Ikea Invades America

IKEA invades AMERICA                                            

Landscape:

The IKEA Concept starts with the idea of providing a range of home furnishing products that are affordable to the many people, not just the few. It is achieved by combining function, quality, design and value – always with sustainability in mind

Strength:

IKEA has a strong global brand in Europe that attracts key consumer groups and now is expanding its footprint in America. It promises the same quality and range worldwide. It had a great vision – ‘to create a better everyday life for many people’ and a strong concept – based on offering a wide range of well designed, functional products at low prices. IKEA’s ‘Cost Consciousness’ means that low prices are taken into account when each product is designed from the outset.

Weakness:

The size and scale of its global business can make it hard to control standards and quality. The need for low cost products and great design needs to be balanced against producing good quality. IKEA needs to differentiate itself and its products from competitors. They need to keep good communication with its consumers and other stakeholders about its environmental activities.

Opportunities:

There is a growing demand for low priced great looking products. The competition either caters to the high end of the market or the low end but there was no one catering to the mid segment category.

Threat:

A slowdown in first time buyers entering the housing market will affect IKEA’s sales. This is a core market segment for IKEA products. The competitors might enter the low price household and furnishings markets. IKEA needs to reinforce its unique qualities to compete with the economic factors and reinvent itself as a brand. 

1. “Who” (Segmentation)

The target market of IKEA is to offer wide range of home furnishings with great aesthetic look to as many people as possible who can afford them and still have money left. The different type of consumers making up this market are:

1. Young consumers who are just starting out in life, have a low budget and the concept to save the world because they are concerned about the future and environment.
2. The students looking for those products that can provide convenience to their existing lifestyle. They want something that can solve their daily needs without much hassles.
3. The older customers wants something that is light and not too bulky because the older customers tend to be downsizing.

1. “What”

IKEA studied consumer trends to identify the products that the market will like. It would then survey the competition to establish a benchmark and then set its own price 30 to 50% lower than its rivals. IKEA used a product/price matrix to identify opportunities that their competitors did not offer. The company sets the retail price and then looks for suppliers that can offer them the lowest price without sacrificing on quality. Once a price point was established, a manufacturer was in place, and the materials decided upon, the actual design process would begin.

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