IKEA – CASE STUDY

SUJEET KUMAR CHOUDHARY SANDEEP KUMAR MANIK ABROL YOGESH MAHAR SHIKSHA KHUSWAHA SNATA PRUSTY URVASHI NIRULA TEJI AHLAWAT SUSHMA OJHA
Tuesday, October 27, 2009 Ikea Case Study

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LAYOUT OF THE CASE STUDY
•CASE BACKGROUND •IKEA PHILOSOPHY •IKEA IN JAPAN-THE FIRST TRY •IKEA IN JAPAN -THE SECOND TRY •SIGNIFICANCE OF CONSUMER BEHAVIOR ANALYSIS •SWOT ANALYSIS OF “IKEA” •SCOPE FOR GROWTH •IKEA’s DRIVERS OF GLOBALIZATION Tuesday,•SUMMARY October 27, 2009 Ikea Case Study

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CASE BACKGROUND
IKEA • IKEA IS A SWEDISH HOME FURNISHING COMPANY. • FOUNDED IN 1943 BY INGVAR KAMPRAD. • OFFERS WIDE RANGE OF PRODUCTS AND GOOD DESIGNS • OFFERS PRODUCTS AT LOW PRICES. • PROJECTS SELF SERVICE.

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CASE BACKGROUND
IKEAS ENTRY IN THE JAPANESE MARKET
The stated case study deals with the entry and performance of IKEA-an MNC dealing with home furnishings-in the Japanese market. It deals with the importance of pre and post production market surveys and the cultural aspects and aesthetics of the consumer behavior. It also deals with the factors that support and promote globalization. It deals with the mindset and the mind blocks of the Japanese consumers that acted as deterrents in the sales of IKEA. It also states the optimistic approaches , marketing and advertising strategies that IKEA adopted to gain a foot hold in the Japanese market and connect with the Japanese people. It shares the importance of quality of products and brand consciousness of the Japanese people.

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IKEA PHILOSOPHY
CONCIEVED BY INGVAR KAMPARD. FORMULATED – “THE TESTAMENT OF A FURNITURE DEALER.” EMPHASISED TO OFFER “FUNCTIONAL TYPICAL IKEA PRODUCTS,” THAT COVER THE TOTAL HOME AREA. INTRODUCED THE TERM -“IKEA SPIRIT.” HE PRESSED ON THE IMPORTANCE AND THE SUSTAINANCE OF THE IKEA SPIRIT IN THE COMPANY. IKEA’s VISION – “IS TO OFFER A WIDE RANGE OF HOME FURNISHINGS WITH GOOD DESIGN AND FUNCTION AT LOW PRICES.”

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IKEA IN JAPAN THE FIRST TRY
 ENTERED THE JAPANESE MARKET IN THE YEAR 1974 BY JOINT VENTURE WITH A JAPANESE COMPANY.  IT WAS A FAILED ATTEMPT TO ESTABLISH IN THE JAPANESE MARKET.  REASONS FOR FAILURE:  NO JAPANESE INTERFACE  LESS DEVELOPED PRODUCT DISTRIBUTION SYSTEM  LOW ADVERTISEMENT AND LOW BUZZ IN THE MARKET  NO CONCEPTUALISATION OF JAPANESE CONSUMERS AND THEIR NEEDS  HENCE CEO IKEA JAPAN, LARS PETERSSON,(2007-04-10) STATED THAT-” JAPAN WASN’T READY FOR IKEA AND IKEA WASN’T READY FOR JAPAN.”
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IKEA-SECOND PREPARED TRY
• • • • • • • • ENTERED THE JAPANESE MARKET AGAIN IN 2006. JAPANESE MARKET WAS MORE OPEN . MORE DEEP AND DETAILED MARKET ANALYSIS. THOROUGH RESEARCH AND ANALYSIS OF THE JAPANESE CONSUMER MINDSET AND BEHAVIOR. OPENED STORES BY PROPER MARKETING AND ADVERTISEMENT THEREBY ATTRACTING GOOD FOOTFALL. CATEGORISED ITS CONSUMER TYPES AND RANGE. PROMOTED LOYALTY IN CONSUMERSHIP. DEVELOPED IMPRESSIVE AND IMPACTFUL INFRASTRUCTURE TO ATTRACT CUSTOMERS OF DIFFERENT AGE GROUPS HAVING ENOUGH DISPOSABLE INCOME.

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SIGNIFICANCE OF CONSUMER BEHAVIOUR ANALYSIS
 CONSUMER FACTORS MUST BE TAKEN IN TO CONSIDERATION BEFORE PENETRATING ANY MARKET. DETAILED ANALYSIS OF  PERSONAL BACKGROUND  SOCIAL NEEDS  ENVIRONMENT NEEDS  PRICE SENSITIVITY  TO SATISFY THE CONSUMERS BY PUBLICISING THE MANUFACTURING LOCATIONS AND BRAND QUALITY AND PRICE SO THAT RELATION AND IDENTIFICATION CAN BE ACHIEVED.  ESSENTIAL TO KNOW THE COMPETING LOCAL AND INTERNATIONAL CONSUMER FAVOURED BRANDS.  TO KNOW THE QUALITY OF PRODUCT THAT A CONSUMER NEEDS.

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STRENGTHS OF IKEA THAT MADE THEM SUCCESSFUL IN THE 2ND TRY
 FOCUSSED ON GIVING QUALILTY GOODS AND PRODUCTS  FOCUSSED ON PROVIDING SERVICES AT LOW AND AFFORDABLE COSTS.  HAD DONE DETAILED CONSUMER ANALYSIS OF THE JAPANESE CONSUMERS AND THEIR MINDSET. HENCE ALL THEIR APPROACHES WERE BASED ON DETAILED MARKET SURVEYS, MAKING THEM PROACTIVE.  OPENED STORES BY PROPER MARKETING AND ADVERTISEMENT THAT ATTRACTED GOOD FOOTFALL.  INTRODUCED GOOD INFRASTUCTURE FACILITIES THAT ATTRACTED THE ATTENTION, EXAMPLE-THE BIGGEST IKEA RESTAURANT IN THE WORLD.  DEVELOPED AND DISPLAYED SMALLER APARTMENTS-28 SQUARE MTS-TO APPEAL TO THE JAPANESE CUSTOMERS AND CULTURE.  THEY WERE OPTIMISTIC IN THEIR APPROACH ABOUT THE FACT THAT THE JAPANESE PEOPLE SHALL PREFER LIVING SPACE OVER LOCATION.  MARKETING AND ADVERTISEMENT WAS BASED ON THE LOOPHOLES OF THE JAPANESE SOCIETY AND PREVAILING CULTURE DEALING WITH THE PERSONAL LIVES OF CUSTOMERS TO STRIKE AN EMOTIONAL QUOTIENT.

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WEAKNESSES OF IKEA-1ST TRY
THE FIRST TRY WAS A FAILURE-REASONS : NO JAPANESE INTERFACE   LESS DEVELOPED PRODUCT DISTRIBUTION SYSTEM  LOW ADVERTISEMENT AND LOW BUZZ IN THE MARKET  NO CONCEPTUALISATION OF JAPANESE CONSUMERS AND THEIR NEEDS  THEY FAILED TO STUDY THE COMPETITION THAT THEY WOULD FACE FROM THE LOCAL AND OTHER INTERNATIONAL PLAYERS ALREADY IN THE MARKET HENCE CEO IKEA JAPAN, LARS PETERSSON,(2007-04-10) STATED THAT-” JAPAN WASN’T READY FOR IKEA AND IKEA WASN’T READY FOR JAPAN.”

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WEAKNESSES OF IKEA-2ND TRY
THEY DECIDED TO CHANGE THE EXISTING TRADITIONAL MINDSET OF THE JAPANESE CUSTOMERS BASED ON THEIR ADVERTISEMENT CAMPAIGN-WHICH WAS NOT RECEIVED WELL BY THE CONSUMERS. THEY TRY TO CONTINUOUSLY FOCUS THEIR EFFORTS IN MAKING HOME A MORE IMPORTANT ASPECT IN JAPANESE HOUSEHOLDS. THEY SHOULD INVEST MORE TOWARDS EMOTIONAL QULALITY. THE JAPANESE PEOPLE TAKE QUALITY FOR GRANTED HENCE THE PROJECTION OF THIS ASPECT WAS A WASTE.

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OPPORTUNITIES FOR IKEA
 IT IS A PROMISING BRAND THAT FULFILLS THE CRITERIA OF GOOD QUALITY –SCANDENAVIAN DESIGNS, WORLD FAMOUS.  THE ASPECT FOR COMPETITION IS PRICE AND IKEA STANDS FOR IT,HENCE IT HAS A CHANCE TO EXCELL IN THE JAPANESE MARKET.  IT CAN FOLLOW THE BASIC MARKETING STRATEGY OF PENETRATION AND SCHEMING.  THE JAPANESE YOUNGER GENERATION HAS STARTED TO INVITE FRIENDS AT HOME, CHANGING TREND. HENCE THERE IS A POSITIVE CHANGE IN JAPAN TOWARDS HOME FURNISHINGS.  THE YOUNGER GENERATION IS PREFERRING IKEA, REASONS:  LOW PRICES, AFFORDABILITY  DESIGNS THAT ARE STYLISH AND MODERN DUE TO THESE REASONS THEY ARE READY TO PAY HIGH FARES FOR TRAVELLING AND FREIGHT.

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THREATS FOR IKEA
• THE JAPANESE MINDSET IS THE BIGGEST THREAT TO IKEA: • THE JAPANESE PEOPLE DON’T SPEND ON FURNISHINGS. • THEY HAVE SMALL HOUSES AND LESS STORAGE SPACE. • THEY DON’T LIKE SHOWING OFF THEIR CAPITAL CULTURE. • THEY DON’T LIKE DECORATING THEIR HOMESTRADITIONALLY NOT ACCEPTED. • THEY DON’T HAVE THE CULTURE OF INVITING GUESTS • THEY TRADITIONALLY LIKE TO SPEND MORE TIME SOCIALISING OUTSIDE THEIR HOMES. • THEY SPEND MORE MONEY ON ACCESSORIES AND PRODUCTS THAT THEY CAN SHOW OFF IN THE SOCIETY.

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SCOPE FOR GROWTH
• OPTIMUM USAGE OF THE AVAILABLE INFRASTRUCTURE TO ACCOMMODATE LARGE CROWDS BY ADVERTISING ITS FLOOR AREA AND THE RESTAURANTS. ATTRACTION OF THE CUSTOMERS OF AGE 3O-WELL ESTABLISHED SERVICE AND BUSINESS CLASS-MORE DISPOSABLE INCOME. ATTRACTING MORE WOMEN, MAKING THE BRAND MORE WOMEN ORIENTED AND WOMEN FRIENDLY. MAKING HOME A MORE IMPORTANT ASPECT IN JAPANESE HOUSEHOLDS. INVITING LOYAL CUSTOMERS, CUSTOMER SATISFACTION LEADING TO BRAND GOODWILL

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IKEA’s DRIVERS OF GLOBILIZATION
• • • • • FAST EMERGENCE/ GROWTH OF ASIAN MARKETS. LONG HISTORY OF RELATIVELY CLOSED MARKET. CREATION OF GLOBAL WORK FORCE. POROUS BORDERS BETWEEN COUNTRIES. IKEA’s VISION TO PROVIDE GOOD QUALITY PRODUCTS AT CHEAP PRICES.

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SUMMARY
 IN TODAY’S GROWING GLOBALIZATION ,IT IS VERY DIFFICULT TO PENETRATE DIFFERENT MARKETS ACROSS THE GLOBE WITHOUT KNOWING THE CONSUMER BEHAVIOUR AND THEIR DIFFERENT CULTURAL ASPECTS WITH CHANGING MARKET. IKEA’s BIGGEST CHALLENGE IN JAPAN-TO CHANGE THE MINDSET OF JAPANESE PEOPLE i.e. TO MAKE THE HOME AN IMPORTANT ASPECT IN JAPANESE LIFESTYLE. IKEA CONCEPT RELIES VERY MUCH ON COMMON SENSETHE COMMON SENSE THAT PEOPLE EVERYWHERE IN THE WORLD WANT -GOOD QUALITY PRODUCTS AT CHEAP PRICES.

 IKEA’s OPTIMISTIC APPROACH - AN IMPORTANT REASON FOR IKEA’S WORLDWIDE SUCCESS.

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