Ikea Case Study
MBAA 514:
Marketing Case Study of the IKEA Company
September 12, 2011
Embry-Riddle Aeronautical University- Worldwide Executive Summary IKEA (2011) has found a wide market in the discount furniture industry. The mission is simple- provide furniture to help everyone decorate as they like (IKEA, 2011). The company always strives to lower costs and pass savings to consumers (IKEA, 2011). It provides exceptional products which enabled the company to increase sales through the recession (Manners, 2009). However, IKEA’s advertising is limited to regional store locations and personal recommendations (Peter & Donnelly, 2009). This level of advertising leaves consumers oblivious to IKEA’s brand. This analysis recommends that IKEA increase its advertising efforts to expand its target market. Situation Analysis
Environment
The current economy is slowly recovering from a recession caused by widespread unemployment (Kavilanz, 2011). The latest statistics show that retail sales barely increased for school shopping this past July (Kavilanz, 2011). This shows that while consumers are not on shopping sprees, they are willing to purchase items they feel are needed (Kavilanz, 2011). IKEA has established an advantage for slow economies; the company has only built stores outside of large, metropolitan cities (Peter & Donnelly, 2009). Because cities typically grow due to job availability and an influx of job-seekers, IKEA has positioned their stores among the majority of employed consumers. These locations are the primary foundation to IKEA’s past success (Peter & Donnelly, 2009), and should provide strength to outlast the current recession.
Industry
Competitors. IKEA is in the industry of consumer goods. Specifically, IKEA is a retailer of furniture (Peter & Donnelly, 2009). On a broad scale, IKEA’s competitors are all furniture retailers, but their direct competition comes from other discount furniture retailers.
Ashley furniture is a discount manufacturer
Marketing Case Study of the IKEA Company
September 12, 2011
Embry-Riddle Aeronautical University- Worldwide Executive Summary IKEA (2011) has found a wide market in the discount furniture industry. The mission is simple- provide furniture to help everyone decorate as they like (IKEA, 2011). The company always strives to lower costs and pass savings to consumers (IKEA, 2011). It provides exceptional products which enabled the company to increase sales through the recession (Manners, 2009). However, IKEA’s advertising is limited to regional store locations and personal recommendations (Peter & Donnelly, 2009). This level of advertising leaves consumers oblivious to IKEA’s brand. This analysis recommends that IKEA increase its advertising efforts to expand its target market. Situation Analysis
Environment
The current economy is slowly recovering from a recession caused by widespread unemployment (Kavilanz, 2011). The latest statistics show that retail sales barely increased for school shopping this past July (Kavilanz, 2011). This shows that while consumers are not on shopping sprees, they are willing to purchase items they feel are needed (Kavilanz, 2011). IKEA has established an advantage for slow economies; the company has only built stores outside of large, metropolitan cities (Peter & Donnelly, 2009). Because cities typically grow due to job availability and an influx of job-seekers, IKEA has positioned their stores among the majority of employed consumers. These locations are the primary foundation to IKEA’s past success (Peter & Donnelly, 2009), and should provide strength to outlast the current recession.
Industry
Competitors. IKEA is in the industry of consumer goods. Specifically, IKEA is a retailer of furniture (Peter & Donnelly, 2009). On a broad scale, IKEA’s competitors are all furniture retailers, but their direct competition comes from other discount furniture retailers.
Ashley furniture is a discount manufacturer
References: Abbas, A. (n.d.). Brand review: Ashley furniture. About.com Guide. Retrieved from http://furniture.about.com/od/buyingfurniture/a/AshleyFurniture.htm Big Lots (2011) Craigslist (2011). Retrieved from http://geo.craigslist.org/iso/us Ebay (2011) Freecycle (2011). Retrieved from http://www.freecycle.org/about/background IKEA (2011) JC Penney (2011). Retrieved from http://www.jcpenney.com/jcp/ X2.aspx?deptid=70752&pcatid=70752&catid=70752&cattyp=DEP&dep=FURNITURE&refpagename=X2%252Easpx&refdeptid=70749&refcatid=70749&cmAMS_T=X2&cmAMS_C=MKTGB&cmAMS_V=X2H2&CmCatId=70749 Kavilanz, P Manners, T. (2009, January/ February). The key to IKEA. The HUB. 28. 26-30. Overstock.com (2011) Peter, J. P., & Donnelly, Jr., J. H. (2009). Marketing management knowledge and skills (9th ed). McGraw- Hill Irwin. New York, NY. Walmart (2011). Retrieved from http://www.walmart.com/