IKEA InternationalMcKensie Attaway, Alie Canady & Baba Gana

Table of ContentsHistory of IKEAIntroductionWhat Sets IKEA Apart?Expansion of IKEADistribution of IKEA StoresIKEA in EuropeIKEA in the U.S.IKEA in China IKEA in IndiaTake-Away Lessons for BusinessReferences

History of IKEAFounded by 17 year old, Ingvar KampradIKEA name:

His name: Ingvar KampradName of his farm: ElmtarydCounty he lived in: Agunnaryd

Began as a one-man effortSelling fish, vegetables and magazines1952: Issued first mail order catalogue, whichincluded furniture

IKEA Opened it's First Retail Store inÄlmhult, Sweden 1958

IntroductionInternational home productsretailerPrivately heldPioneered flat-pack designfurnitureWorld's largest furnitureretailer 2nd largest in United States"Brandz Top 100 MostValuable Global Brands in2014"

IKEACONCEPT

Vision:

"To create a better everyday life for the many people"

Mission:

"To offer a wide range of well designed, functional homefurnishing products at prices so low that as many peopleas possible will be able to afford them"

1. Solving the worst part of buyingfurniture2. Unique products3. Hitting the right demographic4. Not expensive, but not too cheap5. Stores are a destination

What Sets IKEA Apart:

1) Solving the Worst Part of BuyingFurniture

Purchases would last 20years or longerRelieve stress of big-ticketpurchaseIntended to be usedimmediatelyDisposed of when wore outor taste changeEasy totransport/assemble

2) Unique ProductsAttention to detail Scandinavian designExtremely unique Swedishproduct names:

DUKTIG (good, well-behaved):line of children's toys BILLY (masculine Swedishname): a shelfKASSETT (cassette): mediastorage

3) Hitting the Right DemographicAppeal to Generation Y and Millennialsbecause of honesty and transparency Clean, simple aestheticsWhimsical names

4) Not Expensive, but not too CheapGood value Cheaper than competitors (West Elm)

5) Stores are a DestinationE-commerce becomes more popular;more incentives needed Atmosphere (cafeteria & child-care)Maze-layoutNo sales associatesStandalone store

Typical IKEA Store Layout

Distribution of IKEA Stores

Current Locations Future Locations

No Current or Planned Locations

Map of IKEA Stores Around the World 2014

IKEA in Sweden

Focus on Product Range andDevelopment Smaller assortment ofproducts (6,000 - 7,000) Outrageous advertisingcampaigns Emphasis on IKEA catalogueSwedish lifestyle is reflectedin IKEA product rangeStores located outside of citycenters

IKEA in the USA

Entered U.S.market in 1985Low sales for adecadeNo new storesbetween 1993 - 1999

U.S. Implementation Strategy1) Focus on IKEA's strongest products2) Aggressively keep prices low 3) Economies of Scale

1) Focus on IKEA's Strongest Products

Bedroom and Kitchensets: "engine of salesgrowth"Modifications:

Produced to metricmeasure

Sofas too shallowCurtains too shortCabinetry too smallThanksgiving

2) Aggressively Keep Prices LowRadically reduce employee turnoverCreate stable work environment In-store operations streamlined

3) Economies of ScaleMaintain competitive positioning Source locally for stable profitdevelopmentOpen a large number of stores fornational marketing

IKEA in China

Joint venture formed in 1998Local needs and adapt it's strategies12 years to become profitable

Difficulties in the Chinese Market

Pricing

IKEA prices low in Europe & USA; higher thanaverage in China

Built factories toincrease localsourcing ofmaterials Able to cut pricesby 60%

PROBLEM:

ADAPTATION:

Difficulties in the Chinese Market

Target MarketPROBLEM:

Western products are seen as aspirational

ADAPTATION: Targeting young middle-class populationFemales make up 65% of customersHigher incomesBetter educated More aware of western styles

Difficulties in Chinese Market

Marketing StrategyPROBLEM:

Catalogue distribution Competitors imitating products

ADAPTATION:Social media &microblogging totarget youthSmaller brochures

Difficulties in Chinese Market

Store LocationPROBLEM:

Usual positioned in rural suburbs

ADAPTATION:Outskirts of citiesClose to rail and metro tracks

IKEA's Eco-friendliness

Difficulties in Chinese Market

PROBLEM:Price sensitiveSuppliers do not have necessarytechnologies

ADAPTATION:Focus on lowering costs

INDIAIKEA IN

IKEA has been present inIndia for 28 yearsFirst major single brandretailer given approval to setup retail operations in IndiaResponsible for 20% of all rugexports Forbidden by Indiangovernment to sell productsonlineNo set date for first retailstore to open (2017?)

IKEA IN INDIA(4 CUSTOMER NEEDS)

1) High value for low prices 2) Exclusive products3) Westerndesign inspiration andideas4) Ease of shopping