IKEA INVADES AMERICA INTRODUCTION IKEA is an international company which designs house products and sells them in the form of ready to assemble furniture. It is one of the world’s largest furniture companies. It is founded by17 years old Ingvar Kamprad in Sweden in 1943. The most important fact about the company is the attention to control the cost of the products, which allows them to lower the prices. Even today they are continuing to expand in the world by looking forward to new product developments.
The number of stores of IKEA in the United States is 14 at the moment and they aim to have 50 stores by 2013.
SWOT ANALYSIS OF THE COMPANY Strengths: The way IKEA packages the products makes the cost lower and provides easier transportation for the customers. Design of the products matches the cultural expectations of the customers in Europe. Cares brand equity and it is well known in America, and people are looking forward for the new stores.
Weaknesses: Due to cultural differences the sales of the company are affected. Different cultures have different tastes in furniture which can be seen in the difference between American and Sweden cultures. Materials used to reduce the cost of the products cause durability problems.
Product variety is limited. Opportunities: The price range of the products is convenient for the people who have lower budgets. The food service provided by the store attracts people. Product design can be overviewed according to changing nations. Threats: There are many furniture companies, which causes competition among them.
STATEMENT OF THE PROBLEMS The problems faced by IKEA can be examined in three parts; problems affecting consumer, market and cultural problems occur due to different tastes. The way IKEA provides service to consumers has both negative and positive effects on the buyers.
Positive effecting factors are; whether the product affords the desires of the consumer or not, whether the product fits the location it will be used or not and the price range of the products. Negative effecting factors are; the short lifetime of the products, buying goods that are not needed by seeing them in the showrooms, the design of the showrooms force consumers to walk through each section in the market, which can cause them to buy unnecessary stuff. The fact that the products sold are not assembled has both positive and negative effects on consumers.
The strategies market determines have both positive and negative effects. Positive effects are, the way products are packaged enables the market to store more goods at the same time, the effect of showrooms on the consumer, the rules which enables the consumer to test and experience the products, the equipment such as tape measures provided by the market allows customers to check the size of the products, the food service and the playing areas for the children. The negative affecting factors are the usage of low quality materials inside the products to lower the cost causes short lifetime production.
The matrix method and the market strategy affect the market both positively and negatively. Due to culturally different tastes, some negative effects are observed on the market. For example, since the comfort understanding of cultures varies, their expectations from products also change. SITUATION OF ANALYSIS The problems which are stated in the statement of the problems section will be analyzed. The situation of the consumers, market and the cultural differences which affects tastes will be examined. There are positive and negative effects of IKEA’s service strategy on customers.
If there are some problems on the product IKEA guarantees changing the goods. For example, IKEA has received twelve reports worldwide of RUND glass mugs that have broken in use. Five of the reports stated that injury had occurred. On receiving reports with glass breakage IKEA began an investigation which revealed variations in glass thickness. As a precautionary measure IKEA has therefore decided to recall RUND glass mugs on all markets. IKEA does not compromise on product safety and recommend all customers concerned to return the RUND glass mug. IKEA kindly asks customers ho have a RUND glass mug to immediately stop using the glass mug and bring it back to any IKEA store for a full refund. Secondly, customers should choose the products according their needs without taking help from an IKEA sales person. It could be seem as a negative effect, but IKEA has a solution to solve this problem. They provide pencils, paper, tape measures, store guides, catalogs, shopping cards and bags and strollers which help customers for choosing the products easily and those are available at the store entries. Also the showrooms that are set up by IKEA in the store help buyers to decide easily.
The cost of the IKEA products is low due to the standard market prices. Prices of the products attract customers. However, the quality is low because of the low prices. For instance, appearance of the product seems good to the buyer and the outside material of the product is qualified while low quality materials are used inside the product. The other reason of low prices is products are not assembled and there is no transportation cost for the market. Thirdly, there are both negative and positive affects that IKEA uses disassembled goods.
Other companies send the product to your place after a while, but you can take the product to your place right after you buy it in IKEA stores. However, some customers especially in the US do not prefer assembling the furniture they buy. They rather choose to get the product ready. In addition, not all of the people can assemble the furniture appropriately even there are instructions in the package. There are some positive and negative effects of IKEA’s marketing strategy. Product range is enough to compete with the other markets.
The product strategy of IKEA is matrix method. According to this method, a product can be found with different price ranges, materials and designs. IKEA has different matrixes for each product which are provided to the customers for them choosing the most appropriate ones for themselves. It is more advantageous for the customers and a good method to attract them to the products. However, this matrix method is limited and is not appropriate for the Americans because they desire more choices. The other stores like Wal-Mart in the US have more subcategories for the each product.
The other advantage that IKEA has, their storage has more capacity than the others and it can be seen by the buyers in the store. Customers do not lose time for waiting the package of the product, they can go and take it themselves immediately. IKEA has a comfortable shopping environment. IKEA has food courts and play areas in the store. People can eat during their shopping; also they can take their children to the playing areas while they are shopping. In addition, some people go IKEA just for the Sweden meatballs which show IKEA does not sell only furniture. Varieties between the cultures make the desires of the customers different.
Sweden and American cultures are different from each other. For example, American people desire some designs which provide comfort. They like big and soft sofas in their living rooms and big cooking materials in their kitchens. However, IKEA uses Sweden designs. Culturally, Swedish people chose hard sofas and small portions for their kitchens. This occurred as a problem when IKEA started to invade in the USA because of the American’s demands. Beside the comfort issue, IKEA’s self service and assemble process is not very appropriate for the US because Americans desire service to the home.
As stated above, IKEA have limited designs while Americans want to see variety at their homes. One other approach of IKEA which doesn’t suit for the US is that its products are not very durable. However, Americans want to use the product they bought for a lifetime. Moreover, IKEA doesn’t provide internal design for their customers. The buyers should choose their own products and design according to their homes by looking at the showrooms. On the other hand, Americans give importance to the interior design and want a designer to design their homes.
In the USA, big furniture brands such as Wal-Mart has highly qualified sales people. Those people have enormous knowledge about the product, its materials and design. They take care of every customer individually and help them to choose the products. As IKEA is a self-serviced company, Americans don’t accommodate. EVALUATION OF ALTERNATIVES IKEA is not in the leading position in the US, but they want to open 50 more stores by 2013. However, there are some problems which are discussed in the previous sections. In this section, some alternative solutions will be provided.
First of all, IKEA should find solutions for the customer services. To reach this aim, they should include more services such as interior design, delivery system and more qualified sales people. The sales person should be more educated, knowledgeable; they should communicate with customers and have a relationship with them. The advantage of the customer services is that IKEA can meet the demands of their customers more easily and creates a stronger relationship with them. On the other hand, IKEA should hire new employees for this situation, but it will increase the cost of IKEA and this is a disadvantage for them.
Secondly, IKEA has a Scandinavian approach and has straightforward rules not to change that approach that’s why it should focus not on the design but marketing strategy. IKEA has a strong image with its Scandinavian design according to their customers, so if they change their image and design, this will weaken their brand equity. For the good strategy, IKEA stores should be placed correctly mostly in metropolitan areas. Since IKEA aims to reach all the people with different budgets especially the ones with low budgets, it must be placed where smaller apartments occur and students live.
The advantage of the placement is that IKEA has their most of customers from those areas. Disadvantage of it is that it will prevent its widening to the other areas especially to the cities in which most Americans live. They should create advertisements especially internet advertisements to attract people. Besides the advertisements, they can create some campaigns which don’t show them just a furniture company, but a style creator. Big companies create their own styles such as Apple and they grow with this image. IKEA as a style creator can grow up with its own image.
On the other hand, to catch this image they should spend money to create advertisements. RECOMMENDATIONS There are some alternative solutions above. IKEA should implement the first option which is customer service. For example; delivery to the home can be a good solution for the big size products like closets, because it is hard to carry them right to the home with the car that customers own generally and if they try to hire a delivery car, it will be more expensive and generally customers choose IKEA because of cheap prices.
That’s why IKEA should have its own delivery system which consists of trucks, delivery people. American people like special treatment like, IKEA should hire qualified sales person who can help customers and answer their questions. There should be their own designers who can also help the buyers. These designers can go to the customer’s houses according to their demands and design the place that they want.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
