be placed together of different styles. However, IKEA is known for another style of its. IKEA is known to have a setup of the store in such a manner that a customer would get into the IKEA wonderland. There are a number of different settings in the store that a customer would just wish that it had an IKEA home. And this is what most customers like to see. When you enter the store, there are different setups of a kitchen, then a bedroom and then a bathroom. All these different setups provide the customer with a virtual understanding of what the bedroom or the kitchen would look like if he / she buys the products. The IKEA store leads the customers on a path where he / she can look into the kitchen section first and then the other sections in an orderly manner. This is why it is easier to look for things in an IKEA store rather than any other. IKEA has a sense of moving the customers through a similar path so that each one of them would have a similar experience. The IKEA provides the customers with a complete overview of the kind of products that can be bought along with the way the products can be set up in the homes. These are all within the aura of IKEA and it is very difficult to copy it for the competitors. The IKEA also provides a warehouse section where products from the sets can be bought individually. The IKEA can be bought on an everyday basis where the customer would always want a frying pan or a spoon. There are a number of things that a customer can buy from a bed to a frying pan to decoration pieces and the works. There are a number of items that a customer can buy on special occasions. The atmosphere of the store is usually that of a low profile where the customers are given a darkened view so that they can easily look at all the products and imagine themselves in that section. IKEA is based upon the capability of a customer to imagine. It runs on imagination. The IKEA store does not allow food or drinks in its store because then there would be the problem of spoiling the furniture which is a risk for the company as it may not be very easy for the company to rebuild the same furniture again. IKEA usually builds different kinds and sets of furniture rather than the same one over and over again. The reason for this could be that the IKEA store would want the people to have different looking homes. The IKEA also allows the customers to have a free trial for all the goods that they want to buy because this would allow the customers to have a better view or understanding whether the furniture is comfortable or not. There are a number of things that must be tested out before they are bought. There are some IKEA stores that are very congested and the reason for this could be that either the company ahs chosen a very small place or that they chose the small place because that location attracts a number of people. It will be seen that IKEA is usually placed in a shopping mall where customers are expected. The IKEA store allows the customers to also have furniture of their choice where they can personalize it to some extent in cases like change of color or a certain other feature in the furniture. But drastic changes in the furniture are not allowed by IKEA. Michael Porters’ Analysis Threat of New Entrants IKEA is known for the unique and innovative setup that it ha in its stores and this setup has not been used by any of the furniture stores that have opened up. There are a few companies that are opening up on the same standard as IKEA but the new entrants still act as an indirect competitor to the company because of the high barriers that IKEA has setup for the new entrants. Hence, it can be said that IKEA will not be facing too much of a threat for any new entrants because there is a very minute probability that a direct competitor on the same scale may threaten the company. Threat of Substitutes There are no threats of substitutes to IKEA because IKEA provides a different range of furniture for the customers along with different qualities. Of course, there is a chance that the local companies may provide the same style of furniture at a lower cost and at a lower quality. This could be a threat to IKEA for substitution. Bargaining Power of Suppliers IKEA does not have the threat of having the suppliers to face because IKEA is a large retailer and there are chances that there may not be so many retailers for the suppliers that they can provide to in large amounts for larger profits. Bargaining Power of Customers Since there are no direct competitors for IKEA, this reduces the chance of the bargaining power being shifted towards the customers where there is the issue of customers having to argue or bargain over the high prices. IKEA has provided a high quality rationale for the high prices along with the services. Internal Rivalry with Competitors Since IKEA has no competitors, there is no internal rivalry that is currently apparent. IKEA does not need to have any discount sales or promotions because of the competitors introducing a new product. References IKEA. (2007). The IKEA Concept. Retrieved on March 23, 2007 from: http://franchisor.ikea.com/showContent.asp?swfId=concept3 IKEA. (2007). Retrieved on March 23, 2007 from: http://franchisor.ikea.com/showContent.asp?swfId=range1 Read More