Strategic Marketing Assingment

 TITLE:

IKEA: "To create a better everyday life for the

many people."

 Submitted by: M.Rehan Arshad

 Roll no# 7057/FMS/MBA-34

 Submitted to:
Sir Talha Khawaja
  Problem statement
The IKEA Company is basically faced by number of challenges as follows. To
start with, the high cost of transporting their voluminous goods from the point of
manufacturing to the various destinations of their consumers in the European
countries. The cost of transit had risen due to the fact that, the IKEA products such
as mattress, sofas, pillows and galimma tea candles were voluminous and involved
many transit vehicles in moving those products, the fact that led to escalation of the
cost of transport beyond the returns reaped from trading in such products. This
needed to be solved out since it was not only none Economical but also affected
the environment adversely.

Secondly, the warehousing cost was too high. Once the products arrives to the
point of storage, the products occupied so much space causing IKEA to pay much
for warehousing of their goods as they wait to be collected by the various suppliers
in different places in the European countries. Less air filled packaging technique
would allow more efficient space utilization. As such, there was a need to come up
with a packaging design that would occupy less pace in the warehouse and hence
low cost of warehousing on products as they wait to be redistributed to final
consumers.

Lastly, the distribution of the products to final consumers by the IKEA company
in person, was a very none economical affair to carry on with. Doing this would
incur the company far much higher cost, and hence, a more economical approach
had to be innovated so as to enable productivity of the trade. As such, various
logistics have to be employed in developing a system that will curb the diminishing
profit margins of the company as well as develop a system that will alienate the
company from losses emerging at further points of distribution of goods to final
consumers which somehow would be realized by transmitting the whole
distribution to another supplier yet to be determined.
  Findings
Rather than being sold pre-assembled, much of IKEA's furniture is designed to
be self-assembled. The company claims that this helps reduce costs and use of
packaging by not shipping air; the volume of a bookcase, for example, is
considerably less if it is shipped unassembled rather than assembled. This is also
practical for many of the chain's European customers, where public transport is
commonly used, because the flat-pack methods allow for easier transport via
public transportation.
IKEA contends that it has been a pioneering force in sustainable
approaches to mass consumer culture. Kamprad calls this "democratic design,"
meaning that the company applies an integrated approach to manufacturing and
design (see also environmental design). In response to the explosion of human
population and material expectations in the 20th and 21st centuries, the company
implements economies of scale, capturing material streams and
creating manufacturing processes that hold costs and resource use down, such as
the extensive use of Medium-Density Fiberboard ("MDF"), also called "particle
board." It is an engineered wood fibreglued under heat and pressure to create a
building material of superior strength which is resistant to warp. IKEA uses
cabinet-grade and furniture-grade MDF in all of its MDF products, such as PAX
wardrobes and kitchen cupboards. IKEA also uses wood, plastic, and other
materials for furniture and other products. The intended result is flexible, adaptable
home furnishings, scalable both to smaller homes and dwellings as well as large
houses.
Product names
IKEA products are identified by one-word (rarely two-word) names. Most of the
names are Scandinavian in origin. Although there are some exceptions, most
product names are based on a special naming system developed by IKEA.

 Upholstered furniture, coffee tables, rattan furniture, bookshelves, media

storage, doorknobs: Swedish placenames (for example: Klippan)
 Beds, wardrobes, hall furniture: Norwegian place names
 Dining tables and chairs: Finnish place names
 Bookcase ranges: Occupations
 Bathroom articles: Scandinavian lakes, rivers and bays
 Kitchens: grammatical terms, sometimes also other names
 Chairs, desks: men's names
 Fabrics, curtains: women's names
 Garden furniture: Swedish islands
 Carpets: Danish place names
 Lighting: terms from music, chemistry, meteorology, measures, weights,
seasons, months, days, boats, nautical terms
 Bedlinen, bed covers, pillows/cushions: flowers, plants, precious stones.
 Children's items: mammals, birds, adjectives
 Curtain accessories: mathematical and geometrical terms
 Kitchen utensils: foreign words, spices, herbs, fish, mushrooms, fruits or
berries, functional descriptions
 Boxes, wall decoration, pictures and frames, clocks: colloquial expressions,
also Swedish place names

 Analysis
  Recommendation

 Expensive e-commerce shipping

Promote a temporary discount on shipping rates. Free shipping for items

under 100$. Signup for loyalty program and get free shipping measuring
effectiveness if the promotion is successful, it will generate additional online
sales.

 Complex Product Names

Change product names to fit the market. Take from globalization to

localization. Easier to remember, easier to start buzz about product measure
effectiveness of recommendation using conjoint analysis. Do you like
‘DUGTIG’ as the name of this product? Do you like ‘Tea Time’ as the name
of this product?

 Perception of Brand
Cheap vs Value Our brand exploratory survey indicated that a large portion of
respondents associate the IKEA brand with cheap “starter” furniture for young
people. These associations are not favorable to a brand built around the idea of
quality design at a low price. In this case, inexpensive works against the brand,
signifying product quality issues rather than everyday value pricing. IKEA’s
diverse and expensive product line features products appropriate for all ages but
consumers are failing to perceive the value because of the brand’s youthful design
and product durability issues. Recommendations Use Brand-Based and Marketing
Based comparative methods to isolate negative brand associations and perceived
quality gaps. Enhance segmentation efforts to design marketing programs that
appeal to broader demographics.