Delivering Value: A Case Study of IKEA
Delivering the Value Case Study Analysis
Renée Williams
Marketing Management – MKTG – 522-2776
DeVry University, Keller Graduate School of Management
February 8, 2015
Table of contents
Delivering the Value Case Study Analysis 1
1.0 Introduction 3
2.0 Brief Description of IKEA 4
3.0 Industry Analysis & Industry Trends 5
3.1 Environmental Impact 7
3.1.1. Economic 7
3.1.2. Social 7
3.1.3. Technological 7
3.1.4. Legal 8
3.1.5. Political 8
3.1.6. Environmental 8
3.1.7. SWOT ANALYSIS 9
4.0 Target Market 10
4.1 IKEA in China 10
4.2 IKEA in India 11
5. Challenges 11
5.1 Cultural Environment 12
5.2 Underdeveloped distribution systems in emerging markets 12
6.0 Alternative Solutions 13
6.1 China 14
6.2 India 14
7.0 Recommended Course of Action 15
1.0 Introduction
In China, as living conditions continue to improve, people are becoming more and more willing to invest in home decoration. People’s increasing purchasing power has driven the furniture market to develop in leaps and bounds. From 2010 to 2013, the sales value of wholesalers and retailers above a certain scale in the industry grew at an average annual rate of 41%. In 2013, the growth slowed down somewhat to 21%, with sales value reaching Rmb195.75 billion. China’s furniture market has vast room for expansion. Take the furniture replacement market as an example. According to statistics, there were about 438.93 million households in all provinces, autonomous regions and areas directly under the central government in the Chinese mainland. Based on the assumption that people would replace their home furniture once every 10 years, around 44 million households would replace their furniture each year. If each household were to spend Rmb1000 on average, total value of the furniture replacement market would amount to Rmb44 billion a year. However, urbanization, as China’s leading policy of stimulating domestic demand in the years to come, is bound to bolster developing the furniture
Renée Williams
Marketing Management – MKTG – 522-2776
DeVry University, Keller Graduate School of Management
February 8, 2015
Table of contents
Delivering the Value Case Study Analysis 1
1.0 Introduction 3
2.0 Brief Description of IKEA 4
3.0 Industry Analysis & Industry Trends 5
3.1 Environmental Impact 7
3.1.1. Economic 7
3.1.2. Social 7
3.1.3. Technological 7
3.1.4. Legal 8
3.1.5. Political 8
3.1.6. Environmental 8
3.1.7. SWOT ANALYSIS 9
4.0 Target Market 10
4.1 IKEA in China 10
4.2 IKEA in India 11
5. Challenges 11
5.1 Cultural Environment 12
5.2 Underdeveloped distribution systems in emerging markets 12
6.0 Alternative Solutions 13
6.1 China 14
6.2 India 14
7.0 Recommended Course of Action 15
1.0 Introduction
In China, as living conditions continue to improve, people are becoming more and more willing to invest in home decoration. People’s increasing purchasing power has driven the furniture market to develop in leaps and bounds. From 2010 to 2013, the sales value of wholesalers and retailers above a certain scale in the industry grew at an average annual rate of 41%. In 2013, the growth slowed down somewhat to 21%, with sales value reaching Rmb195.75 billion. China’s furniture market has vast room for expansion. Take the furniture replacement market as an example. According to statistics, there were about 438.93 million households in all provinces, autonomous regions and areas directly under the central government in the Chinese mainland. Based on the assumption that people would replace their home furniture once every 10 years, around 44 million households would replace their furniture each year. If each household were to spend Rmb1000 on average, total value of the furniture replacement market would amount to Rmb44 billion a year. However, urbanization, as China’s leading policy of stimulating domestic demand in the years to come, is bound to bolster developing the furniture
References: About The IKEA Group (2014) Welcome Inside Our Company, retrieved February 6, 2015, from: http://www.ikea.com/ms/en_US/this-is-ikea/company-information/index.html Blum, J. (2013), China’s furniture stores wage war with online retailers, retrieved February 6, 2015, from: http://www.scmp.com/business/china-business/article/1348268/chinas-furniture-stores-wage-war-online-retailers Burt, S. (2008) Standardized Marketing Strategies in Retailing, IKEA’s Marketing Strategies in China, Sweden and the UK, University of Sterling Department of Marketing, Institute for IBISWorld.com (2014), Furniture Stores in China: Market Research Report, retrieved February 6, 2015, from: http://www.ibisworld.com/industry/china/furniture-stores.html Kotler, P. & Armstrong, G. (2014), Principles of marketing (15th ed.). NJ: Pearson Miller, P February 5, 2015 from: http://www.chinabusinessreview.com/ikea-with-chinese-characteristics/ Wong B