IKEA

Global Marketing Strategy of IKEA

Global Marketing Strategy of IKEA

Introduction

IKEA Group is a global home products retailer which sells accessories, kitchen & bathroom items, and furniture. In 2010, the group had 280 stores in 26 territories/countries, most of them are in North America, Europe, Australia and Asia. The group recorded revenues of E23,539 million (approximately $32,234.3 million) during the financial year ended August 2010 (FY2010), an increase of 7.7% over FY2009. The operating profit of the group was E3,197 million (approximately $4,378 million) in FY2010, an increase of 15.6% over FY2009. The net profit was E2,688 million (approximately $3,680.9 million) in FY2010, an increase of 6.1% over FY2009.

This paper discusses the global marketing strategy of IKEA, it also reviews its markets, competition, strengths, weakness, opportunities & threats (SWOT) and in the end it provides recommendations for IKEA with strategic options for the next 5-10 years.

Discussion

IKEA Group (IKEA or 'the group') is an international home products retailer that sells furniture, accessories, and bathroom and kitchen items. The group's emphasis on providing home furnishing products at low prices has been the main reason for the wide spread customer acceptance of its products (Paliwoda 2007 47-48). This in turn has facilitated IKEA's growth in various geographies. However, barriers to entry in lucrative markets such as India, reduce the opportunities for the group to expand its geographic presence and facilitate top line growth. (Seyoum 2008 78-80)

SWOT Analysis Overview

Strengths

Significant market presence

IKEA is one of the largest furniture retailers in the world. The group sells approximately 9,500 home furnishing products in about 280 stores in 26 countries / territories. Apart from this, IKEA has 29 trading service offices in 25 countries, and 27 distribution centers and 11 customer distribution centers in 16 countries. The group's emphasis on providing home furnishing products at low prices has been the main reason for the wide spread customer acceptance of its products which in turn has facilitated its growth in various geographies.

The group designs, manufactures, transports, sells and assembles its merchandise to minimize cost at each level. To help keep prices low, the group ensures that the production equipments and raw materials are used efficiently. Customer involvement also contributes to low prices. IKEA relies on customers to choose, collect, transport and assemble IKEA products themselves and offers home delivery services at an additional cost. Over the past 10 years, IKEA has lowered its prices by 2% to 3% per year, on an average. The group's low cost proposition is central to its product offering and also a key driver for customers. In FY2010, IKEA stores had a total of 626 million visitors and the group's websites attracted 712 million visitors (Lee 2005, 25). Thus, powered by low prices IKEA has come to hold a strong market presence which gives the group considerable bargaining power and an advantage in terms of higher customer recall.

Improved range, price, ambience, layout, and facilities at IKEA win customer loyalty

The improved range, price, ambience, layout, and facilities at IKEA have been driving ...