Understanding IKEA’s Marketing Mix And Strategy Case Studies Examples

Marketing mix of IKEA

Pricing strategy
According to the IKEA website, the business idea of the company is to “offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”. The main focus is on reducing the prices and this is achieved by building long-term relationships with their suppliers, opting for mass production and investing in highly automated machinery.

Product strategy

Keeping the designs functional, yet simple, IKEA concepts of designing furniture were a huge hit all across the world, and were further complimented by their unbelievably low prices. The main reason for ditching of the conventional, elaborate designs was the need to cut costs. Further, since the product target audience is the young generation of students or workers, on a lookout for modern furniture, the no-frills, edged furniture designs were evolved. These indeed have been a huge hit across the world. Lastly, in order to make foray into flat-packaging, thus allowing easy, damage-free transportation of these products, simple, flat-based designs were wonted for.

Product Life cycle

Even since its establishment in the early 1940s, IKEA has come a long way. It has undergone the developmental (Introduction) stage and has seen immense growth. The product-line is forever innovating and hence is not stagnant. It may be, therefore deduced that the product of IKEA can be placed comfortably between growth and maturity.

SWOT Analysis

Strengths:
Product innovation gives IKEA customer loyalty.
The pricing strategy of IKEA is unbeatable.
IKEA has reduced its operating and manufacturing costs by adopting economies of scale.
Its showrooms have been touted as equivalent to “modern theme parks”, thus providing great in-house customer interaction.
Has a strong distribution network.
Weaknesses:
Low product life span.
Being a foreign company, American buyers may find it a little difficult to trust the company and its product quality.
Self-assembly line of furniture may get a little too handful for the average customer.
Needs to develop on customer service.
Provides no home delivery.
Opportunities
There is huge scope of expansion in developing nations.
Tapping into the online segment would help improve customer satisfaction as well expand sales.
Threats
The price wars are getting intense what with companies like Wal-Mart, Target etc too getting into the fray. This increases the chances of compromising the product quality and hence, increases the negative publicity.