Cool Hunt Project Draft Report IKEA Company Draka Case

CHAPTER 2 1 Analysis of Trends

The main trends: 2.1. The rise of urban nomads: Urban nomads are the hard working, city dwellers that daily merge their own web link work and play on the go. They travel form one hot spot to the next through cities with their laptops and mobile phones. They will work 24/7/365 days a year with pleasure. And ' Drink, Dine, Work' are their mark. 2.2. The rise of the social web: The social web is a set of social relations that link people through the world wide web. These online social interactions form the basis of much online activity such as online shopping, education, gaming and social net working websites. With the rise of the enormous amount of communities, the social web is a trend that makes people's social relationships become more available. Social networking site such as Facebook and Myspace. 2.3. Experience economy: The experience economy is a new stage of economic offering, which can be expressed as a natural progression in the value added by the business over and above its inputs. It requires giving away products at the more commercial level. In the customer's point of view, personalized experiences compare to the simple business transactions are more interesting and they are willing to pay the extra money. 2.4. Cool relax: Cool relax, which can be a cool refreshment for the mind, in order to keep us going and living in the stress society. The rise of a stress society is not totally new, and the need to comfort ourselves from time to time is accelerating. Therefore, people search for new design of product, people oriented service, high quality of brand and so on, to help themselves feel relax. 2.5. 50+ generations: The 50 plus are the wealthiest and fastest growing group of consumers. Successful companies will segment the market by life stages, lifestyle choices, interests and needs, because vitality and wellness are key to the over 50 generation. It also would be wise to recall who has the most decision making authority and to direct their marketing efforts accordingly.

CHAPTER 3 2 The Brand

3.1. Company Information IKEA is a privately held, international home products company that designs and sells ready-toassemble furniture such as beds and desks, appliances and home accessories. IKEA is the worlds largest furniture retailer. IKEA is founded in 1943 by Ingvar Kamprad in Sweden. IKEA is well known for the attention it gives to cost control, operating details and continuous product development, allowing it to lower its prices by an average of 2 to 3% over the decade to 2010, while continuing its global expansion.

Cool Hunt Project Draft Report IKEA Company Draka Case

At the moment IKEA has 325 stores in thirty-eight countries. In the fiscal year of 2010 IKEA sold $23.1 billion worth of goods, a 7.7 percent increase over 2009. In 2010 IKEA had a total of 127,000 employees spread over thirty-eight countries. 3.2. Products At IKEA customers can find the following product lines in the stores all over the world; Upholstered furniture coffee tables rattan furniture Dining tables, chairs Kitchen wares Fabrics Children's items bookshelves media storage doorknobs Bookcase ranges Chairs curtains Curtain accessories Carpets Lighting Bedlinen bed covers pillows cushions Boxes Beds wardrobes hall furniture Bathroom articles desks Garden furniture wall decorations

3.3. Customers and Target Group - IKEA has a very wide range of consumers, it is hardly impossible to enter a house or apartment without noticing any IKEA products. This is because they offer such a wide variety of product in their warehouses and those products are also priced very reasonable compared to IKEAs competitors. Who should IKEA consider a competitor; IKEAs competitors are primarily in the Home Furniture & Housewares Stores industry. IKEA also competes in the Grocery Store & Supermarkets, Nonstore Retail and Restaurants sectors. Stores such as Wal-Mart, Carrefour and even a fastfood restaurant like Mc Donalds. 3.4. Positioning - IKEA can considers itself as one of the biggest companies operating in the Home Furniture & Housewares Stores industry, in 2011 IKEA a total of 734 million visitors entered a store of IKEA somewhere in the world. Also, with a total net income of 2,7 billion IKEA is ranked third into the Home Furniture & Housewares Stores industry ranking list: Top 5 of this list: Company Bed Bath & Beyond Inc. Williams-Sonoma Inc. Inter IKEA Systems B.V. Pier 1 Imports Inc. The Brick Ltd. Sales $8,7 Billion $3,5 Billion $2,7 Billion $1,3 Billion $1,3 Billion Location Headquarter Union, NJ, USA San Francisco, CA, USA Delft, The Netherlands Fort Worth, TX, USA Edmonton, AB, USA

Cool Hunt Project Draft Report IKEA Company Draka Case

The value proposition of IKEA is that they offer the benefits of clean Scandinavian design and image, tremendous assortment, immediate delivery, a pleasant shopping atmosphere, and low prices, while asking the consumer in return to engage in self-service, self-assembly, and self-transportation, often from peripheral locations. This is a dramatically different value proposition compared to the traditional, full service, expensive, high street furniture store. 3.5. Value Proposition The added value of IKEA: - The factory can get around an entire manufacturing element thus reducing manufacturing costs. Today the work and responsibility involved in fitting the table legs rest with the customer. The customer does not perceive this as a cost. - The tables can be packaged in flat boxes, and 90% of the air can be dispensed with. Costs involved in packaging, storing, and transporting the table are considerably reduced. - The fact that IKEA builds its outlets on the periphery of towns and cities, they can reduce rent to a level that makes it financially feasible to carry large stocks of the finished table. - Customers can take their newly purchased table with them on the same day and will not have to wait for it for several months. Availability increases notably which, in turn, leads to more decisions to buy and to larger volumes. - The table is packaged so as to allow customers to transport it themselves. The costs for the stores furniture van have disappeared. - IKEA places orders for 10,000 tables at a time. This allows economies of scale, the deployment of modern machines, and a more efficient purchasing of raw materials. - IKEA begins to collaborate with the suppliers to develop better machines and materials. IKEA transfers know how between factories. - IKEA develops her activities in Sweden, and initiated exportation that was soon to conquer the whole world. - People can furnish their homes with good-quality furniture at reasonable prices. The way IKEA is remembered by their consumers is that IKEA is a good, clean, fast operating store with low product prices. Also, IKEA is very up-to-date with the design of their furniture. Its hard to describe a specific group of people who will buy and use IKEAs products because almost every household does have some products that are produced by IKEA. However, if IKEA is going to focus on a couple of new trend groups they will be able to approach certain people who feel attracted to those trends, an example of a trend group is: The urban nomad. Urban nomads are people who do not want to work at one spot, they want to work wherever and whenever it is possible. Also, the urban nomads like to do certain things at a time, they prefer a coffee at Starbucks because they can drink their coffee while they are surfing the web on Starbucks free wifi. A description of the urban nomad: His name is David, David is in his mid-twenties and is an adventures person, David wears jeans with a casual t-shirt and occasionally a baseball cap, David is an entrepreneur and he owns a couple of websites to earn his living, David does not have any pets or children, David likes to travel a lot, David likes to participate in several sports, David likes to buy gadgets and stuff that is easy to use and to carry, David behaves like a common human being, 3

Cool Hunt Project Draft Report IKEA Company Draka Case

CHAPTER 4 3 Researching and selecting the trends

With development of technology, there are more business models and trends that can be sketched or chosen than ever before. The key is to choose a business model and trend that best fits the main course of business objectives and plan. This will ensure that the business spends the right amount of time, take the right level of risk as some innovative models involve more risk than others, are practical in terms of financial resources, and gain the kind of satisfaction and success the business requires. 4. 1 Trends The trends found in the science of times website is in a wide spectrum of business aspects and trends. However, some examples of trends that are relevant to the IKEA Hotel business model are as follows: 4. 2 Right Touching Multichannel marketing will continue to increase as more channels are in the marketers toolbox. Measuring these touches are important but selecting the right ones in the first place will get more attention. A new key word, right touching, describes the process of selecting the right online and offline channels that best meet customers preferences. To do multichannel marketing with the right touchpoints means that marketers will need to invest in technologies to support this in an automated fashion.

Cool Hunt Project Draft Report IKEA Company Draka Case

4. 3 Easy Hotel Fitness and Health Weekend 50+

-Fitness indoor & outdoor - Hiking - Biking - Workshop about exercises that can be continued at home - Workshops about eating healthy - Workshop with a Chef This is cool because it shows that Easy Hotel have a special program for 50+, the 50+ group will feel appreciated and thought off. They will feel cool and not left outside because they are old. We are STRONG and ready to start the other half of our LIFE! 4. 4 Box Office BoxHouse, Future Urban Architecture

Cool Hunt Project Draft Report IKEA Company Draka Case

Future Urban Architecture The future housing should allow people to more easily obtain the required information while ensuring personal privacy and independence. Each part of this box house is pre-made to combine good, convenience and ideal factors for those who travel allot. So where ever and when ever you want to go you can take your box house with you.

CHAPTER 5 4 Ideation
The creative tool dropping workshop was a very useful brainstorm session with many usable ideas as a result. The group members were challenged to write down their thoughts without any limits. Thats why we had such a wide variety of outcome, from car designs to IKEA water bottles. Based on the COCD-box we rated our ideas with the following colors: Yellow - How - Ideas for the future Blue - Now - Easy to implement Red - Wow - Innovative and Breakthrough Purple - Combination of red and blue 5. 1 IKEA Hotel The IKEA hotel was rated red and we concluded that the IKEA hotel was our most valuable idea of the brainstorm session. Therefore, we will start working out the IKEA hotel concept mixed with some other ideas from the brainstorm session. A proposed idea on how to make IKEA hotel profitable is by cheap priced rooms which can be booked online by the customers. Every piece of furniture should have a price, name and code tag on it so people can easily order the same piece in the actual IKEA shop. Also, a direct buying system could be introduced within the hotel. Moreover, the visitors of the IKEA will then be able to directly buy a piece of furniture and take it home right away. This will save the visitor time and IKEA will raise the selling point and the buying process will be quicker. However, by using the direct buying system the IKEA hotel does need a small warehouse to stall some furniture, the IKEA hotel will become a large and efficient showroom and a small shop by itself. It is suggested to also introduce a delivery system that delivers the purchased goods to the buyers address.

Cool Hunt Project Draft Report IKEA Company Draka Case

5. 2

IKEA Hotel Rooms - Design your room yourself If IKEA want to develop its IKEA Hotel business, it can make full use of IKEA company's advantage of provide fast and new fashion style of furniture, to let customers choose and match those furniture to create a room by themselves. This special experience can be ordered on-line in advance throughout IKEA Hotel's website, or they can choose the theme hotel room which designed by our company. It is really a good opportunity for customers to pay for the normal room's price but can be creative to make up a room with no matter novel style, new functional furniture they may interested in or those expensive ones they ever dreamed of.

Cool Hunt Project Draft Report IKEA Company Draka Case

The common rule of thumb in business" 80% of your sales come from 20% of your clients. As we know that the main turnover comes from the 20% of the company's loyal customers. But many of hotels are lack of considering the demand of those loyal customers or offering the personalized services. IKEA Hotel can set an good example to provide their creative service to meet different kind of demand that customers need. To let the customers have more change to experience IKEA's goods and services in order to discover more potential customers and make them become the loyal customers.

5. 3

IKEA Hotel Furniture IKEA furniture is used to design IKEA Hotel as a theme hotel. Guests who stay at the hotel will find the design extraordinary, which might turn a guest into a potential customer if IKEA ultimately. The hotel can perform also as a sale platform, where IKEA products are shown in a real experience to the customers in form of a hotel in which all the products can be freely tried and explored constantly especially with attention to the quality of the products.

Cool Hunt Project Draft Report IKEA Company Draka Case

5. 4 IKEA Hotel IKAR The IKAR is a car that will be used in the hotel as a way of offering cheap transportation to potential customers. This kit will be available in IKEA Hotel. The target audience will be people from different group of customers, but mostly the young, dynamic because they are more attracted to new technology. The customer can assemble the car himself with equipment and knowledge of basic assembly. IKAR has a car chassis model with interchangeable modules that allow the utility to customize the colors, finish, and level of comfort. The customer can 'get' his car on the IKEA hotel website and then rent it for the necessary time. Some cars assembled will be displayed on site. The customer pays and wins. The customer will have the possibility to deliver and assemble the IKAR by a subcontractor if desired. IKAR: Experience! Advantages - Cost-reduced transport -Reduced-cost production - Recyclable Materials - Simple and fast assembly

CHAPTER 6 5 Value Proposition

The best idea according to our team criteria and based on the COCD-box is the IKEA hotel. The IKEA hotel is an innovative idea which has not yet been used by large furniture manufacturing companies such as IKEA. IKEA will gain more customers by starting such hotels in bigger cities; visitors of those

Cool Hunt Project Draft Report IKEA Company Draka Case

hotels will be able to buy all furniture which is used in the rooms of the hotel. Also, this might attract people to actually go to the IKEA shops which are usually located outside large cities. 6. 1 Brand Value Link The link between the IKEA hotel and the IKEA store is that the visitors will notice that both are very neatly and greatly designed and also reasonably priced. Furthermore, the hotel will also function as an actual IKEA shop with a small warehouse. IKEA already serves a big market; almost every household owns a product bought at IKEAs. However, the IKEA hotels will be attractive for a certain market group called Urban Nomads. Growth Potential The future growth potential of the IKEA hotel is enormous regarding the amount of big cities; all those cities are an attractive market full of Urban Nomads. To make IKEAs products attractive for the Urban Nomads the IKEA hotel needs to contain many small and mobile products such as mobile offices and foldable chairs. IKEA Hotel An Innovative Business Model The actual idea is to open a hotel and decorate it with IKEAs furniture. All furniture which is shown in the hotel contains a price and name tag. Visitors are able to buy furniture directly at the hotel after their stay. A night at the IKEA hotel will not be expensive. The IKEA hotel rooms will be reasonably priced just as the furniture IKEA sells. Quality however will be good. The IKEA hotel is the best idea ever because it brings a new dimension to the IKEA experience of people, IKEA is now more than just a big store close to the highway which is hard to reach for people without car. Also, IKEA will sell more premium furniture such as expensive beds which people wont buy without sleeping on it in the hotel. The hotel will also be an added value to the brand IKEA. The IKEA hotel is easy to implement because no resources need to be bought, IKEA owns all furniture. However, the only high cost investments that need to be made are property and a marketing campaign. Therefore this idea can be realized within 1 or 2 months. 6. 4 Added Value to Brand The management team of IKEA and later IKEA hotel can make money out of this concept on few ways. Firstly, IKEA can earn money by stays overnight from the hotel visitors, these visitors will probably also buy some drinks or food at the IKEA hotel. Secondly, extra sales which are made at the IKEA hotel, such as beds, lamps and other furniture, and at last, the IKEA hotel concept will enlarge the brand awareness of IKEA. This will lead to more visits in the actual shop and to the hotels.

6. 2

6. 3

CHAPTER 7 6 Visualization (Mood Board)

7. 1 Business Model IKEA Hotel

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Cool Hunt Project Draft Report IKEA Company Draka Case

7. 2 Positioning Moodboard

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Cool Hunt Project Draft Report IKEA Company Draka Case

7. 3

Target Group Moodboard

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Cool Hunt Project Draft Report IKEA Company Draka Case

7 Innovation Report
The report has provided insight on which innovative business model can possibly be executed by IKEA as a primary target in development of the business objectives. According to the analysis of trends and possibilities of implementation of side business models, the team has found out that an IKEA Hotel has a potential and advantage over other proposed models. 13

Cool Hunt Project Draft Report IKEA Company Draka Case

it is concluded that there could be a tendency in the guests of IKEA Hotel to convert into a potential customer. Although there are some sectors in which IKEA Hotel may not be able to positively attract customers, for example due to the fact that guests at the IKEA Hotel would have to pay for their stay, but indeed the group collectively agreed that such a facility will attract new customers mainly due to the experience that the guests acquire by real consumption of a wide variety of IKEA products and also the nature of the products in regard to quality and lastly by comparison of IKEA products prices. The most areas of concern are in fact the assets and capitals that are actually required to establish such hotels by IKEA and of course, whether such set ups would increase sales of IKEA as much to return the spent capital in an appropriate span of time. However, the future is unforeseeable. Looking into the cost of setting up an IKEA Hotel, and the estimation of costs of other marketing methods that cause a sales increase, in the long term, it is advisable that the IKEA Company considers establishing a hotel. Although this will have a cost load in the short term, there will be a less cost impact on the course of the business, requiring a thorough research and analysis result to be positive. In conclusion, due to uncertainty of the future of the economy in the world, and the lack of global guidelines to prevent fluctuations, the larger companies such as IKEA have no other choice but to seek applicable innovative and creative methods to guarantee the survival of the business and keep track of a profitable course of business in the unforeseeable future.

Bibliography: Design Uqam Org. (2011). Transport Division. Retrieved January. 2012 from
http://www.design.uqam.ca/dess/transport/DESS_Transport/gradues_files/IKAR%20IKEA%20KIT%20CAR.pdf

Science of the Time. (2012). Fontys Cool Hunt Project. Retrieved January. 2012 from 14

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http://scienceofthetime.com/2012eindhovenibms/wp.php and http://scienceofthetime.com/study/ IKEA Company. (2011). IKEA Franchisors. Retrieved January. 2012 from http://franchisor.ikea.com/index.asp Wikipedia. (2011). Free Encyclopedia. Retrieved January. 2012 from http://en.wikipedia.org/wiki/IKEA Furniture Stores. (2011). Home Furniture and Houseware. Retrieved January. 2012 from http://www.hoovers.com/industry/home-furniture-housewares-stores/1538-1.html

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