Ikea Invades America
Table of Contents
Introduction 1
Purchase Obstacles 2
Reserve Positioning Strategy 3
Withheld Product/Service Attributes 4
Cost Efficiency 5
Works Cited 6
Appendix 1-3 7-9
Introduction
Founded in 1943 by a poor Swedish farmer named Ingvar Kamprad, IKEA is now one of the largest furniture retailers in the world. From its inception, Kamprad wanted to create cheap, quality furniture that everyone could afford. That formula led to IKEA’s early success in Sweden and has carried over until today. To its customers, IKEA is not just a store but a way of life, which may be evident through the cult-like following the company has achieved. When talking about the four P’s of marketing (product, price, place, promotion), there are few companies in the world that have mastered this concept better than IKEA. IKEA has been able to recognize the demands of its shoppers and create compelling products that meet those demands at a reasonable price. Its products are sold at unique stores that serve strategically important, geographic markets. This paper examines the factors that have made IKEA such a big success and offers some recommendations for future growth in the United States. Today, IKEA has over 240 stores in 35 countries and has revenues of over $26 billion. Its revenues double every 5-6 years and the company is now expanding to growing markets like China, Japan, and Brazil. The future of IKEA looks brighter than ever. For a brief snapshot of IKEA’s current sales around the world see Appendix 1. In 1985, IKEA decided to invade America. Faced with this early failure, IKEA retooled its furniture to fit American tastes. IKEA soon became the fastest growing furniture retailer and the 14th largest furniture retailer overall in the United States. IKEA executives needed to find a balance of how to create new furniture offerings without losing its unique design and corporate soul. By examining IKEA’s marketing strategy and answering a series of
Introduction 1
Purchase Obstacles 2
Reserve Positioning Strategy 3
Withheld Product/Service Attributes 4
Cost Efficiency 5
Works Cited 6
Appendix 1-3 7-9
Introduction
Founded in 1943 by a poor Swedish farmer named Ingvar Kamprad, IKEA is now one of the largest furniture retailers in the world. From its inception, Kamprad wanted to create cheap, quality furniture that everyone could afford. That formula led to IKEA’s early success in Sweden and has carried over until today. To its customers, IKEA is not just a store but a way of life, which may be evident through the cult-like following the company has achieved. When talking about the four P’s of marketing (product, price, place, promotion), there are few companies in the world that have mastered this concept better than IKEA. IKEA has been able to recognize the demands of its shoppers and create compelling products that meet those demands at a reasonable price. Its products are sold at unique stores that serve strategically important, geographic markets. This paper examines the factors that have made IKEA such a big success and offers some recommendations for future growth in the United States. Today, IKEA has over 240 stores in 35 countries and has revenues of over $26 billion. Its revenues double every 5-6 years and the company is now expanding to growing markets like China, Japan, and Brazil. The future of IKEA looks brighter than ever. For a brief snapshot of IKEA’s current sales around the world see Appendix 1. In 1985, IKEA decided to invade America. Faced with this early failure, IKEA retooled its furniture to fit American tastes. IKEA soon became the fastest growing furniture retailer and the 14th largest furniture retailer overall in the United States. IKEA executives needed to find a balance of how to create new furniture offerings without losing its unique design and corporate soul. By examining IKEA’s marketing strategy and answering a series of
Cited: Businessweek.com (2005, November 14). How the Swedish retailer became a global cult brand. Retrieved June 1, 2008, from http://www.businessweek.com/magazine/ content/05_46/b3959001.htm IKEA should also target large ethnic groups like Hispanics who have their own tastes. IKEA has demonstrated some success in catering to them in the past. (Businessweek.com, 2005) 4 Source: Moon, 2003, p. 3