Analysis Of Ikea Through The Seven P’s Of Marketing
Ikea is a Swedish company which sells furniture at an affordable price. The founder of Ikea is Ingvar Kamprad, who was born in the south of Sweden in 1926. As a young boy, he always wanted to be a businessman. From a small age, he was selling matches he bought in bulk and selling them individually for a very low price. In the 1940s to the 1950s is when Ingvar was 17, he developed IKEA. IKEA is named after himself and his farm and village. IK comes from his initials Ingvar Kamprad. E is from the name of his farm (Elmtaryd) and A, (Agunnaryd) is from the village he grew up in. IKEA sold picture frames, pens, wallets and jewellery. In 1948 furniture was introduced. Shortly after the furniture was introduced the first IKEA catalogue was published. 1953 was the first showroom for IKEA, this was so important for IKEA because consumers can touch and see the product before they buy it. The first store was opened in 1958 in Sweden. The restaurant was brought in, in 1960. A few years later IKEA arrives in Norway, Oslo and Denmark, Copenhagen. In the 1970s business was going so well from creating the SKOPA chair and using denim material, as it is cheaper than others they began to expand outside Europe and set up a store in Australia, Sydney and Canada, Vancouver. Between the 1960s-1970s some of the classic IKEA furniture was created, for example, ÖGLA chair, MTP bookcase, SKOPA chair, POEM armchair and the BILLY bookcase. In the 1980s IKEA opens up five new stores in five different countries. IKEA FAMILY was then created. This is a loyalty program for people like to decorate their home and love IKEA. If you become a member you can get discounts on selected products with information and some inspiration. IKEA now had 10,000 employees working in sixty stores. A new president and CEO were elected as Ingvar Kamprad retired in 1986. 1990 IKEA opened up in 5 new countries one of them being China one of the largest countries in the world. They placed an environmental policy in the early 1990s and launched the IKEA website. IKEA became a member of the global forest certification organization. Another range was created, children’s IKEA. A new president and CEO for the company was appointed in the late 1990s. In the 2000s IKEA has involved themselves in projects and has educated themselves in the environment. A code of conduct was launched called The IKEA Way. This lets suppliers know what they can expect from IKEA. IKEA took part in a Child rights project in India. One of the biggest advantages for consumers that IKEA brought in was for people able to shop IKEA products online. There are now 100,000 employees. IKEA food was launched in 2006. IKEA is still growing to this day. Within the seven p’s I will be talking about a product, price, place, promotion, people, physical evidence and process. Product IKEA offers over 9000 products. Each year the company will renew its product range. The IKEA range is inspired by the idea of democratic design. Within the democratic design, there are five dimensions in which they like to incorporate to their products form, quality, function, sustainability and low price. IKEA designs so many products because they want to have a huge range to cater to everyone’s needs and desires. This is how IKEA beats their competitors, by having an extremely large range with affordable prices. The products that IKEA supply are outdoor furniture, desks, mirrors, chairs and much more.
Price
IKEA’s price is so attractive to all the consumers. IKEA’s products are extremely affordable. They use a cost leadership pricing strategy. IKEA makes low-cost furniture for homes and offices. IKEA focusses on cost-efficient operational details which allows IKEA to lower its prices. (“IKEA marketing Mix (4Ps) strategy”. Having lower prices helps to makes consumers want to buy from IKEA. IKEA uses this low priced strategy along with the wide range they have to cater to everyone. They cater to products for all ages.
Promotion
As IKEA is one of the biggest furniture brands in the world it is very well known for their affordable furniture. To promote their brand they use TV advertising, newspaper and magazine advertising. IKEA has also a very recognizable colour to their brand which is yellow and blue. Their logo is also very significant which helps support their brand making people aware of their brand. IKEA also offers discounts, coupons and promotions. IKEA also has sales mostly during festive seasons. IKEA also offers IKEA FAMILY which I have already mentioned. These members get monthly offers on certain products.
Place
IKEA has now opened many stores around the world, and it will keep expanding. IKEA has more than 250 stores located around the world. In 2008 these stores welcomed 565 million visitors and 450 million people visited IKEA online. IKEA reached 21. 2 billion euros in sales in 2008.
People
IKEA’s customers and employees are the most important things for the company. Employees at IKEA believe that they are ‘straightforward people with a passion for home furnishing. ’ The employee culture within the business is described as fun, togetherness and enthusiasm. IKEA likes to have a strong relationship with customers and customer satisfaction. Mikael Ohlsson in 2011 said in their annual report the business will be making energy-saving alternatives. For example, they’re making their kitchen range will now be eco-friendly which will have water saving taps. This will be more appealing to the consumer as people like to be more eco- friendly. Ohlsson wanted sustainability to be more clear to customers and employees.
Physical Evidence
All of IKEA’s stores are the exact same layout and are very big in size. They are never in the city centre or the middle of town they are normally located just out of town. These stores have restaurants, big car parking. There’s a route within the store which you follow once you enter the store. In every store, there are arrows along the floor in which you follow to guide you along the large store. In most of the IKEA stores have space where returned, damaged products are sold with a discount.
Process
IKEA has 44 production units across ten countries. IKEA owns its own wood because it owns sawmills. This makes it far cheaper to produce products and can be sold at a cheaper price. IKEA follows a clean environment slogan. IKEA has a very uncommon supply chain and stock management techniques. IKEA buys products from 1800 suppliers. IKEA’s aim is to use only the amount of material they need, the try not to waste any materials. Many retailers wood reject this wood due to the knots, but IKEA uses it to their advantages. The servicescape is the physical environment where the service is taking place. In IKEA as soon as you entered through the doors the experience starts. This helps evaluate the consumers experiencing within the shop. The servicescape includes the layout of the store, what the employees wear, the web page and what the building looks like from the outside. Once you drive by IKEA it is this massive blue building with the yellow writing spelling out IKEA. Once you drive in the car parking is huge and very spacious for consumers to wheel their trollies to the car easily. Everything in IKEA is labelled and found easily. Once you reach the top of the escalator your journey begins. You can see clearly what you are meant to do once you get your pencil and paper to fill in the details of your product. Arrows are placed on the ground to direct people on which way they should move around the store. This makes it easy for new customers who have not been to the shop before. The aisle is very big to let people pass by each other easily. The location of the items in the showroom is placed perfectly. There is room within each item to inspect each product. You have to follow the maze to see everything in the store. As every store is the same this makes it easy on the consumers. All employees are wearing a blue and yellow uniform. The lighting within the store is very bright so customers can see each product easily. As you get down to the warehouse it is very easy to find the item you want. The warehouse is extremely big and signs are directing you everywhere. IKEA uses demographic, psychographic and geographic segmentation as their marketing strategy for their products. The demographic segmentation is divided into categories of age, life cycle stage, gender, income, religion, race and nationality. The psychographic segmentation look at the aspects of consumer buying behaviour. It is divided into the lifestyle, activities interests and opinions, values attitudes and lifestyle, social class and personality. The geographic segmentation is the last segmentation. This is very important for a company to have. Other companies like Vodafone and Nike have different marketing strategies for each different country. This segmentation is very important for marketing because some slogans in a different language can be offensive in another language. This happened to a fast food restaurant known all around KFC. When it opened in KFC in China in Beijing they translated the slogan “Finger-Lickin good” to “Eat your fingers off. ”
Conclusion
Personally, I think IKEA is incredible. As I walk into IKEA I always know I have to be prepared. Before I even enter I always know what I am going to get and that is key. You need to know the exact measurements because there would be nothing worse building up the item and it not being able to fit in the space you want it and I know this from experience. As I got up to the top of the escalator you know exactly what you need to get first. Grab the first pencil and paper you see and grab a bag. Once you have your equipment this is when the race begins. No matter how much you can love IKEA no one can actually stay in there for that long. As you follow the arrows around the maze you are constantly looking out for the products you want. I find it so easy to select the products I want all the time. Walking down to the warehouse is nearly the reliving part of the whole experience. The products are numbered so clearly and all easy to find. I think they make the in-store experience so easy because building the products and be a challenge.
