CASE ANALYSES 4

IKEA was founded in 1943 by a 17-year-old Swede named Ingvar Kamprad who sold pens,
Christmas cards, and seeds out of a shed on his family’s farm. The name IKEA was derived
from Kamprad’s initials (IK) and the first letters of the Elmtaryd farm and the village of
Agunnaryd where a retail titan in home furnishings and a global cultural phenomenon,
inspiring BusinessWeek to call it a “one-stop sanctuary for coolness” and “the
quintessential cult brand.” IKEA inspires remarkable levels of interest and devotion from its
customers. Each year more than 650 million visitors walk through its stores all over the
world. Most need to drive 50 miles round-trip but happily make the effort in order to
experience IKEA’s unique value proposition: leading-edge design and functional home
furnishings at extremely low prices. IKEA’s Scandinavian-designed products are well made
and appeal to the masses. To stay relevant and fashionable, the company replaces
approximately onethird of its product lines each year. Most have Swedish names, such as
HEKTAR lamps, BILLY bookcases, and LACK side tables. Kamprad, who was dyslexic,
believed it was easier to remember product names rather than codes or numbers. Besides
featuring fashionable and good-quality products, IKEA stands out in the industry because
of its bargain prices. The company’s vision is and always has been “to create a better
everyday life for the many people.” As Kamprad said, “People have very thin wallets. We
should take care of their interests.” A high percentage of its customers are college students
and families with children.
IKEA continuously seeks out new ways to run its businesses more efficiently and pass
those cost savings on to the customer. In fact, it reduces prices across its products by 1
percent to 3 percent annually. How can it do so? For starters, IKEA engages the consumer
on many levels, including having the customer do all the shopping, shipping, and
assembly.
IKEA is known for its quirky marketing campaigns, which help generate excitement and
awareness of its stores and brand. It ran a campaign inviting customers to be the
“Ambassador of Kul” (Swedish for “fun”), but in order to collect the prize, the contestants
had to live in an IKEA store for three full days before it opened, which they happily did.
Thousands of people will line up for a chance to win prizes and IKEA furniture. In Sweden,
IKEA launched a Facebook page for the manager of a new store. Anyone who could tag his
or her name to an IKEA product on the profile page won that item. The promotion
generated thousands of tags.
Ikea has been able to gain a better understanding of consumers and what they want from
the brand by layering up digital insight with more traditional customer research. But the
rise of digital has allowed the brand to gain a much deeper understanding of customers at
a more granular level, according to Ikea’s chief digital officer, Barbara Martin Coppola.“If we
ladder up the digital capabilities [with traditional research] we can have even richer
insight,” she explained, speaking at an event hosted by brand consultancy Wolff Olins.
“Every day, 24-hours a day, we get feedback on what people want through clicks and
expressions, and through this dialogue that is possible in real time through digital. When
you combine both it gives you very rich insight and a deep understanding about life at
home, which helps then to connect and better serve many people around the world.” One of
the key insights Ikea has gained as a result of this layered approach to research is the fact
people want sustainable consumption, which led Ikea to launch its ‘buy back’ service last
year.
The initiative allows anyone wanting to get rid of old Ikea furniture the opportunity to sell it
back to the retailer, which will then resell it via its ‘bargain corner’ department. “By using
[furniture] and giving it back we’re starting a circular Ikea, a new business model that
allows you to use the furniture and then give it to other people for a second life. Furniture
as a service is something we’re putting in place and by 2030 we will have circular business
models in place at Ikea for many to enjoy,” she said.
Given Ikea’s reputation as a value-led retailer, Martin Coppola said it’s important that
sustainable living doesn’t cost consumers more, which is why the brand is encouraging
people to “take simple, affordable steps to make a difference”, such as reselling used
furniture or switching to LED light bulbs.
“When it comes to sustainability at large, in general today it often comes at a price
premium. We want to show our customers and co-workers that living more sustainably
shouldn’t come at a premium,” she added.This focus on sustainability and doing right by
its people is why Martin Coppola joined the business.“I went to Ikea because it is a value-
based, very strong, human-centric brand,” she explained. “It’s a tremendously conscious
brand, which gives meaning to my work in digitalising the company, transforming the
company for the next era, to suit many more people.”Martin Coppola believes the
businesses that will thrive in future will be the ones that make a difference and don’t put
the wellbeing of the company before that of its people or the planet.“Instead of focusing on
short-term profits only, they [companies] need to balance their decisions carefully to take a
broader perspective and [make] a positive impact on society and the world at large,” she
said. “I have the overall global responsibility of our digital agenda and I think a human-
centric, conscious agenda will be a must-have for any brand moving forward. It’s not only
the right thing to do, but it also makes business sense.”
 
Question:
What are some of the things IKEA is doing well to reach consumers in different
markets? What else could it be doing?

What are some of the things IKEA is doing well to reach consumers in different
markets?

What else could it be doing?