Positioning and Target segments:
IKEA positions itself as a leading international furniture retailer that provides economical, well-designed and functional furniture. As IKEA’s biggest competitive advantage is the low price, IKEA tries all its best to lower the fixed cost and the variable cost, like building supplier relationships in developing countries to reduce labor and production cost; flat-packaging to reduce the freight fee; use materials in a cost-efficient way and in-house design also reduce the resign cost for IKEA. IKEA also differentiate itself with appealing shopping experience, self-service, as well as developing facilities like childcare, restaurants, and lounge rooms. The Scandinavian design and style is also a niche for IKEA.

The target segments of IKEA is price-conscious people, who have tight budgets, like college students, younger adults and new families, who want to make the first furniture purchase, then the IKEA may be a very good choice for them due to its price advantage. Another target segment for IKEA is early adopters. For the modern design and unique shopping environment, people who like innovative things will likely to give it a try to IKEA’s furniture.

Benefits & drawbacks to IKEA:
The benefit that IKEA gains from its strategy: 1. Its price advantage is very obvious compared with other furniture retailers, which can attract large amount of price-conscious customers. 2. The hip Swedish design and appealing shopping experience is a niche for IKEA. 3. All the IKEA stores take huge areas, which provide wide product range for customers to have more choices.

The drawback for IKEA: 1. The low price strategy will let customers perceive IKEA’s furniture as low quality 2. Due to IKEA’s store size, they are located in relatively few locations, the lack of flexibility makes it hard for IKEA to reach customers form everywhere. 3. IKEA