1.4 Vision and Mission
Ikea sets its vision to create a better everyday life for many people, in order to achieve their goals, they have decided to produce well-designed, functional household products and price them at a low cost so that as many as possible can afford to buy it.
2.0 Current State Analyse
2.1 Growth Pattern
As a strategic tool for IKEA to growth sustenance, it used a steady reduction of the product prices. This style made IKEA growth enviable. Before taking any new project IKEA seeks full knowledge of production costs. Low production costs made it possible for IKEAs low product prices and high product quality. By the researchs the company identified and eliminated all the unnecessary elements that added the production costs.
IKEA set up an four way plan in order to make the price reduction strategy sustainable.
keeping its custom-built properties and develop new retail stores
Adopt a economical spending towards its operation activities. Increasing the production volume to ensure reduction in production cost and raw materials cots
Develop a more effective supply chain protocol
Employees taking responsibilities decisions for better and faster resolution of the customer issues. Because of the established economical culture in the company, the employees had no difficulty adapting to the growth strategy.
2.2 Generic and Development Strategies
IKEA follows a generic strategy where a mix of cost leadership and differentiation.
The fact that they maintain low prices on products while delivering good quality is especially attractive for the millennial generation. IKEA has differentiated its business on some points. These differentiation points are important because they give a unique identity to IKEA and that has made it an excellent brand.
IKEA focuses on meeting the needs of the middle class, which is a major customer base globally. The middle class usually wants to have good products at average or low prices, which IKEA has been able to solve well. Being able to buy modern quality products at a very low price has become a favorite for middle class consumers.
Product quality and affordable prices are a source of sustainable competitive advantage for the brand. There are other factors that distinguish it from the other brands and give the unique brand identity. IKEA is also known for its customer service, the stores are designed as a labyrinth to create a unique and smooth shopping experience, which contributes to the brand’s overall appeal. Market strategy is also differentiated from competing brands. They use product catalogs that are available online and offline. These factors have made it possible to generate and enjoy a source of sustainable competitive advantage.
2.2.1 Product Development
One of IKEA strategy is to involves bringing new products or services to the market. IKEA has an well known product and design innovation. By the time IKEA has grown its product range a lot, they sell today more than 9500 products. IKEA has found faster growth by product development strategy.
IKEA offers wide range products according to consumers needs. The products are available for all different sections of the society. IKEA has adapted their products according to each different market. IKEA diversify the product line and product depth. IKEA is a low priced furniture store, they provides reassembled and casual furniture. The most of the products in the store are stylish which makes the company unique.
Instead of selling assembled furniture, Ikea sells its furniture unassembled to allow the customer to mount it, which in turn creates a family feeling, to make it possible to mount their own furniture. IKEA reduces transport costs in this step. A fitted wardrobe takes more space in transportation for both the customer and IKEA, so IKEA ensures that there is less energy consumption and contributes to a better environment. IKEA designs its own furniture showing proffs about the power of the company.
2.2.2 Market development
IKEA faced difficulties when they expanded abroad. IKEA overcome these difficulties by experimenting and innovating by that they was able to grow their popularity in overseas markets. Theis overseas expansion expansion has brought great new opportunities and extra sales for IKEA. There are today 300 stores in 36 countries. IKEA expanded their customer base globally not only by understanding local peoples needs but by taste and catering to them (Caplan, 2006).
2.2.3 Marketing Strategy
IKEA target families, students and singels with lower income. The marketing strategy is based on deep customer research and market research. In order to gain more information and knowledge IKEA do send degin experts into peoples house to listen to their concerns and provide them with feedback. This step allows IKEA to make marketing decisions based on peoples real life experiences instead of using surveys or data collections (IKEA, 2012)
IKEA most unique and successful tool to promote its brand are the promotional catalogs. The catalogs are most used and most effective among its communications channels. The catalogs are printed in several languages and based on the market. IKEA catalog is available both in print and online. The IKEA catalogue has a huge wide range of products available to the consumers. The catalogue circulation has increased from 131,500,00 to 198,000,000 in 2010 (IKEA. 2011)
Ikea focuses especially on products and price elements of the marketing mix. IKEA attempts to offer the most of its products to the lowest cost. There are other marketing mix then just the price