IKEA Furniture Case Study
...he shopkeeper. As it can be observed, they are not loyal to a specific brand and they usually belong to the lower or medium class. 6th segment: “Low value seekers” Lower income people usually look for low price furniture combined with functionality and the best possible design. They perceive furniture as a necessity and they purchase products in a habitual form. Furthermore, they are constantly looking for discount offers without paying too much attention to detail. “Low value seekers” do not care for the purchasing environment, as long as they find the price they want. “120 Enomena Ergostasia” is an example of a Greek small manufacturing industry for the particular segment. 7th segment: “Creative minds” Lower and medium income people that want to spend a considerable amount of time and less money for the decoration of their places belong to this group. They require functional solutions and simple designs incorporating ready-made products or construction of their own ideas. They do not follow fashion trends and get informed from specialized leaflets. The main target group of Practiker is this segment. IKEA is the world’s largest furniture retail for a very obvious and logical reason: It addresses to the many. Its target market group consists mainly of the 5th, 6rth and 7th segments and at the same time, it attracts people also from the 1st, 2nd and 4th segments in order to satisfy specific needs. The basic concept of IKEA is to create a better life for the many that can be accomplished with low cost products, which are well designed, fashioned and functional. Based on the demographic variables, its customers have the following characteristics: Young – middle aged persons from 20 – 45 but at the same time older people that feel young. Generation Y’s and generation X’s are the most likely category of potential customers. The life cycle of the potential customer is directly related to their income, so usually young single or married that do not want to spend a lot of money in furniture at that particular time of their lives and people from generally low – medium size income at all ages. The lower upper class also visits the store and buys usually complementary products or commodities for their country houses. As far as the lifestyle its consumers is concerned, there are two main groups: strivers and makers that have low resources and experiencers that have high resources. IKEA attracts also people that are time-constrained, since they can find a great variety of products in a single store. Moreover, it addresses to people that want to keep up with trends, imitating purchasing habits of upper class due to the sophisticated design of IKEA’s products. IKEA uses particular slogans such as “Make a fresh start” for attracting people who have been divorced, remarrying couples, single parents, gay people and generally tries to be optimistic. Hence, it takes advantage of the today’s life occasions. Low price combined with innovative design and functionality is the main principle of IKEA promoting campaign. Question 2: How is IKEA positioning themselves with respect to competitors in Greece? How you would describe IKEA’s brand personality? IKEA has succeeded in identifying the different needs and groups in the furniture marketplace. In this context, its target market recognizes the company’s distinctive offering and image. IKEA is positioned as a company offering “good quality furniture at a low price” (best value for money). It mainly promotes the benefit of “affordable solutions for a better living” worldwide. In order to distinguish its position from the competitors, IKEA has added a set of meaningful and valued differences in distinct areas of the market: a. Product As far as the product is concerned, IKEA has established a wide variety of product lines, covering furniture products (kitchen, bathroom, bedroom, etc.), as well as complementary products (kitchenware, duvet, carpets, folders etc). Furthermore, it provides a vast majority of designs and styles (country, minimal, etc.) b. Services The key services, which give IKEA a competitive advantage include: • Child care services; • Restaurant and Café; • Membership programs with special discounts; • Wide distribution of catalogues containing all the available products, prices and dimensions; • Large parking areas; • Customer training through active participation in the buying process; • Quick and direct purchasing; compact packaging; • Utilizing the Internet for information search and online purchases; • Innovative showrooms that allow consumers to actually test furniture products. c. Personnel IKEA’s personnel are well trained, cheerful, helpful and they allow “visitors” (not customers) to enjoy a “shopping experience” (not a sales pitch). d. Channel IKEA has a premium, well-organized and worldwide distribution channel encompassing the design (numerous designers), the manufacturing (many product lines, mass production), as well as the delivering (to its own stores) processes. As far as the delivering of the purchased products is concerned, IKEA is responsible for delivering only large volume furniture quickly and free of any charge. e. Image The key brand image factors which differentiate IKEA from its competitors are the following: • Yellow and blue colour identifiers; • Smart slogans with “Affordable solution for a better living” being the most important one and directly related to IKEA’s offered benefits; • IKEA store is well laid out with distinct interior design, layout and colours. • Provision of complete room decoration in special areas inside the store, thus avoiding the need of an extra payment for decorators. In that sense, IKEA isolates its competitors since it operates in a complete different way. IKEA has managed to build brand awareness after establishing its clear brand position: “Providing wide furniture products with an exceptional value for money”. To this end, it has invested heavily on very large outlets at urban areas, providing consumers a unique “shopping experience”. If we consider IKEA brand as a person that would look like a 35 years old woman with clear-cut ideas which are improving continuously by carefully observing her environment. She is flexible, helpful, optimistic, modern and adaptable to trends with a strong personality. Finally, she enjoys traveling around the world in order to open new horizons and she knows how to spend her money. Question 3: How does IKEA address elements of The Consumer Decision Making process? (provide 3 separate examples for different stages) One of the most important factors that affect a good marketing plan and boost sales is the deep understanding of the consumer decision-making process. IKEA has acquired a great understanding of this process and it had effectively interfered in many ways to all five stages. The first step of this process is that the consumer recognizes her/his need. Furniture is usually bought whenever it is required and since it comprises of long-lasting products, people purchase them once and they substitute them after a long period of time. In this sense, marketers cannot do a lot. IKEA has found ways not only to satisfy the recognized needs of its potential customers (active) but at the same time, it tries to create new needs (proactive). Based on the low prices of its products, it stimulates buyers to change their lives starting by changing frequently their furniture. “Everything is changed” and “Make a fresh start” are two examples of their advertising campaign. Additionally, IKEA provides...