Marketing Plan

Submitted to:
Prof. Rahul Shah

Submitted by:
Kalpesh Solanki
Pranshul Gupta
Nikhil Bhoj
Sneha Singh
Ravi Teja
Shivam Gupta
 INDEX

Introduction................................................................................................................................................. 2
History of IKEA............................................................................................................................................. 3
Mission Statement ...................................................................................................................................... 4
Corporate Objectives .................................................................................................................................. 5
IKEA Opportunities...................................................................................................................................... 6
5C Analysis ................................................................................................................................................... 7
SWOT Analysis ............................................................................................................................................. 8
PEST Analysis ............................................................................................................................................... 9
Segmentation, Targeting and Positioning ................................................................................................ 10
Positioning of IKEA in India ....................................................................................................................... 11
Goals of IKEA ............................................................................................................................................. 12
IKEA India Budget ...................................................................................................................................... 14
Product Development ............................................................................................................................... 15
Product ...................................................................................................................................................... 15
Price ........................................................................................................................................................... 16
Promotion.................................................................................................................................................. 16
Place........................................................................................................................................................... 17
Plan into Action ......................................................................................................................................... 17
Monitor Results ......................................................................................................................................... 18
Conclusion ................................................................................................................................................. 19

1
 Introduction
The Indian retail industry has emerged as one of the most dynamic and fast-paced
industries due to the entry of several new players. Total consumption expenditure
is expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824 billion in
2017. It accounts for over 10 per cent of the country’s Gross Domestic Product
(GDP) and around 8 per cent of the employment. India is the world’s fifth-largest
global destination in the retail space.
India’s retail market is expected to increase by 60 per cent to reach US$ 1.1
trillion by 2020, on the back of factors like rising incomes and lifestyle changes by
middle class and increased digital connectivity. Online retail sales are forecasted
to grow at the rate of 31 per cent year-on-year to reach US$ 32.70 billion in 2018.
India is expected to become the world’s fastest growing e-commerce market,
driven by robust investment in the sector and rapid increase in the number of
internet users. Various agencies have high expectations about growth of Indian e-
commerce markets. Luxury market of India is expected to grow to US$ 30 billion
by the end of 2018 from US$ 23.8 billion 2017 supported by growing exposure of
international brands amongst Indian youth and higher purchasing power of the
upper class in tier 2 and 3 cities, according to Assoc ham.
Government Initiatives
The Government of India has taken various initiatives to improve the retail
industry in India. Some of them are listed below: • The Government of India may
change the Foreign Direct Investment (FDI) rules in food processing, in a bid to
permit e-commerce companies and foreign retailers to sell Made in India
consumer products. • Government of India has allowed 100 per cent Foreign
Direct Investment (FDI) in online retail of goods and services through the
automatic route, thereby providing clarity on the existing businesses of e-
commerce companies operating in India.
Investment Scenario
The Indian retail trading has received Foreign Direct Investment (FDI) equity
inflows totaling US$ 1.42 billion during April 2000–June 2018, according to the
Department of Industrial Policies and Promotion (DIPP). With the rising need for
consumer goods in different sectors including consumer electronics and home
appliances, many companies have invested in the Indian retail space in the past
few months.

2
 History of IKEA

Ingvar Kamprad founded IKEA in 1943 as a

mostly mail-order sales business. It began to sell
furniture five years later. The first Mobel-IKEA
store was opened in Almhult, Smaland, in 1958.
The first store outside Sweden were opened in
Norway (1963) and Denmark (1969). The stores
spread to other parts of Europe in the 1970s, with
the first store outside Scandinavia opening in
Switzerland (1973), followed by West Germany
(1974). Amid a high level of success, the
company’s West German executives accidentally
opened a store in Konstanz in 1973. Later that
decade, stores opened in other parts of the world, such as Japan (1974), Australia
(1975), Hong Kong (1975), and Singapore (1978). IKEA further expanded In the
1980s, openings stores in countries such as France and Spain (1981), Belgium
(1984), United States (1985), United Kingdom (1987) and Italy (1989).

Industry Retail
Founded 1943; 76 years ago
Founder Ingvar Kamprad
Headquarters Leiden, Netherlands
Number of Locations 424
Area Served Worldwide
Key People Jesper Brodin (Chairman and CEO of INGKA Holding)
Torbjorn Loof (Chairman and CEO of Inter IKEA group)
Products Ready to assemble furniture, homeware
Revenue US$ 40.906 billion
Operating Income US$ 5.247 billion
Net Income US$ 4.898 billion
Total Assets US$ 62.933 billion
Total Equity US$ 45.371 billion
Owner INGKA Holding
Number of Employees 208,000 (2018)
Website www.ikea.com

3
 Mission Statement

“At IKEA our vision is to create a better

everyday life for the many people. Our business
idea supports this vision by offering a wide
range of well-designed, functional home
furnishing products at prices so low that as
many people as possible will be able to afford
them.”

4
 Corporate Objectives
“To offer a wide range of home furnishing items of good design and function,
excellent quality and durability, at prices so low that the majority of people can
afford to buy them.”

This objective kind of give IKEA employers and employees the sense of growing
direction. It also forms the foundation for IKEA decision-making: try to reduce the
price as much as possible (but not at any price, it still want to maintain the quality
of products). It indirectly guides the way IKEA products are designed,
manufactured, transported, sold and assembled, therefore it is the base of all IKEA
strategies and tactics. IKEA's objectives provides a basis for measuring and
controlling the performance of the workforce (the designing and functioning,), the
management and the entire business.

 Self-assembly feature cuts operational & transportation cost

 Concentrate on individual marketing rather than mass marketing

 Limited warranty and service model after that

 Opening small retail store and segmented marketing

 Diversity in business

 Country specific management style

 Standardized retailer selection

 Financial stability, independence and flexibility etc.

5
 IKEA Opportunities

 Environmental Friendly:
There is a certain growing demand for eco-friendly products in the
consumers these days. This might help in the growth strategy for Ikea.

 Cost-conscious Consumers:
Consumers are now becoming very cost conscious. They would opt for such
products as they tend to change their furnishing periodically.

 Developing Countries:
Countries were per capita income is low such low-cost products could do
wonder. China and India would prove to be great markets.

 Saturated markets:
Places like India and China where there is huge population and
where people need unique solutions to their space usage problems are
countries which Ikea should target and focus on.

Some of the opportunities that IKEA takes advantage of through its sustainability
agenda are:

 A growing demand for greener products

 A growing demand for low priced products. Trends in the current financial
climate may result in consumers trading down from more expensive stores
 Demand for reduced water usage and lower carbon footprints.

6
 5C Analysis
Company Notes

Strengths and Weakness Good Relationship with

suppliers.
Goals and Objectives Customer friendly atmosphere

Culture Employee friendly

Resources, Technology, Japanese technology for

Experience, Skills manufacturing

Customers Notes
Collaborator Notes
Market size/ 20% in India
Suppliers 48 suppliers
Segments
Purchasing Spending Less
Habits, trends and saving more
and Buying Distributors Planning to open
Process distribution center
Overall Less for DIY in Pune
Customer products Alliances and Rustomjee for
Satisfaction Partners designer homes
Perceived Value Low budget and
by Customers long durability

Competitors Notes Climate/Environment Notes

Regulations and 30%
Current and Local furniture Government suppliers
Prospective makers Oversight from India
Social and Cultural Target low
Strengths and Price is strength, budget
Weakness Weakness is Indians
Quality Business Cycle Early
Opportunities and To grab local Inflation and other recovery
Threats market Economic Factors stage
6.5%
Products and Market 80% with Locals inflation
Share Legal -

7
 SWOT Analysis
Strength
 Reputation, for product and
company itself (internally &
externally)
 Cost and competitive advantage
 The IKEA in-store “experience”
 Employee satisfaction
 Large catalogue reach
Opportunities
 Smaller stores
 More stores in United States
 Capitalize on GREEN efforts
 Expand online shopping
 Add bonus/rewards services to
increase customer satisfaction
8
Weakness
 Assembly difficult for older
adults/frequent movers
 Comfort and quality versus low cost
 Ability to implement controls on a
store-to-store basis instead of
globally
 The design doesn’t appeal to
everyone
Threats
 Competitors, both high-end and
smaller retailers
 Economy rising, causing customers
to shop at higher-priced retail stores
 Staying profitable while continually
dropping prices
 Shipping efficacy and cost
 PEST Analysis

P POLITICAL E ECONOMIC

Online trading is not given India is currently in the stage

REGULATIONS & permission, of early recovery , which is
GOVERNMENT BUSINESS CYCLES good for the company to enter
OVERSIGT 30% of supplies are to be
made from India.

May be a likely change of Interest rate – 2.19% and

LEGISLATIVE INFLATION &
government is to happen in Inflation rate-6.5%
CHALLEGES INTEREST RATES
2019.

Corporate taxes are high, GDP growth rate – 1.9%

ECONOMIC
TAXES combined with different
GROWTH
tariffs.

Less STABILITY OF Financial markets are stable

LEGAL ISSUES FINANCIAL in nature and good for
MARKETS business.

EMPLOYMENT Rigid laws and trade Unemployment rate is 3.52%.

EMPLOYMENT
ISSUES & WAGE unions are strong enough
RATES
REGULATIONS in India.

TRADING & Free trade policy.

EMBARGO POLICIES

S SOCIAL T TECHNOLOGICAL

India has a huge Quality products through

population of 130cr, in Japanese technology.
MANUFACTURING
DEMOGRAPHICS which 50% of the
INNOVATIONS
population are under the
age of 25yrs.

India has a literacy rate of RECENT Space hub 10, DIY, VR

EDUCATION 74%. TECHNOLOGICAL promotion are new trends.
DEVELOPMENTS

INCOME 32.7% of the people live Catalogue book patents,

PATENTS
DISTRIBUTION below poverty line. Video patents.

Orthodox and outdated COMMUNCATION Usage of big data analytics to

mostly. & INFORMATION track trends.
LIFESTYLE TRENDS
TECHNOLOGY
TRENDS

9
 Habit of saving more and INTELLECTUAL Copyright in catalogue,
CULTURE
spending less. PROPERTY Trademark of BEKAN.

Segmentation, Targeting and Positioning

Demographic Segmentation

Age 22 and Older

Gender Male and Females

Life Cycle
Stage Bachelor Stage young,
single people not living at
Psychographic Segmentation home
Newly Married
Social Class Lower class, Couples young, no
working class and children
middle class Full Nest I youngest child
Lifestyle Resigned under six
Struggler
Full Nest II youngest child
Mainstreamer six or over
Explorer Full Nest III older married
couples with dependent
children
Empty Nest I older
married couples, no
children living with them
Empty Nest II older
married couples, retired,
no children living at home
Solitary Survivor I in
labor force
Solitary Survivor II retired

10
 Occupation Students, Employees and
Professionals

Positioning of IKEA in India

Geographic Segmentation
Swedish furniture retailer Ikea will
Region Europe, Americas, Asia & follow a three-step retail strategy in
Australia, Russia India –

Density Urban
1. The first priority is to build the
brand in India through large-format stores. This is important for companies
that place a huge emphasis on the so-called touch-and-feel aspect of
retailing.

2. The next step will be e-commerce.

3. The third step will be to experiment with new formats.

The company has identified 49 Indian cities where it wants to set up physical
stores. In India, Ikea will look to sell what it thinks the local market needs,
offering pressure cookers alongside its iconic Billy bookcases. It is also thinking
about tailoring stores to cities. The one in Hyderabad, for instance, could present
Behavioral Segmentation products differently (and also offer
different products) from the one in
Degree of Loyalty ‘Hard core loyal’ Mumbai because average home sizes
‘Soft core loyal’
in the two cities are vastly different.
‘Switchers’

Benefits Sought Cost Efficient

Personality Easygoing and
Determined
User Status non-users,
potential users,
first-time users
and regular users

11
Ikea is also hoping its restaurants (attached to its stores) will be a draw in India.
The company’s popular meatballs will be on the menu, but contain only chicken.
The 1,000-seater restaurant at the Hyderabad store will offer a mix of Swedish and
local cuisines (Biryani and samosas are on the menu).

IKEA store in Hyderabad, India

Goals of IKEA

 The Swedish flat pack furniture giant opened 19 new stores globally during
the period, pushing total store count to 422, and added two new markets: India
and Latvia.
 The retailer has an online presence in 35 markets around the globe and saw
2.5 billion visits to its website last fiscal year. IKEA plans that by 2025, they
will potentially reach and interact with 3 billion people
 They plan to offer new and different ways to shop the Ikea product range –
online, in remote locations and in city centers. They will introduce smaller
store formats and offer a wide range of flexible and affordable services.
 The retailer is set to expand into South America through a new franchisee,
department store chain Flabella, with stores to open in Chile, Colombia and
Peru. Nine stores are planned in the region over a 10 year period.

12
  Ikea will open 15 new stores across Mexico, Estonia, Ukraine, Puerto Rico,
Oman, Luxembourg, Macau and the Philippines in FY19.


Environmental Goals:-

To become climate positive, IKEA will reduce more greenhouse gas emissions than
the value chain emits by drastically reducing the climate footprint of the products
and operations in absolute terms, capturing and storing carbon within the value
chain and working together with home furnishing suppliers across their
entire factories (not just the manufacturing for IKEA). In addition, IKEA will enable
customers to save and generate renewable energy at home.

Commitments for 2030 include:

 Designing all IKEA products with new circular principles, with the goal to
only use renewable and recycled materials
 Offering services that make it easier for people to bring home, care for and
pass on products
 Removing all single-use plastic products from the IKEA range globally and
from customer and co-worker restaurants in stores* by 2020
 Becoming climate positive** and reducing the total IKEA climate footprint
by an average of 70% per product
 Achieving zero emissions home deliveries by 2025*
 Expanding the offer of affordable home solar solutions to 29 IKEA markets*
by 2025

13
 Three major challenges impacting the IKEA business

IKEA India Budget

 Initial approved outlay in India: 10,500 crores

 Budget for Hyderabad IKEA: 1000 crore alone in the store which would
provide 7500 products
 It also bought a land of 4 lakhs square ft. all-inclusive of 4500cr
 Advertising was followed with OOH strategy Bill boards and hoarding on
streets costing around 150cr to 180cr
 VR promotion through auto costing around 15 lakhs
 Online promotion would constitute about 50cr in long term

14
 Product Development

Features Do It Yourself (DIY)

Packaging Sturdy, stackable box of cardboard

Branding Affordable, unique store experience, Creative

products

Quality Depends on Products

Service/Support Home delivery and assembling assistance

Warranties

The design of home furnishing products at IKEA starts with an understanding of

people’s everyday needs at home, especially the needs of the majority of people,
who have limited incomes and limited living spaces. This is how IKEA succeeds
in offering well-designed, functional products at prices so low that most people
can afford them.

In order to make products saleable and right for the IKEA identity, IKEA co-
workers in product design and product development focus on price and quality,
design and function, environment and health. They scrutinize every product idea
with regard to the best use of raw materials and manufacturing opportunities. This
is why elements of the design are often decided on the factory floor, where
designers and manufacturers work together.

The IKEA range is developed by IKEA of Sweden in Älmhult, Sweden, and all
positions in this work area are based there.

Product

15
Advertising Printing & Media, Social Media, Broadcasting and OOH
Channels (out of home)

Public Relations Cohn & Wolfe Six Degrees for India

Sales 38.8 billion euros globally (2018)

Publicity Through advertising channels

Price

List Price Low priced products

Discounts Member-Only prices, Monthly Discounts

Perceived Values IKEA Effect, High perceived value with

lower costs

Commissions -

Payment Periods No credit facility for retail customers

Flexibility IKEA Gift Cards, IKEA payment cards

Terms -

Promotion

16
 Place

Distribution Manufacturer, Dealer, Wholesaler, Retailer and Consumer

Channels

Outlet Locations Hyderabad (India)

Transportation A network of transport companies helps to move products

from factories to stores, via distribution centers and
warehouses.

Storage Stores, Warehouses.

Plan into Action

 Ikea started preparing for the Hyderabad launch, two-and-a-half years ago.

 Ikea began early with the corporate PR about four years ago and started to
connect with the government authorities.

 After two years of coming to India, Ikea started working with its creative
agency Dentsu Impact. The brand took the Dentsu team to Sweden to show
them across Ikea, their values.

17
  The agency launched the first Ikea TVC in July that captured playful
moments between family members and showed just how amazing our lives
at home can be. Each situation brought to life a new perspective to everyday
life at home and how Ikea's home furnishing solutions help make each day
brighter and happier.

Monitor Results

 IKEA received a thundering response on day 1. 40,000 people from all over
the country flocked the store, which is why there was a waiting time of
almost 4 hours. There was stampede and heavy traffic jam near hi-tech and
traffic police had to deploy some extra officials to tackle the chaotic
situation.

18
 Conclusion

IKEA is the only retailer store that specializes in furniture products that would
come into mind when comparing their good quality and affordable household
furniture. However, IKEA doesn’t simply generate the profits and market shares,
but for its achievement is to become the dominant home-furnishing retailer
globally. By concluding the achievement of IKEA, the company has chosen to
19
engage a foresight of creating a working condition in advantage of their
sustainability. Eventually, it has been exercised to their existing suppliers to
comprehend the nature of sustainability production is important. This approach
has helped IKEA significantly to characterize itself from the market against
competitors. IKEA success came from their marketing strategy, good customer
service, pricing, style and functionality, store location and wide variety of
products.

Their marketing strategy is commendable as they have carefully thought about

how to sell their products effectively. To the extent of their combination of
product designs, low price rates, resources management and the social
responsibility to the Environment, the company’s manufacturing process and
systematic issues illustrate the environmental stance globally. The improvising use
of packaging allows more items to be fitted into a single packaging box which
consist of fewer delivery trips needed to be taken to households. Ultimately, IKEA
success lies in their wide collection of creative and innovative products.
Customers will surely have a lot of options to choose from and this strategy
creates a demand for customers as they wander around the store, discover a wide
variety of things that they want to buy. It is submitted that IKEA had uncovered
their focus in sustainability in their business growth by reducing raw material
wastages and attaining their social responsibility. The sustainability would focus
on creating benevolence and enhancing their brand reputation and values

20