Analysing of IKEA'S strategic marketing problems, opportunities, strategic marketing alternatives and realistic implementation plans consistent with the overall objectives of the IKEA organization.



Swedish company IKEA was the world's major furniture retailer then the early 1990's. It sold cheap furniture of Scandinavian design. The company run in 55 countries with a staff of 76000. IKEA presented approximately 12000 items to the home furnishings market universal. It sold a varied variety of products with furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries through Europe, North America, Southeast Asia, Middle East and Australia. IKEA is well recognized for its high-class model, low price, extensive choice of product and flat storing.

The Sweden-based Inter IKEA Systems (IKEA) was ranked 42 by Business Week magazine in its list of Top 100 global brands for the year 2005. In January 2005, IKEA was retained third in Brand Channel's fourth annual Reader's Choice Awards for the international brand with the supreme effect in 2004. Allowing to the Brand Channel rankings, IKEA was the #1 brand in Europe and Africa. IKEA was the world's biggest furniture retailer that expert in fashionable but low-cost Scandinavian planned furniture.IKEA's achievement was familiar to its massive familiarity in the furniture retail market, its product variation and cost leadership. The company sold its furniture in necessaries, to be gathered by the customers at home. Adding to furniture, IKEA also sold convenience items such as utensils, hooks, clips, stands, etc. IKEA's creator Ingvar Kamprad (Kamprad) had made an international furniture series of 226 stores in Europe, Africa, Asia and the US. For fiscal year 2004-05, the company produced returns of US$ 17.9 billion, a 15% growth over the previous fiscal year. IKEA sales grasped 21.2billion Euros in 2008 showing an upsurge of 7%. In 2008 IKEA opened 21 new stores in11 countries and imagines to open around 20 more in 2009 as part of its policy for development. IKEA held a market share of not more than 10% in the markets in which it activated. In spite of this, it had been effective in nearly all countries, because of public consciousness of the IKEA brand.

IKEA is a worldwide company that has capitalized and is existing in many countries; it supports its products and services consuming the same brand in all markets coordinated from its one central corporate office in Sweden which is liable for a international strategy that focuses on cost management, efficiency and value.

Localization in Global Markets

IKEA targeted mid class customers world-wide. IKEA made shopping stress-free for customers. For instance, right at the appearance of the store, customers could drop their kids at the playroom which had many kinds of harmless play kit, and formerly shop on their individual in a comfortable way. The stores were assembled in the form of a circle, to permit customers to outlook all units of the store. IKEA board market was the total middle class which mutual procurement behaviours. The client spending summary was also linked through nations. With these correspondences, IKEA recognized that to strengthen its existence in the worldwide market, it was essential to restrict. For illustration in China, IKEA manufactured 250,000 plastic placemats in 2005 to admiration the year of rooster.


Strength of IKEA

IKEA is a extremely recognized brand inviting key demographic customer crowds. The IKEA business model is exclusive in its structure and accomplishment with slight straight competition on a like for like beginning. Achievement has been obsessed from the price architecture proposing value to the customer in inventive but efficient products. In spite of the great lean-to operations IKEA operate there is a point of expert knowledge within key product areas where purchases are supplementary measured and entail support such as kitchen fittings.

Weakness of IKEA

Global brand has a flat of faith on European markets with 90% of the stores created in Europe and the balance across America, Middle East and Asia. Even though the model helps short prices it has been recognized there is an connected low level of customer service which pairs telling that there is a want to work on service to make undisputable a entire shopping ability and make sure recurrence business inside the dynamic customer base. The growth of Ecommerce has been crucial to fight in a contemporary technical world because of marketplace measure, but there is also a consideration this measure into multi channel retailing interchanges away from the simple revelation of the customer being able to realize and trace the product.

Opportunities for the company

IKEA are stirring from International to universal position over the progress of Asia and Eastern European models. There is a new and emerging market in China as the country undergoes a huge industrial revolution IKEA's traditional product value is low price high volume product but the movement into mid and higher price points will see an prospect to transfer the demographic base and rise the average basket value with less self-assurance on a limited demographic collection. At a time of recession in the international economy, it may look that some companies will decrease proceeds up of services that Ikea's proposals. Though, in harsh times customers incline to emphasis upon cost decline and outsourcing - with are policies that Ikea's offers. So hard times could be lucrative for Ikea, while there are destructive relations within the growth of the IKEA Ecommerce position there is an related prospect to develop growth and rise stages of customer service as the supplementary transactional capability will decrease stress from stores to a convinced grade.

Threats for the company

Usual retailers are beginning to copy the model of low cost value flat packed furniture in rising competitive retail market that will influence on the concern of IKEA. With economic distresses above growing living costs and reducing non-refundable revenue there is a whole threat to the performance of the business in UK and American markets.

1. Political Factors

Ikea is functioning a globalize family with stores everywhere the world. This company's performance is extremely prejudiced by the political and legislative circumstances of various countries, as well as the European Union (EU). For service legislations, the government inspires companies to deliver a combination of job prospects from flexible, lower-paid and locally-based jobs to highly-skilled, higher-paid and centrally-located jobs. Moreover to come across the demand from population classifications such as students, employed parents and senior people. Ikea knows that retailing this company consumes a countless effect on jobs and people aspects being a certainly native and labour-intensive area. IKEA employs big amounts of; student, disabled and elderly workers, often paying them minor rates.

2. Economical Factors

Economic influences are concern to IKEA. The Company supposing to supervisor demand, costs, prices and profits. One of the best significant factors on the economy is high unemployment levels, which cut the valued demand for many goods. These financial factors are mostly external the control of the business but their superior effects on performance and the marketing mix can be deep. However global business is still growing and is likely to provide higher capacities to Ikea's revenue, the company is still appropriate considerably dependent on the UK market. Ikea would be poorly affected by any interruption in the UK furniture market and are bare to market devotion threats.

3. Social/Cultural Factors

IKEA have improved the amount of items presented for sale. Demographic changes such as the aged population, an upsurge in female workers and a failure in home meal planning mean that UK retailers are similarly concentrating on added-value products and services. In addition, the company attention is now in the way of; the individual business mix share, the resource sequence and other operating developments, which can effort costs out of the business. Domestic retailers are always new taciturn to take on new suppliers. The customer trying the products which is a meaning of their social situation and their consequential approaches and philosophies. Customers are becoming more and more conscious of health matters, and their attitudes.

4. Technological Factors

Technology is a key macro-environmental movable which has particular the progress of several of the Ikea products. The customer and the company helped by the new technology. Once the products are freely available and services are actually good then the customer pleasure goes active. IKEA stores control the following technologies:

  • Wireless policy

  • Intelligent variety

  • Electronic shelf arrangement

  • Self explore machine

5. Environmental Factors

In 2003, there has been improved stress on several companies and managers to recognise their duty to society, and act in a way which assistances society largely (Lindgreen and Hingley, 2003). The foremost social matter frightening furniture retailers has been environmental issues, an important zone for companies to performance in a generally liable way. Therefore, by knowing this tendency within the comprehensive moral position, Ikea's trade social duty is concerned with the ways in which an organization exceeds the slightest responsibilities to shareholders identified over guideline and company authority.

The environmental progression occupied, consist of the following:

  • Trading PVC in wallpapers, home textile, shower curtains, lampshades, and furniture.

  • Reducing the use of formaldehyde in its products, with textiles.

  • manufacturing a model of chair made from 100% post consumer plastic excess;

  • Presenting a series of air-inflatable furniture goods keen on the product line. Such products cut the use of raw materials for enclosing and filling and censored carriage impact and volume to about 15% of that of traditional furniture;

  • Reducing the use of chromium for metal outside exploit.

  • Consuming wood from appropriately handled forests that replant and continue biological diversity.

6. Legal Factors

Various kinds of government legislations and strategies have a straight communication on the performance of Ikea. For instance, government acclaimed an enforceable Code of Practice should be fixed up hostile many of the present practices, such as demanding expenditures from suppliers and varying approved prices in recollection or without notice (Mintel Report, 2004). The company of influential competitors famous brands produces a threat of solid price conflicts and tough needs for product departure. The government's strategies for ascendancy controls and reduction of buyers' influence can bound access to this segment with such controls as license necessities and restrictions on arrival to raw materials (Mintel Report, 2004; Myers, 2004). IKEA Marketing Mix Analysis

Marketing Mix

1. Price

The price is the amount a customer pays for the product. It is indomitable by a number of issues with market share, competition, substantial costs, product characteristics and the customer's apparent value of the product. The business may rise or cut the price of product if other stores have the similar product. The price of an item is obviously a significant factor of the value of sales complete.

IKEA's policy is established on cost leadership. Through markets where it currently has an existence, products are sold at low prices. Prices are 30 to 50% lesser than competing products. Price differences are individual a result of variations in exchange rates. This penetration pricing allows IKEA to increase important market share. Low prices are an outcome of big capacity buying, low-cost logistics, store location in accommodation zones. IKEA also profits from economies of measure and strong supplier-firm relations. IKEA arrives into long-term agreements, delivers rented equipment and technical provision in exchange for exclusive, low-cost trade suppliers for new markets. IKEA should maintain its price- image to continue the brand's placing.

2. Product

IKEA's value chain is exceptional in that customers are also suppliers and suppliers are also customers. The dealings among the supplier and IKEA and on to the customer have a significance adding stage in each platform. Product variation occurs in the value-added characteristic. IKEA's customers are preserved as 'presumes' with greatest of its products demanding assemblage after purchase. Then assist in this feature is restricted, IKEA offers selections for picking, transferring and accumulating furniture.

But this is glowing acknowledged in extents where IKEA now operates; it may be a topic of reflection while arriving in new markets. IKEA should meet a market where DIY is not preferred, IKEA may comprise the cost of the service to the product's price.

3. Position/Place

'Place' is apprehensive with diverse kinds of transferring and stowing goods, and at that time constructing them accessible for the customer. Receiving the correct product to the correct habitation at the correct time includes the supply scheme. IKEA stores are positioned in accommodation regions. This is a issue in the attainment of IKEA's low pricing. While it may seem as a weakness, this fits IKEA's mark market of customers willing to transport their individual purchases and demanding fewer support in convention.

4. Promotion

Promotion is a system to fix the business of communication with customer. This will contribute evidence which supports them to take judgement to purchase a product or service. Ikea's promotions were grounded on selected marketing circumstances and cultural awareness of each country that distinct a lot from worldwide markets. IKEA was existing in some countries like Canada, Australia and Germany for above twenty five years in countries like the US, Britain and Italy, it had been everywhere for only a slight more than a decade. IKEA had operated with altered advertising agencies to take out some of the best innovative and substitute television spots through the world. For the reason that, an IKEA justification was reflected a superior fastening as it certified the agency the liberty to discover particular remarkable and unfamiliar ideas.

IKEA recently conforming up with the makers of well-liked video game The Sims 2 to create a things pack called The Sim's 2. The game covers several stuffs that can be found in IKEA stores and was released on June 24, 2008 in North America and June 26, 2008 in Europe. It was the 2nd things set with a leading brand.

IKEA released a UK huge promoting operation in September 2007 titled 'Home is the Most Important Place in the World' by estate agent signs with the name 'Not for Sale' written on them for bigger movement.

An underpass train decorated in IKEA style was hosted in Russia in 2008 of November. Four cars were warped into a mobile showroom of the Swedish formulate that had multi-coloured seats and envision finished, delivered passengers until June 6, 2009.

The ticket-free scheme for London Underground (Oyster Card) are currently given with wallets sponsored by IKEA Company who also supporter the tube map.

5. People

To grasp an economical advantage to the organization, the company needs to recruit the correct stuff and train them correctly. Customers make judgments and deliver perceptions of the service based on the employees they interact with. Staff should have the right skills, approach, and service knowledge to deliver the service that customers are paying for. Ikea intention to apply for the Financiers in People sanction, which communicates customers that staff are taken care off by the company and they are trained to confident standard.

6. Process

Ikea ample their all procedure likes plan development, trade improvement method, customer service process etc. in an appropriate and capable system. They all the time keep their attention to their customer service, company vision and the facilities of their employer that is why the company look after their internal and external organisation task very strongly.

7. Physical evidence

Physical evidence is one of the 7 p's of providing marketing interim an significant duty in service sector company. It contracts with absolute necessary or the demonstration of written substantiation. This comprises the present co-ordination and standing services of the company.


IKEA is a famous worldwide brand with hundreds of stores through the world. In order to Develop enactment; it needs to evaluate its external and competitive atmosphere. This will expose the main prospects it can proceeds improvement of and the threats it essential compact with. IKEA Counters to both internal and external matters in a positive and vigorous way by exhausting its strengths and decreasing its weaknesses. Over this, IKEA is talented to make the solid growth it requirements to maintain a tough character in the market.

We can also say that the world's major home-furnishing retailer IKEA has been growing sales all over the place in the world by domestic efficient development. IKEA key to invite sales as the fraction of countries middle class grows. In the forthcoming days the extent of Ikea's furniture market will be as big as the entire Europe's.





  5. Marketing and operation management - by

    1. Slack

    2. Chambers

    3. Harland

    4. Harrison

    5. Johnston

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