Article: IKEA HITS HOME IN CHINA

Presented by Group 1 - EMBA9B

1. Nguyen Thi Bich Ngoc 2. Nguyen Thi Ngoc Oanh 3. Nguyen Minh Ha

IKEA logo the colors of the Swedish flag

Do you think families with low income can afford such a comfortable kitchen like this?

The answer is very simple with IKEA. YES!

IKEAs OVERVIEW
VISION: VISION: To create a better everyday life for the many people.  BUSINESS IDEA: To offer a wide range of well-designed, IDEA: wellfunctional home furnishing products with good quality and durability at prices so low that as many people as possible will be able to afford them.  PHILOSOPHY: More from Less.  PRODUCTS: All IKEA home furnishing products must be PRODUCTS: safe from both a health & environment perspective.  SUSTAINABILITY is an IKEA priority. IKEA has made all the improvements for people & the environment.


 IKEA has strong core values enabling it to maintain sustainable development in the context of global competition: provide eyecatching designs; friendly products to the environment with surprisingly low prices and unique promotion campaigns IKEAs strategy is to continue its expansion into the world market, to dramatically control big market-shares of potential & promising markets like East Europe and East Asia It took IKEA long time to opt the right strategies for them.

IKEA Marketing Strategies in China



IKEA integrates its global marketing strategies with culturally-based marketing activities. Marketing strategy: a customer-centered marketing

THE 4 Ps MARKETING MIX OF IKEA



IKEA implements 4Ps model: It is the set of controllable tactical marketing tools product, price, place, and promotion It focus on Price (Low price)

1-PRICE
IKEA SLASHES PRICES IN CHINA TO THE LOWEST IN THE WORLD IKEA will reduce prices each year by improving productivity in stores, increasing its China manufacturing facilities

PRICE (cont.)


By increasing China-made products, prices on some items as low as 70% below prices in outlets outside China

LOW PRICE STRATEGY



In reducing prices each year; Ikea improve productivity in year; stores; stores; increasing its China manufacturing facilities and sticking to wholly owned stores (half of the products in Ikeas Chinese stores are made in China, compared with 23% in Ikea 23% stores overall). This enabled the company to halve prices in overall). China over the past 4 years, even as Chinese consumer incomes have increase. increase. IKEA treats pricing as a key strategic tool for creating and capturing customer value. The companys pricing policy is value. cost oriented as well as customer-value oriented customer-

2-PRODUCTS


Ikea whose name in Chinese means comfortable home is anything but comfortable on weekends. Designs models with different features. Variety: almost everything you need in their homes and apartments. Most of IKEA products are DO IT YOURSELF; whose parts of the product were uninstalled and placed in small carton boxes for home- delivery. Parts can easily be assembled homeinto finished products.

3-PLACE
 

 

Ikeas new stor in Beijing: 42,000 square meters; close to the size of 8 football fields, the 2nd largest store in the world. Beijing store can serve large volumes. Its expected to draw 6 million visitors annually, compared to two million for Ikea outlets elsewhere To accommodate customers, its building aisles are half a meter wider than normal. Planning: open a new store in the city of Chengdu (Chinas secondary cities) late of 2006 add about 2 stores yearly until about 2010

4-PROMOTION


IKEA launched what could be the cheapest IKEA non-sale item in the world: a scoop of vanilla ice cream in a cone for 12 cents. It offers a few products made just for Chinese stores, such as a 12-cent red placemat with doggy figures, a nod to the Lunar Year of the Dog. IKEA is well known for not encouraging personal selling in general. The customers make their own choices. Sell products at cheaper price when it is needed (IKEA in China sells umbrellas 50% cheaper on rainy days than sunny days to build a positive image in the long term)

OPPORTUNITIES


A huge surge in home-ownership; many apartments are typically empty shells sold without paint, lighting, flooring ... market for home furnishings has taken off. So huge demand for home furnishings. Chinese authorities have removed the regulations requiring all foreign retailers to have a local partner. Ikea was able to open its first wholly owned store in Guangzhou, setting the trend for all future stores. DoITYOURSELF market in China including furniture, home-wares .. is growing 10% a year. In Chinas home-wares segment alone, IKEA holds 43% market share

CONCLUSION


IKEA is very successful in its strategy of Overall Cost Leadership (or Cut-price strategy) IKEA has changed the habits of Chinese (from using durable Chinese wooden furniture to renewing furniture every 3 or 4 years), getting the Chinese to buy more products from Western retailers in China IKEAs achievements in China are built on a well-designed, customer-centered marketing strategy. The success of IKEA in China conveys an important message to other multinational companies that the key to enter China market is the right market positioning and the right implementation of mix strategies orienting to customers.

THANK YOU!