Case Study Ikea
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Transcript of Case Study Ikea
CARMEN VICTORIA AGUADO LÓPEZ
INTERNATIONAL CASE OF STUDY
IKEA
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The ikea approach
International Case Study
“If there is such a thing as good leadership, it is to give a good example. I have to do so for all the Ikea employees.” Ingvar Kamprad
Carmen Victoria Aguado López
IKEA´S HISTORY
The business that we are going to talk is Ikea , the most famous furniture Company over the
World .This Swedish deal , created by Ingvar Kamprad1 ( “IK” Ingvar Kamprad , “E” Elmtaryd
was his farm , “A” Agunnyard was his hometown)2 . In
1945 Ikea launched the first advertising into a local
newspapers, three years after the furniture’s appear in
the company (originally the company makes office
equipment not furniture’s).
But if one thing is famous of Ikea, a part of the prices of campaigns, it´s the catalogue. 1951
was the year of the first Ikea catalogue.3The catalogue is
now published in 27 languages for 36 countries, Africa is
the only continent where you cannot find an Ikea, and it
´s considered to be the main marketing tool of retail giant. The Catalogue it´s distributed in
stores or by mail, in Spain you can find in your mailbox each September.
1958 is another famous date, was the opening of the first shop in Sweden and the creation of
the “Tore box”, who have not used a mythical box of those? Ikea´s restaurant, created in 60´s, it
´s one of the other pillars with Swedish dining. As well, we have to take into account, the
creation on Ikea Family, the card with which families have advantages (20 % of discount in
products family) 4
Basing on the expansions, these started in 1963 when Ikea went to the neighbour country,
Norway. It was the leap to the expansion and the beginning of the empire that´s today. The first
continent where Ikea has entered was Oceania, Australia specifically. North America has
received Ikea´s group in 1985 with the opening in Philadelphia and in 1998 arrived to Asia,
China.
1 Forbes Magazine, The world´s billionaires, 2015 Ranking Ingvard Kamprad .Image of http://www.forbes.com/profile/ingvar-kamprad/. 2 Thisismoney .co.uk , IKEA Founder Ingvar Kampard , Lucy Balinger , 14 April 2008.3 Home Design. Inspiring Ikea Catalogue Cover (1951-2014) http://homemydesign.com/2013/inspiring-ikea-catalog-covers-1951-2014/ 1951 catalogue cover 4 IKEA FAMILY. www.family.ikea.es/hazte-socio-family_en (Web in Line) ©Inter IKEA Systems , B.V 1999-2014
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But nevertheless Ikea is not only expansions, furniture’s etc…In 1990, they created the first
environmental policy, three years after started to join part of FSC (Forest Stewardship Council)5
and in 1998 hires the first forestry manager.
In conclusion IKEA in our days is a good positioned deal thanks to the mistakes of his creator
and his persistence to overcome barriers.
IKEA´S MARKETING
STRATEGY
Ikea the same as other
companies, has poor
beginnings but in our
days in famous over the
world. How has not visit
an IKEA once in live?
The first shop was not
equal to today, the
figures have grown to be multiplied by an incalculable amount. If we look the results of 2014, we
can see that the total sales were 28.7 billion and their food about 1.46 billion. (In the Key Figure
as we can see)6
Regarding the strengths of IKEA, anyone who like IKEA knows. In first stay, powerful brand
image, who doesn´t know Ikea? , thanks to globalization could be disclosed, but in a different
way than Coca-Cola or Apple. IKEA started in Sweden and after that jump into another
countries with only good – prices and a catalogue that appear after not with subliminal publicity
as Coca-Cola. Financing and deferred without interest (for example until the 14 of August 0% in
entire your purchase)7 , that can allow families to buy more and if we add that IKEA has a
friendly atmosphere with facilities like restaurant (for example in Spain Ikea has this offer;
Breakfast 1€, Lunch 2€ and Dinner 3€, that includes their famous “Köttbullar”)8 or day care
centre, its value rises. Also, the wide range of products and the special offers that they put to
remove during the year some articles to introduce others. But we must take into account other
two things; own brand manufacturing and brand installed thanks to the franchise system.
On the other hand we have the weakness, an extremely weakness’ is the relatively few location
in some countries , for example the IKEA that I have more near is 45 kilometres away of my
house , in Murcia, and it´s on the suburbs of a city so for people is not so comfortable to drive or
to catch a bus. Then the shops have many employees for nothing because is an auto service
shop, you enter with your basket and after you write the references of the furniture you receive.
5 Ikea History 1990 , http://www.ikea.com/ms/en_JP/about_ikea/the_ikea_way/history/1990.html 6 Key Figure 1. www.ikea.com/ms/en_GB/this-is-ikea/about-the-ikea-group/index.html 7 Customer service of IKEA 86 Principal page of IKEA in Spain , www.ikea.com/es/es
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But buy the furniture is not a problem, the problem is when you arrive to your house and you
start assembling yourself and this for certain groups of consumers would not be so funny , you
lose many time with instructions with difficult names , “fixa” , “frakta” “behandla” … and to make
matters worse the furniture’s are not for the whole life.
Focusing on the Marketing mix (4P´S ; Product , Price, Place, Promotion) , Ikea´s is known for
its affordable prices to suit all budgets , the designed their products then they search a raw
materials sourced, the products are manufactured, then are distributed, and they sold by retail,
without no-frills low-cost framework. So they can save money of transportation to negotiate with
suppliers. The Place where Ikea´s lays down their surface is on the outskirts of neuralgic cities
(Cologne, Madrid, Murcia, Paris…) and the location is over the world ;Europe ,Asia, Australia,
North America. What makes Ikea being what is? From my point of view, their promotion and
their products. The Swedish names that they put, make show people interest in knowing what is
and when they discovered they want to buy it. But go to Ikea in a certain period of time depend
on the publicity or the catalogue. Campaigns like “Bienvenido a la república independiente
de mi casa”- Tony Segarra (“Welcome to the independent republic of my house”) or “It´s a
big country. Someone’s got to furnish it” – Donny Deutsch9.
Other aspect to consider are, in my humble opinion they are what we look more and it´s better
to highlight them together. IKEA was the key to enter into a world of furniture like Lego, you can
assemble and disassemble when you want and put wherever you want. The only disadvantage
that you have to carry with the furniture to your car and then when you arrive home, remove of
the car and “down to work”. But you have the marvellous rate of transport that Ikea offer to you
(between 29 and 149, depending on the amount by which the lot is valued) 10to transport.
Another aspect is the design, IKEA recreates living spaces so you can form an opinion. The
pillows and the sheets are what most stand besides lamps ( during my Erasmus I realized that
as happens in Germany and thought it was something that only happened in Spain , a more
focused strategy I thought). Finally the famous Hot Dog (in Murcia in the structure they have a
large picture as a teaser), this kind of Hot Dog give you the necessary quantity of energy to
continue shopping, believe in me I tested. The price nowadays is 0.50€ 11 in Spain and 1.00€ in
Germany 12 , as we can see the price are not the same. Another example the Halogen bulbs
GU10, 7.99 € in Spain 13 and 4.99€ in Germany14. Perhaps the level of competition or taxes are
what determined that.
9 Bernice Kanner, New York Magazine 1 June of 1992 , pp. 22-2410 Leifer Service , Ikea Deutschland 2015 http://www.ikea.com/ms/de_DE/campaigns/services/service_und_leistungen.html11 Ikea Restaurant Spain http://www.ikea.com/es/es/catalog/categories/departments/food/12 IKEA Restaurant Deutschland http://www.ikea.com/de/de/catalog/categories/departments/food/13 Halogen Bombilla GU10 http://www.ikea.com/es/es/search/?query=bombillas14 Halogen Lampe GU10 http://www.ikea.com/de/de/search/?query=lampe
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IKEA FAILURE AND SUCCESS
IKEA is a company so standardised that doesn´t change so common for enter into a market,
which have produced many problems. China, Arabia Saudi or Japan (they entered in 1974 and
they went out in 1986, 20 years after they decided to re-enter)15 are the leading countries. But
we are going to talk about China , that at the beginning was a stone in their shoes, a country
with a 66% of masculinity 16 that have evolved in recent years and increasingly closer to the
West and away from its eastern customs. The new generation looks more for the trendy
technology and brands with a good image.
China is a country where the tradition premium over the innovation (same products from outside
China), as an example their square tables instead of roundtables that Chinese citizens use.
China and Japan are famous for their little apartments and IKEA offered big sofas that were not
so compatible. Nevertheless we don´t take into account the competitors of IKEA (“YiJia”, “proper
home”), AIKA (“loving home”)17 it´s one of its biggest competitors, Hola18 a brand from Taiwan.
For this reason the prices of IKEA in China are so cheaper and another reason it´s the facility to
copy the products.
After all, we will consider all the changes you made Ikea to seize the Chinese market, they put
their shops in the city centres near the public transport (they adapt that because in a European
Country, Ikea is located in the suburbs) they introduce chopsticks and special tea cups for the
Chinese New Year. They discover that Chinese consumers prefer the traditional shops, the
specialist stores so we can coupled with the location of the shops in the centre to competition
and gain market share.
On the other hand we are going to talk about a success of Ikea, Germany. In our days Germany
is the winner in the five top selling markets of IKEA 19 behind countries like USA, France, Russia
and Sweden. One success of Ikea in Germany was the first city centre store of IKEA opened in
June of 2014 in the city centre of Hamburg and IKEA the first one opened in Europe so close of
the population. Hamburg is a city where a 40% of the 1.8 millions 20of citizen have no car. But
with this shop the pretend to create a model and stablish one in Berlin, Johannes Ferber, the
managing director who’s spearheading Ikea’s expansion in Germany. “It’s a very expensive
experiment for us, but we want to know if the city-store concept works out,” he said.
15 Global Strategic Management , Jedrzej George Frynas and Kamel Mellahi 3rd edition , November 2014, p. 4-516 Source : Geert Hofstede , http://geert-hofstede.com/china.html 17 Danwei , Bilingual Brands : Love in the time of IKEA , Dror Poleg , 9 may 2006 18 IKEA and it´s competition in China , 20 April 2013 ( marketingtochina.com ) 19 IKEA Group , Yearly Summary FY 13 ,2013 p.24 20 El Economista , El primer Ikea en el centro de una ciudad pincha con la venta de muebles , 4 August of 2014
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“Altona could serve as a model for other big cities such as Berlin.”21 So, in future we could
discover if they are going to be stablish in Berlin
Based on their success, the firs IKEA was opened in 1974 22 in Munich Eching one year after in
Cologne, the expansion ok IKEA in Germany started until arrive 44 stores. Germans not just
seeking cheap prices, quality was the key. Ingvard start business with Poland to achieve that.
Another country where IKEA obtained a success was in USA, one problem that they have when
they entered was the recognition of the name, change of adverts, in 2002 they produced
“Unborring”/”Lamp” by Spike Jonz. The sport had opened with a discarded lamp sitting on the
sidewalk in the rain and had concluded with an actor saying;” Many of you feel bad for this
lamp”, the lamp is the basic model that cost 3.95$23. Moreover, fight with competitors like Ethan
Allen, Bassett Home Furnishing, William Sonoma and Lexington24. But another problem appear
the size of Europe was smaller than American. On the other hand they started to be a success
and not only selling vase( they bought the big one because they drink many drinks with ice and
that occupy much), because stores offer adventures ,the stores are also places where families
can spend big load of time, thanks to the play area for children and the large cafeteria. Another
cause was Ikea buyers were more likely people that has
travelled abroad , and this kind of people is
concentrated in the coasts where are more freedom,
Americans’ started to be more concerned with the
design and more open with IKEA´s world perhaps
because IKEA began production in USA to save costs.
But a company in USA is not important until it arrives in
New York, 1990, 27.000 people visited it on opening
day25. But visitors are not all, other claims in USA is the
politics as seen in the image26. This may be another of
the hits of IKEA in USA.
To sump all , IKEA is a company that have learned of their errors in pass , as an example Japan
where they re-opened another time , China where they change to adapt, Spain where they put
in strategic places for not to saturate the market and bring together a larger number of
customers. But IKEA is a well-recognised company over the world. That will give this fame
someday a place in the Latin American market?
Bibliography
21 Bloomberg Business, Nicholas Brautlecht , 30 June 2014. “ IKEA GOES URBAN WITH FIRST HIGH STREET STORE IN HAMBURG” 22 IKEA Germany 23 Ikea Unveils “Unboring” Campaign , 16 September 2002 , 24 Apartment therapy , Top 100 US furniture store by sale , 18 January 2011 25 Arlene Hirst ,How IKEA became America´s furniture-selling powerhouse, 8 October 2014 26 New York Magazine ,24 September 1990 , page 41
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Brainy Quote http://www.brainyquote.com/quotes/quotes/i/ingvarkamp322818.html ( Visited 10 April 2015)
Forbes Magazine, The world´s billionaires, 2015 Ranking Ingvard Kamprad .Image of http://www.forbes.com/profile/ingvar-kamprad/. ( visited 10 April 2015 )
Thisismoney .co.uk , IKEA Founder Ingvar Kampard , Lucy Balinger , 14 April 2008 http://www.thisismoney.co.uk/money/news/article-1630047/Profile-Ikea-founder-Ingvar-Kamprad.html (visited 15 April 2015)
Home Design. Inspiring Ikea Catalogue Cover (1951-2014) ,1951 catalogue cover http://homemydesign.com/2013/inspiring-ikea-catalog-covers-1951-2014/ (visited 10 April 2015)
Nn: ( 2014) : IKEA FAMILY. http://www.family.ikea.es/hazte-socio-family_en (Web in Line) ©Inter IKEA Systems , B.V 1999-2014 ( visited 10 April 2015)
Nn : Ikea History 1990 , http://www.ikea.com/ms/en_JP/about_ikea/the_ikea_way/history/1990.html ( Visited 10 April 2015)
Nn: Key Figure 1 http://www.ikea.com/ms/en_GB/this-is-ikea/about-the-ikea-group/index.html ( Visted 10 April 2015 )
Nn: Customer service of IKEA http://www.ikea.com/ms/en_US/customer_service/splash.html ( Visited 10 April 2015)
Principal page of IKEA in Spain , www.ikea.com/es/e ( Visited 10 April 2015)
New York Magazine, On Madison Avenue , Bernice Kanner 1 June of 1992 , pp. 22-24 https://books.google.es/books?id=eeQCAAAAMBAJ&pg=PA22&dq=Donny+Deutsch+new+york+magazine&hl=es&sa=X&ei=975UVcydOumUsQSqiYH4Bw&ved=0CCAQ6AEwAA#v=onepage&q=Donny%20Deutsch%20new%20york%20magazine&f=false ( Visited 10 April 2015)
Ikea Deutschland 2015 ,Leifer Service http://www.ikea.com/ms/de_DE/campaigns/services/service_und_leistungen.html (Visited 14 May 2015)
Ikea Restaurant Spain http://www.ikea.com/es/es/catalog/categories/departments/food/ (Visited 14 May 2015)
IKEA Restaurant Deutschland http://www.ikea.com/de/de/catalog/categories/departments/food/ ( Visited 14 May 2015 )
Halogen Bombilla GU10 http://www.ikea.com/es/es/search/?query=bombillas (Visited 14 May 2015)
Halogen Lampe GU10 http://www.ikea.com/de/de/search/?query=lampe ( Visited 14 May 2015)
Global Strategic Management , Jedrzej George Frynas and Kamel Mellahi 3rd edition , November 2014, p. 4-5
Source : Geert Hofstede , http://geert-hofstede.com/china.html ( visited 11 April 2015)
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Danwei , Bilingual Brands : Love in the time of IKEA , Dror Poleg , 9 may 2006 http://www.danwei.org/intellectual_property/ikea_china_plays_love_games_wi.php ( visited 11 April 2015)
IKEA and it´s competition in China , Oliver ,20 April 2013 http://marketingtochina.com/ikea-and-its-competition-in-china/ ( visited 11 April 2015)
IKEA Group , Yearly Summary FY 13 ,2013 p.24 ( visited 11 April 2015)
El Economista , El primer Ikea en el centro de una ciudad pincha con la venta de muebles ,4 August of 2014 http://www.eleconomista.es/interstitial/volver/mapfmy15/empresas-finanzas/noticias/5990624/08/14/El-primer-Ikea-en-el-centro-de-una-ciudad-pincha-con-la-venta-de-muebles.html#.Kku8qVFlvvquOif ( visited 11 April 2015)
Bloomberg Business, Nicholas Brautlecht , 30 June 2014. “ IKEA GOES URBAN WITH FIRST HIGH STREET STORE IN HAMBURG” http://www.bloomberg.com/news/articles/2014-06-29/ikea-goes-urban-with-first-city-store-in-hamburg-s-altona ( visited 13 April 2015)
IKEA Germany http://www.ikea.com/de/de/ ( visited 13 April 2015)
Ikea Unveils “Unboring” Campaign , 16 September 2002 , http://adage.com/article/creativity-news/ikea-unveils-unboring-campaign/35788/ ( visited 13 April 2015)
Apartment therapy , Top 100 US furniture store by sale , 18 January 2011 http://www.apartmenttherapy.com/top-100-us-furniture-stores-by-137079 ( visited 13 April 2015)
Arlene Hirst ,How IKEA became America´s furniture-selling powerhouse, 8 October 2014 http://curbed.com/archives/2014/10/08/how-ikea-became-americas-furnitureselling-powerhouse.php ( visited 13 April 2015)
New York Magazine ,24 September 1990 , page 41 https://books.google.es/books?id=ZmeBLxJqbN8C&printsec=frontcover&dq=september+24+1990+usa+new+york+magazine&hl=es&sa=X&ei=w8JUVYqtFIbgsASX_4GIDg&ved=0CCMQ6AEwAA#v=onepage&q=september%2024%201990%20usa%20new%20york%20magazine&f=fals ( visited 13 April 2015)
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