...strategies used by two (2) different companies for a similar product within the category that you selected. The two promotional strategies that will be compared are from IKEA and Pottery Barn. IKEA is a Swedish company that sells a wide range of ready-to-assemble furniture, appliances, and home accessories. IKEA’s home furnishings are of good design and functionality offered at a price low enough to be affordable to most people (IKEA, 2014). Pottery Barn is a specialty upscale American-based home furnishing store that was acquired by Williams-Sonoma in 1986. Pottery Barn was built on the idea that home design should be exceptional in comfort, quality, style, and value (Pottery Barn, 2014). IKEA’s promotional strategy includes a mix of television advertising, sponsorship, newspaper and magazine advertising. The concept of “democratic design” is portrayed in all of these methods, especially in the iconic IKEA catalog. This design features three elements: form, functionality, and low price (IKEA, 2014). With respect to low price, IKEA customers play an important role by driving to the store, selecting the flat-packed product from warehouse, transporting the product home, and finishing by assembling the product themselves. Having the customer complete this labor is all what helps contribute to the low pricing commitment. IKEA has targeted young married couples and first time home owners by marketing a contemporary lifestyle of enthusiasm (Douglas & Craig, 2011). The image branding...
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...strategies used by two (2) different companies for a similar product within the category that you selected. The two promotional strategies that will be compared are from IKEA and Pottery Barn. IKEA is a swedish company that sells a wide range of ready-to-assemble furniture, appliances, and home accessories. IKEA’s home furnishings are of good design and functionality offered at a price low enough to be affordable to most people (IKEA, 2014). Pottery Barn is a specialty upscale American-based home furnishing store that was acquired by Williams-Sonoma in 1986. Pottery Barn was built on the idea that home design should be exceptional in comfort, quality, style, and value (Pottery Barn, 2014). IKEA’s promotional strategy includes a mix of television advertising, sponsorship, newspaper and magazine advertising. The concept of “democratic design” is portrayed in all of these methods, especially in the iconic IKEA catalog. This design features three elements: form, functionality, and low price (IKEA, 2014). With respect to low price, IKEA customers play an important role by driving to the store, selecting the flat-packed product from warehouse, transporting the product home, and finishing by assembling the product themselves. Having the customer complete this labor is all what helps contribute to the low pricing commitment. IKEA has targeted young married couples and first time home owners by marketing a contemporary lifestyle of enthusiasm (Douglas & Craig, 2011). The image branding has...
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...IKEA assignment. 1. Value-based pricing is inherent to IKEA's approach because the company's goal is to give a high quality furniture at lower prices. They build the brand accordingly, knowing the customer needs for design, aesthetics and function very well. IKEA targets students, young families, single people with lower to medium income. The company knows that its target market can't afford to spend too much on the furniture yet wants it to be modern. Thus, the company avoids the added cost for the assembly of their furniture, warehouse costs, eliminates the need for a specialized delivery vehicle and their stores promote customer self-service. These strategies allow the company to charge lower prices while maintaining a good value products. 2. I'd say that IKEA uses a good-value pricing strategy. The company offers a quality furniture for a fair price, but I don't think they offer any extra value. IKEA furniture is not luxurious or very innovative, but it has a great balance of quality, functionality and price. The design of their furniture is simple, yet very functional. There is a very limited selection of colors, with usually only 3-5 basic colors available. 3. Target costing pricing approach is when a company seeks to balance quality and functionality with the target cost. It means that the organization like IKEA starts its marketing program with first identifying the price and designs it accordingly from there. IKEA has a research team that works...
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...Project Management Case Studies: Ikea And Timbuk2 Project Management Case Studies: IKEA and Timbuk2 Table of Contents Case I: IKEA Design and Pricing 3 Case Summary: 3 Key Terms: 3 Case Questions 5 Conclusions 9 Case II: The Tao of Timbuk2 9 Case Summary: 9 Key Terms: 10 Questions: 11 Conclusions: 15 Bibliography 16 Case I: IKEA Design and Pricing Case Summary: IKEA is a Swedish retailer that dominates the home market in 32 countries and is currently expanding in the United States. The success of the company is providing low cost products that include function, modern design, environmental considerations and healthy manufacturing conditions. IKEA designs its products, manufacturing, and distribution systems with the target price in mind. IKEA’s processes and corporate mantras feel unique and cheerful. Both customers and employees count on the company to operate responsibly. IKEA makes customers feel like they are living well even though they aren’t paying for premium product. There is a great deal to learn from its operations and management. The company’s goals have been incorporated into the product design process that IKEA uses. Key Terms: • Triple bottom line – A business strategy that includes social, economic and environmental criteria. IKEA is an example of a company that judges itself by the triple bottom line. While it strives to do good business, it includes a business and operating model designed to minimize the...
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...placed in small space on the wall. An additional benefit that will largely attract the fast-moving technology orientated generation is its ability to charge small wireless devices such as mobile phones, iPods and mp3 players. We have decided to stay aligned with the design of our product to be similar to that of IKEA’s products due to its simplicity in look and innovation in design and use. The wood used for the product will comply with forestry management of IKEA and ensure that the area it sourced from does not threaten high conservation values. Product Differentiation It differentiates itself from other home organisers due to its size and the ability to charge small devices. It is also clutter free as it allows you to store just your essential items in a hidden compartment within the unit without displaying all the things like other organisers. Like all other IKEA products this is a self assembling product using medium range Brand Name: Homemaid closely resembles the simplicity of the Swedish Furniture Company IKEA. It closely aligns with the image of the company which designs furniture that is light-weight, laminated wood and easy to assemble. The brand is closely associated with minimalism in furniture designs which provides the consumer with its core purpose yet providing a complete a furnished look in its style. Packaging The packaging for Homemaid will be simple and packed in a flat cardboard...
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...IKEA Case Study Strategic Marketing Plan Review Table of Content 1.0 Executive Summary Pg. 3 2.0 IKEA Company’s Proflie Pg. 4 3.0 Segmentation Base on Applied by IKEA Pg. 5 3.1 GEOGRAPHIC SEGMENTATION 3.1.1 TARGET MARKET SEGMENTS Pg. 5 3.2. DEMOGRAPHIC SEGMENTATION 3.2.1 TARGET MARKET SEGMENTS: Pg. 6 3.3 PSYCHOGRAPHIC SEGMENTATION Pg. 6 3.4 BEHAVIORAL SEGMENTATION 3.4.1 TARGET MARKET SEGMENTS Pg. 7 3.5 IKEA’S POSITIONING STRATEGIES Ph. 7 4.0 Customer Value Provided by IKEA Pg. 8 4.1 Strategy of Best product values offered by IKEA Pg. 8 & 9 4.2 Best Price value strategies offered by IKEA Pg. 9 4.3 Best Service Value Strategies offered by IKEA Pg. 10 5.0 MARKETING PROPOSAL PROGRAM Pg. 11 5.1 PRODUCT STRATEGIES Pg. 11 5.2 PRICE STRATEGIES • The Long-Term Aspiration of IKEA • Reducing a lower price in several ways: • The Short-term Aspiration of IKEA Pg. 12 & 13 5.3 PROMOTIONAL STRATEGIES Pg. 13, 14, 15 & 16 5.4 PLACE STRATEGIES Pg. 16, 17, 18, 19 & 20 6.0 Conclusion Pg. 21 7.0 Referencing Pg. 22 1.0 EXECUTIVE SUMMARY The selected company for discussion is IKEA group where company is renowned for their D.I.Y concept which makes them the sovereign furniture retailer in the industry. In this report, the first scope of the discussion will be accentuating on the segmentations and target market segments on how IKEA is based according to their company...
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...Case Study 1- IKEA: Design and Pricing IKEA: Design and Pricing Considered the world’s largest furniture retailer in the world, Swedish retailer IKEA has dominated the market in more than 314 stores and 42 countries and now has set its sites on North America (US and Canada). The company offers a vast array of space conscious furniture units as well as kitchen ware and accessories for the home. The marketing strategy- “make less expensive items without making them cheap”, in other words, the company relies on its current success of making good quality products with low prices. Prices typically run 30 to 50 percent lower than that of its competitors and although cheaper, the idea is not to leave the customer with an inferior product. The process of keeping prices down from product conception and design to final distribution, these are the mainstays for this world leader. We will briefly describe the steps taken by IKEA in order to a produce one of its most famous products, the Trofe’ mug. The first step is establishing and setting the price of the product. During the process of product development also known as bringing the product to life. This involves numerous factors such as color, design, suppliers and most importantly, product price and in the case of the trofe’ mug, the price had to be extremely low, relying on sales volumes to generate sales and profits. As the development process of the product continues...
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...IKEA 1. Explain, in detail, the aspects of IKEA strategy that make it a Hybrid strategy. IKEA is clearly a follower of a “strategy clock” approach, which is characterised by two distinctive features: it is more focused on low prices to customers, not only low costs to organisation, and its strategic decisions are made to create the balance between price/cost leadership and differentiation, creating unique benefits and features that provide competitive advantage. Home furnishings market is highly segmented with mostly local competition of the several kinds: multinational furniture retailers, companies specialising in just a part of furniture product range, non-specialized retailers where furniture as part of their product range and small companies/producers. IKEA strategy is characterised by cost saving, where managers fly economy and share rooms in the hotels, salaries are hardly generous, advertising is done in-house, their offices do not look like typical offices of a multinational companies due to fanatical devotion to cost cutting. With this cost cutting urge, the company is capable of offering prices much lower than the competition. Such pricing strategy makes IKEA deliberately focusing on younger people and middle class buyers, those who do not wish or cannot afford buying expensive furniture. IKEA is well aware of who are their key-customers, which is 25-50 years old people, majorly families with kids. Thus, there is a certain focus on a segment, which is another part...
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...used when pricing their products. In normal practice, a company designs their product and then prices it according to the cost of production and their competitor’s markup. IKEA have a different approach, they first ascertain a target price and then design the product. Designers at IKEA must accommodate all costs such as raw materials, manufacturing and transportation until the product reaches the stores within its target price. IKEA have developed this approach in order to support ‘a vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.’ (Our Business Idea-IKEA) IKEA adopted the idea of designing practical furniture that could be disassembled for flat packaging and transported to their stores worldwide. This idea was implemented in order to reduce the amount of free space in its transportation and storage. Transporting their goods in flat packs allowed IKEA use their space more efficiently and therefore cut down on their costs in contrast to their competitors who transport assembled furniture. Although the company focuses on producing affordable furniture they do not compromise the quality of the goods when designing them. In order to manage their supply chain, IKEA divided their corporate structure into different division with three major components-Retail, Distribution and Trading Areas. IKEA of Sweden: Develops and supplies IKEA’s product range for IKEA stores...
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...Strategy Swedish company IKEA was the world's largest furniture retailer since the early 1990s. It sold inexpensive furniture of Scandinavian design. The company operated in 55 countries with a workforce of 76,000 (the company referred to its workforce as its 'co-workers'). IKEA offered nearly 12,000 items to the home furnishings market worldwide. It sold a wide range of products including furniture, accessories, bathrooms and kitchens at 186 retail stores in 30 countries across Europe, North America, Southeast Asia, Middle East and Australia. IKEA enjoyed high brand equity. | | In 2003, Manhattan US-based Interbrand, a marketing research and consultancy firm, valued the 'IKEA' brand at $6.92 billion and ranked IKEA 43rd on its list of the top 100 most valuable global brands, ahead of Nestle, Harley-Davidson, and Apple.3 | Analysts attributed IKEA's success to its skill in combining good product design and superior quality with an affordable price. IKEA's low-pricing strategy was aimed at young people. For several decades, IKEA had looked for international markets, which were culturally as close as possible to the Scandinavian market. The basic assumption behind IKEA's global strategy was 'one-design-suits-all.' Anders Dahlvig, the CEO of IKEA, had once said, "Whether we are in China, Russia, Manhattan, or London, people buy the same things. We don't adapt to local markets." | IKEA had, in fact, been quite successful with its 'one-design-suits-all' global expansion...
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...Company Description IKEA started up with the woods of southern Sweden with the inspiration by the founder at 1943 in Switzerland. The founder of IKEA is Ingvar Kamprad. The company name is inspire by the first letter of the name of founder, Ingvar Kamprad (IK) and the name of the place that he grew up, Elmtaryd and Agunnaryd (EA). IKEA’s vision is “to create a better everyday life for the many people” (IKEA/MY/EN, 2014). Besides that, the company’s business idea is to offer a wide range of well designed, functional home furnishing products at affordable prices so there will be many people able to purchase them (IKEA/MY/EN, 2014). Now, IKEA had established in about 40 countries with 345 stores, such as France, China, United States and so on and it’s still growing. IKEA is positioning as good quality furniture with low price. IKEA is known as a values driven company with a passion for life at home (IKEA /GB/EN, 2014). IKEA has offers varieties of home furnishing products with affordable price to people. IKEA furnishing products are designed to let customers easy to carry back to home and install it by themselves. IKEA promote that the furnishing products provided is a way to a beautiful home to fulfill with love and make life better. IKEA’s stores decorated in a way that how actual home look like. This design is making for the convenient of people to get inspiration on what to put in their home by choosing the products they want. IKEA’s furnishing products can be classified...
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...Executive Summary Background IKEA, the world’s largest home furnishings retail chain, was founded in 1943 by a Swedish entrepreneur Ingvar Kamprad. IKEA offers standardized products worldwide that are Scandinavian in design worldwide. The unique idea of this famous brand is to offer the option of assembling products to customers. The design of the furniture is very modern and light as it is made of particleboard. The products are of contemporary design and function with the concept that is based on low price. High quality, convenience, affordability, consistency, functionality and good design are the essence of this world class home furnishing retailer. Challenges IKEA faced many challenges in terms of culture and business practices as well as socio-economic and political conditions in China. The biggest challenges were pricing, copycat producers and cheap labor cost for assembled furniture. Alternatives To make the price more affordable for Chinese consumers IKEA has developed manufacturing units in China and collects raw materials locally. Due to country specific environment IKEA chose franchising in China. Because of cheap labor cost of Chinese assembled furniture IKEA offers reasonable fee-based assembling services. IKEA has built its stores near public transportation lines inside cities since only 20% of customers own cars in Shanghai. Recommendations IKEA needs to find more local suppliers to keep price lower. To understand local culture and purchasing habit,...
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..." The IKEA vision is to create a better everyday life for the many people. This includes doing what we can to help create a world where we take better care of the environment, the earth's resources, and each other. We know this continuous improvement is a never- ending job, and that we are sometimes part of the problem. But we work hard to be part of the solution". You are required to explain how IKEA is able to implement its vision and mission statements in its work processes? Vision At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. The IKEA product range focuses on good design and function at a low price. It offers home furnishing solutions for every room in the home. It is co-ordinated so that no matter which style you prefer our designers and product developers work hard to ensure that our products meet your day-to-day needs and eliminates the unnecessary. Low prices are the cornerstone of the IKEA vision and our business idea. The basic thinking behind all IKEA products is that low prices make well-designed, functional home furnishings available to everyone...
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...(Hughes, Gwinnett, & Curphey, 2012). IKEA, one of my favorite places to shop, is an environment that is affordable for many people to have the homes décor and all-around supplies they need at a reasonable cost. With the market changes, economic, and overall changes to the environment (aka flood, earthquake), the one thing that stays stable is the pricing and products at Ikea. The furniture is typically good quality and usually easy to put together (depending on who is doing the task). The decorated areas, for example, a small room with sample bedroom furniture provides the feel of how a customer’s bedroom would look after buying those products. Since it is a place to easily get lost and go in circles, there is always a co-worker nearby to direct you to where you have to go. In most cases, they are respectable and happy. Perhaps this is because of how Kamprad respects co-workers views and overall good working environment he creates for his co-workers. Resources. According to Hughes, et al., (2012), resources are intangible elements and material resources as well as capital and perception of product quality. Ikea has noticeable and immaterial resources. From its success, one can actually see its sales success, profits, and other financial needs to continue to build the product and brand elements. When referring to the perception of product quality, that is intangible but definitely apparent. There is something for everyone at Ikea—even when not planning to buy anything...
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...IKEA Answer of Question 1: The porter generic strategies This concerns the positioning of the firm in the industry where it operates, so Porter illustrates that the strengths of any firm can be deployed in one of the costs advantages or the differentiation advantages and for narrow scope in the industry. So the three Porter’s generic strategies are defined as. • Cost-leadership strategy. This calls for being low cost producer for a given level of quality and sell at the average of industry pricing to make profits or sell at below the average of the industry pricing to increase the market share. • Differentiation strategy. This calls for the development of the product and add value by finding unique attributes that make the customer different in using this product from the competitor’s products, and the uniqueness of these attributes will charge the customer higher prices than the competitors who are not able to find a substitutes easily. • Segmentation or (Focus) strategy. And this can be split into (focused differentiation, or focused low-cost). This calls for concentrating or targeting a narrow group of people and serving them by either low-cost products or differentiated products. The strategy clock This is an elaboration of the Porter’s generic strategies, and developed by Bowman to consider the competitive advantage of the firm in relation to the cost advantage or differentiation advantage. This is represented by combination of price axe and the perceived added...
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