Ikea case

The scope of business of the company. The efficiency of the global brand. Competitors of the company and compare them. The defenses of the brand in target markets. SWOT analysis of the company (strengths and weaknesses, opportunities and threats).

Рубрика Маркетинг, реклама и торговля
Вид доклад
Язык английский
Дата добавления 09.05.2015
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IKEA CASE

Keselman Sergey

In order to assess success of the company like Ikea it is necessary to have a look into the whole scale of business which company like Ikea performs. Ikea is a very successful global brand, not because it has 226 stores in Europe, Asia, Australia and the United States with 410 million shoppers a year, not because other global brand like Wal-mart stumbled in Brazil, Germany and Japan but for Ikea's unique cultural branding that merges the value and fashionable design to ensure the creation of an affordable contemporary household goods (not just the furniture with 5-10% sales in each country with Ikea stores) for the middle-class. This uniqueness of its corporate DNA is the main reason why the Ikea is so successful globally. The frugality of the founder of the Ikea with his desire to create “better life for many”, these initials statements are included into Ikea's corporate rules. The frugality combining with the obsession with design forming a unique brand that became a global cult brand. brand competitor target threat

As a global brand Ikea stands for

1) Unique household products with contemporary design, affordable prices that will inspire consumers

2) A gathering place the global tribes that are sensible in cost, design, and green environment.

3) Egalitarianism. The Ikea as a corporation is very flat, the executives performs first-line employees' job in an “Anti-bureaucracy Week”

4) High Competitive. Constantly dropping the price (2-3% annually) to provide the best values for customers (consumers).

Without the design part, the Ikea's brand will be just like that of Wal-Mart in US. With the strength of Wal-Mart, Ikea's won't be able to compete with Wal-Mart for the economies of scales since there won't be any differential products between Ikea and Wal- Mart. The only difference between these two companies is the design (contemporary design) part of the brand. Ikea holds the position to be the affordable contemporary designer for the household goods with the affordable price. With this differential branding position, Ikea does practice the economies of scale with a network of 1300 suppliers in 53 countries, as it just like Wal-Mart, worked hard to find the right manufacturer for the right product. Ikea started the business as a furniture store, but the sale of the furniture only constituted 5 to 10% of the sales in each country with Ikea stores opened. For most customers, Ikea stands not only for the contemporary design and affordable furniture but also the complete household goods from picture frame to candlesticks.

We need to say some words about defensibility of Ikea's brand equity in its tarkget markets. Here we have a precise answer: to grow the market, Ikea's main targets are US, Russia and China markets. We can conduct a SWOT analysis for Ikea for its targeting market competitiveness.

Strengths:

Contemporary Design household market.

Identifiable concept with clear strategy of cost leadership

Target consumers- middle class consumers.

Recognizable store structure - a huge range of home furnishings within the same area.

Ikea is privately held, thus the pressure from the financial market for quarterly growth and profit.

Weakness:

Limited manufacturing capabilities, the current model can only grow 20 stores in a year

Quality concerns in some regions

Cultural differences in the some diversified markets as in the US, China, and Japan

Opportunities:

The fast growing Asian countries with an affluent middle class represent opportunities for Ikea to penetrate and sell its concept of affordable contemporary design of uplifting lifestyle.

Focus on differentiated products for the Asian markets

Threats: economic situation in Russia and political relations may have a bad influence on Ikea business performance in this country.

Competitors: no big competitors on Russian market for IKEA .

From this SWOT analysis, that we identify the strengths and weaknesses of Ikea that its business model is difficult to copy. The entry barrier is high for the competitors. Generally in Russia we have a stable situation, if do not take into consideration economic position. So we can say that Ikea is going to have success on Russia market due to further expansion. According to some sources, they are willing to construct a new store in city center.

As any manager who wants to expand and develop the market it is strongly recommended to assess the risks

The risks of the Ikea brand could realized from the deviation from its core value as the founder had established and the values that associated with the contemporary design could not be maintained. As a brand manager, I would recommend to measure the weakness/strengths of the brand to enforce that Ikea is a strong brand and has a range of products that appeal to the mass market. The brand of the future would need to be modified to adapt into different culture and regions as in the Asian, Australian and Middle East markets where only 6% of its sales were generated from this region.

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