IKEA Marketing Strategy - Report Example

IKEA Marketing Strategy

IKEA SWOT analysis

Strengths

IKEA is a globally known brand thus attracts major customers

It provides a wide range of products of varying designs and low prices

The company is conscious about the costs of its products

Weaknesses

IKEA find it difficult to control the standard and quality of its products

The current need for low cost services and products

The need to maintain communication with major customers as well as environmental activities for stakeholders

Opportunities

The increasing global demand for green products

The increasing demand and need for more low priced products

The status and trends in global financial status may force customers to move away from stores that are more expensive

Threats

Generating new and innovative ideas regarding social trends, market dependent forces and economic factors

IKEA’s market expands over several groups of customers. Therefore, the marketing strategy for IKEA seeks to create value and build customer relationships by reaching out to this vast number of customers. IKEA is seeking to build customer relationships through advertising and promotion. The company strives to make the customers the core part of their business through the marketing plan. Each of the marketing campaigns recognizes a particular target market among the customers. The marketing campaigns at IKEA targets and directly markets to each of the client target-market to ensure the company persuades the customers to remain loyal to their products. As a step to build strong customer loyalty and relationship, IKEA reaches out to each customer group

Marketing plan

As such, IKEA’s marketing program focuses on four critical areas of business that ensure the success of the company in the business world including product design, catalogs, product advertising, and public relations or promotions. Customers are attached to the company because of they love clean lines and the cache that the company ownership affords (West, Ford and Ibrahim 213).

The main marketing focus is the company’s printed catalog whereby the company spends most of its annual revenues. The company has a 376-page catalog that markets most of the company products and ensures that the information is available to the customers. The online catalog and company website features company products and other programs. The company website also offers information on the company’s stores, advertisements, and promotions. However, since there is little information offered on the website, customers might be forced to visit stores to access more information on the products.

In addition to the company catalog, IKEA also uses television, radio, and the internet based programs to reach out to the vast number of customers. The major intention of the company’s advertisement is to increase awareness about the brand. However, some of the advertisements are controversial for instance ads that show gay customers or those that use sexually suggestive stories. However, advertising is not the company's major focus regarding promotional efforts. The use of the word of mouth as a primary marketing strategy is evident in the company's use of social media to reach out to customers.

According to Kerin, Hartley and Rudelius (10), marketing should focus on satisfying customer needs. The marketing strategy should concentrate on a specific group of potential customers or target population. IKEA's main consumers are categorized as young, middle-class people who prefer low priced products but trendy. The marketing program at IKEA targets this group of potential customers.

Market segmentation involves grouping the buyers into groups. The marketing program then will develop products and services specific to these groups. Market segmentation, targeting, and positioning have helped IKEA become one of the leading brands. The company has positioned and set itself in the right place where customers are made to believe the company’s behavior is to ensure 100 percent customer satisfaction. Selecting the target market is one of the critical steps in segmenting and target marketing. The target market identified by IKEA has been beneficial to the company’s success.

The major role of the IKEA marketing communication plan is to develop and build the company brand and inspire customers to come and shop at the stores. The IKEA marketing concept builds on the relationship between the customer and the client. The IKEA marketing communication builds on nine Key messages to build its relationship with the customers. The IKEA concept is based on the company’s commitment to product design, customer value, and brilliant solutions. Based on the IKEA concept the company communicates the message that it uses the available resources to develop and ensure the customers benefit from the low prices. The IKEA also informs the customers that its product range is developed to be extensive and practical for everyday use. It is also communicated in IKEA marketing plan that the company offers high-quality products, and everything is available in the stores. Therefore, the message is that it is very convenient to shop at IKEA because of the affordable prices, good quality products, and convenience.

Promotions

For a company to develop awareness to its customers, it should use the five major promotions alternatives including advertising, personal selling of the products, public relations, sales promotions and direct marketing. IKEA has a long history of a marketing communication that focuses on using printed media to communicate to its customers (Edvardsson and Enquist 104). The use of printed media has proved to be valuable for IKEA and has ensured the success of the company for many years. The other commonly used forms of media that help in the IKEA marketing communication include TV, radio and Internet-based communications that have increased in importance due to the increased use of internet technologies. IKEA mainly uses mass media as the main promotional strategies because these promotional programs are best when the potential number of customers is large (Kerin, Hartley and Rudelius 448)

IKEA marketing mix focuses on four different areas

• IKEA product range is the company’s starting point that forms the basis for all marketing communications. The company uses all the other marketing communications to exhibit and amplify the product range
• The store is the company's main agent for presenting and communicating its product range, low and affordable prices and the IKEA concept
• The IKEA catalog is the company's primary tool for marketing because it covers about 70 percent of the company’s annual marketing budget
• The IKEA advertising initiatives, public relation campaigns and other forms of communication are used to complement the IKEA product range, stores, and the company's catalog.

Merchandise forms the base for IKEA marketing strategy. This includes the products range and the prices of these products. The company has ensured that the product range and the prices are the same across all its stores in different countries (Burt, Johansson and Thelander 6). For IKEA, prices of its products are often considered low particularly when compared to prices of other competitors. The four Ps of marketing are evident in IKEA’s marketing program. The merchandise or products provided by the company are ideal and customized to meet the needs of the potential customers. Compared to other competitors the prices at IKEA are affordable to a variety of customers. Promotion is achieved through the company’s extensive marketing communication strategy that uses various media channels to create awareness about the company and its products. The products are then available to the consumers through the many IKEA stores distributed across various regions (Kerin, Hartley and Rudelius 10).

IKEA is continually looking for ways and exploring avenues for improving their products and services to improve their customer satisfaction. IKEA is determined to conduct continuous market research to understand ways of improving its products and services. Market research helps IKEA predicts the potential impacts of demographic changes on its sales. By understanding customers, IKEA can design products and store designs to appeal its customers. Other critical elements of the marketing mix can be unveiled and understood through market research. As explained by (Kerin, Hartley and Rudelius 198), marketing research involves the collection of relevant information that will help the organization make relevant decisions that will facilitate the process.

Strengths

The marketing approach to IKEA is large and extensive allowing the company to reach out to a large number of customers worldwide. Plenty of financial resources channeled to the marketing aspect give the company a competitive edge in reaching to customers as compared to its competitors. IKEA enjoys the economies of scale offered by its enormous size of the marketing program. The fact that the marketing strategies are implemented at larger scales lowers the average costs of running the business thus; IKEA can outweigh most of its competitors when it comes to marketing given the extent of financial support channeled to the marketing programs.

Weaknesses

IKEA has demonstrated that its strong ability to build strong relationships with it existing customers. Unfortunately, the company does not concentrate on marketing to non-existing customers. People who do not live near IKEA showrooms, those who lack information on IKEA’s range and those who are not seeing the benefits of buying goods at IKEA instead of another company. The lack of reaching out to non-existing customers is one of the greatest weaknesses of the IKEA marketing plan. The company’s marketing strategies do not market to non-locals and do little to market their products to customers that are out of range of IKEA stores.

Despite that the scale of the business may give IKEA competitive advantage over other companies, it may also serve as a limitation when communicating to people. It is a difficult task for IKEA to reach out to all it customers and communicate to them regarding its environment activities. Although, the company tries to use TV and radio campaigns, the consumer base it too large to the extent that it may be problematic for the company to reach out to everyone.

Recommendations for improving the marketing program

To improve its marketing approach, IKEA should concentrate more on the Corporate Social Responsibility aspects of the marketing. The marketing should improve on CSR initiatives that aim at giving back to the community (Smith 179). Improvements should be channeled to social initiatives such as the project done with UNICEF. The new actions plan that involves the improvements in the CSR should be clearly incorporate in the organization’s marketing strategy to ensure that the communities are aware of the company’s actions to support them.

With the recent improvements in the use of technology in advertising and promotions, it would be ideal for IKEA to shift its focus from concentrating on mass marketing to social media marketing. IKEA should enter fully into the digital marketing by maximizing the use of social media. The company should concentrate its marketing efforts on digital catalogue and the use of other social media platforms. The company should concentrate on using its digital marketing strategy to reach out to the global market. This is by developing separate online pages for each country that has the company’s stores.

In efforts to expand into the global markets, IKEA may opt to shift its marketing efforts towards India, China, and Brazil (Harapiak). There is potential for business in India given its growing population and economy as well. Therefore, it would be a good idea for future marketing strategies for IKEA to focus on penetrating the Indian market. China is emerging as an economically stable nation in the East. Therefore, seeking further opportunities in these countries is critical to the success of IKEA.

4Ps marketing at IKEA

Product

IKEA offers a wide range of home furniture products for various rooms in the house including kitchens, living rooms, bedrooms and children’s rooms. Some of the products offered by IKEA include tables, TV solutions, shelves, sofas among others. Within these products, IKEA also segments for instance specialization in children’s bedrooms.

Place

IKEA is an international business company that operates by selling furniture in Europe, N. America, Australia and in Asia. The company’s main business is related to its physical stores most of which are located in out-of-town regions. These stores are large to allow accommodation of a large amount of products. The company has more than 300 stores worldwide

Price

Value is the basis for pricing at IKEA. The company used low pricing or no-frills pricing strategy. Since the company is not a pricer, most of its products are designed, sourced, distributed and sold through retails within a framework developed based on low pricing

Promotion

IKEA is among the world’s largest sellers of furniture retail brands. The brand was developed based on the concept of selling home furnishing products to consumer at affordable prices. The company uses a promotional mix that includes TV advertising, newspaper marketing, social media and internet promotions.