International Marketing Analysis of IKEA - Case Study Example

INTERNATIONAL MARKETING ANALYSIS OF IKEA REPORT Name Class Instructor Institution City State Date INTERNATIONAL MARKETING ANALYSIS OF IKEA REPORT Executive summary This is a report on IKEA Company, which is a major retailer of furniture's worldwide. The report will entail marketing analysis of the company. The analysis will involve taking two scenarios that are local and international markets. The report has analyzed deeply the UK and China market. It was found that IKEA has used lot of marketing skills from segmenting market, good advertisement, and quality products at a low price Some of recommendation to the management is to make business online, do some research on the consumer needs and also increase corporate social responsibility to ensure more sales and customer retention. Contents Executive summary 1 Contents 2 Introduction 3 Market analysis 4 Internal strength 5 Internal weaknesses 6 China market 6 Competitor analysis 7 External strengths 9 Conclusions and recommendations 9 References 11 Introduction IKEA is well known retail outlet for home appliances that started as a small company and has grown over last few years expanding to many countries and expanding to more countries in the future, all this is due to good corporate strategies (Bloomberg, 2011).IKEA is well known for producing goods of low prices and of high quality hence having a customer loyalty. Also its have an outstanding store setting and catalogue that has been used as to retain the customers. With trendy, functional products with minimalist lines, which are manufactured cost-efficiently makes it stand out among the competitor.The purpose of this report is to show how IKEA can improve its marketing in its both and overseas branches, determine its strategic advantage in international expansion and analyze the current market strategies. The report is explained on the strengths of the company and how it has used them to market also the weakness have been used to explain how it has been able to use this weakness improve its marketing. I have analyzed the report on both markets and citing some of the strategies used. This includes how it has segmented different customers markets. Offered different products to meet customer need and wants, used corporate social responsibility to improve the organization image and also taken into consideration of people social and culture issues hence producing products to meet their needs. Also I have analyzed different competitors and also come with recommendations on how IKEA can be able to improve its marketing and also improve sales. The organization can decide to use web based customer software, train employees on customer handling and communication skills and also improve on pricing strategies due to improved competition. Market analysis Each company has to increase its market and also improve its customer services. Marketing very important to each organization as the most company especially start-up need it to have a clear idea on the path they are choosing. Analysis helps an organization to avoid business failure and also be able to meet customers' needs and wants. With good analysis one can understand the market well and be able to improve on it. This includes understanding what the customer wants, researching on what competitors are into, differentiating the product and be able to channel communication to target audience. For a good market, it should have good market segmentation, profitability, customer satisfaction, the wide variety of goods, good marketing and meeting the right quality, quantity price, and promotion. Internal strength Traditionally in UK children inherited furniture from their parents but due to changes in technology and globalization this has changed consumer buying patterns. IKEA is known for high quality at low prices, and its slogan says "low price with meaning" hence explains the major force of the company in producing trendy products that are produced at minimal cost for people to afford. It has 150 superstores with over 1 million shoppers generating around 156 million annually( Times100 2009) To ensure there are successful marketing strategies it starts in product development process in which managers identify products lines , product developers analyze prices hence reducing prices by almost 50% hence when the product are produced are produced at low cost. It's known to outsource more than 90% of supplies and produce rest internally. When shipping products, the items are packaged in flat boxes to reduce transportation, warehouse and storage cost. Lounging & relaxing furniture is one of product produced by this company. Stores are designed in a way that is customer friendly in this it has ensured customer satisfaction is guaranteed. The location of items is in such a way that shoppers can try and test new products cresting an impulse buying. This includes display price information, prices used, and colors available and after sale services available. The stores take care of customer needs this includes delivery services, restaurants, and child care services and also producing an ecofriendly products to meet their specifications. Customer segmentation is a strategy in which is used to target potential customers most stores in the UK this include segmentation on age, traveling possibility and cost. This makes the company get customers from different areas. To enhance local marketing has a catalog to guide customers also they have loyalty programs to reward customers who make frequent purchases this is called Ikea family that customers have advantages such as discounts and free magazines. Ikea has a good knowledge of customers which is achieved by constantly using innovations to drive costs down. Business innovations range from new packages to sustainable materials (IKEA 2011) Internal weaknesses New customers are constant due to globalization and technology changes in the market. Strength IKEA is well-known the brand that attracts many customers. With it being a multinational company with many outlets quality control issues that have been a problem to this company. With different cultural diversity in the world pose a great challenge to the new markets. When introducing products in USA market, they dint meet the standards. Lounging & relaxing furniture was a major issue of restricted manufacturing capability. This is because they rely on subcontracted supplies hence an issue when standards change. A common complained when customers complained the some chairs could not fit in their doors. The companies have been criticized severally on issues such as poor customer treatment, negative publicity and questionable advertisement this has led to negative publicity. This has reduced sales, but the company has involved in social responsibility issues such as supporting environmental groups such as WWF. China market Asia generates more than 6% of companies' total revenue, but IKEA see growth potential, especially in China (Bloomberg 2011). China has the second largest economy so far. China government favorable policies toward retailing and consumer business have encouraged the retail business growth in China (hill, 2009). Chinese competitors are also taking this into consideration of favorable policies combined with labor unrest among Chinese migrant workers, increased import duties, and imitations of IKEA products line has been some of the threats in the China market IKEA stores are close to the city because the majority of Chinese consumers use public transportation also they have built parking places under most stores e.g. the Shanghai store, with expectations that patterns of shopping can change.The target segmentation is Chinese females around 30 years old as they since they often make decisions around home furnishings especially things like chairs. Some research has indicated that this generation in which they had one child policy was easy to convince and believed in them much interested in with brands from other countries making it an easy target (Johansson 2008), China consumers use stores as a social place for weekend family outing to view the products hence ending up to buy one. The showrooms have been customized into Chinese people standards to ensure that the Chinese culture is taken into consideration. This includes the seats, balcony, and other accessories. This has significantly led to increased sales over the period. China is also full of competitor who are replication hence organization keep on updating having new strategies hence keeping them at their tools and one step behind. Competitor analysis IKEA' smaller competitor have reduced buying power from suppliers ; they may be able to respond with this advantage they can respond quickly higher volume orders, but IKEA has been able to maintain long term relationships with suppliers to ensuring good communication to be able to meet the needs of the customer efficiently and effectively. IKEA’s networks extend from the raw material suppliers to a distributor of products. Low-cost retailers such as Wal-Mart, ASDA or Tesco are venturing in furniture market with similar specifics such as low costs and market presence in most countries Growth consumer income means that people buy change from low price and low quality products, which is similar to what is offered by IKEA. This will result from them to move to high-quality products. IKEA is it in the matured stage of its Product life Cycle. It a stage with rapid growth and stabilized in the market. IKEA has differentiated products from those offered by competitors making its products stand out among others in the niche (Mooney 2004). However, it is a stage that the company needs has to ensure that they change so as to grow rather than face decline as shown below The graph shows how the company’s sales have changed in relation to time According to the table above the product grows the sales until maturity. With no innovation, it will lead to product failure. The IKEA should come with new innovation and introduce new product lines to increase customer base. This will enable that the sales increase and also more profit regardless if one of the products is at declining stage. External strengths IKEA is known for its low prices and quality products originally the postwar boom was the main drive in the furniture industry introduction of new styles with low cost has led to more customers demanding even outside the world. It has a well-known profile, quality, and price in the industry and to be precise it is known to have the best Lounging & relaxing furniture. The companies are known for a good catalog since 1956, and now the presence of internet has enhanced business. It has a wide range of products hence a good product strategy. In Lounging & relaxing furniture, it consists of sofa combinations, sofa sections and chaises and hammocks. Conclusions and recommendations IKEA’s main strength has been to use trendy products and low cost to pricing to maintain the leader position. However conversion of its competition price approach into a long- term policy has been a problem hence need for new strategies. To maintain the leader in this industry the company has to Improve Customer Service and Set new outlets e.g. franchisee or show rooms to save on cost to be incurred such as a cost of transportation. Customers also need a personal detailed instruction in the assembly of products this can save on costs as customers can assemble or dissemble products with the use of online guides hence no need of expertise consultation. As from the above report the company needs to train and its employees on being customer friendly. This is because the customer is the reason for business. They should ensure that area is over emphasized to give the best to the customer. The management must come up with long-term plans and innovative strategies to ensure that the product sales are not in decline. State of the art technological tools should be used in the advertisement and marketing department. The company has to incorporate B2C modules that will ensure customers buy and sell or can send feedback online this include systems such as Amazon this will increase the customers niche and hence make more sales. Some of this can enable marketing by creating links that can be posted in social media e.g. Facebook and Twitter to create product awareness. Social media has played an important role in the advertising market due to the client base that visits the social sites. Customers do have a personal liking for interaction that boosts recommendations and helps to increase advertising and sales. For instance, Facebook has recorded over 1 billion user base that is a good platform for global advertisements. References Bloomberg Business week. (2005, November 14). 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