Nov 14, 2020 in Analysis

Ikea case analysis
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IKEA Case Analysis

 

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IKEA Case Analysis

19-19. IKEA appears to adopt a unique strategy that combines a global strategy with regional ones. Its global strategy implies that most products it sells in different countries are similar, and the most successful ones do not change over many years. In terms of store design, the stores are large and share some unique features like specified departments, showrooms, cafes, and rooms for children in all countries. At the same time, IKEA implements a set of unique regional strategies in order to adapt its marketing mix to the local customers. For example, it can sell different products in different countries depending on the demand for them, local traditions and life conditions as well as average sizes of apartments. The prices can also vary for different countries, depending on the average income of consumers and the prices of local competitors.

19-20. In terms of five global product and communication strategies, IKEAs global strategy is the closest to a dual adaptation one. It implies that IKEA adapts both its communication approach and its products to local markets. Communication strategy is adapted to the target audiences in different countries. For instance, IKEA is positioned as a shop for people with low and medium income in developed countries. However, it is also a shop for middle-class people from large cities in China because poor people and people from small cities usually do not buy furniture. In terms of product adaptation, IKEA sells both simple and unique products in local markets adapted to local demand and traditions. Moreover, prices in different countries vary to a large extent.

19-21. IKEA does not establish low prices in all markets since there is no need in that. In the developed countries, customers average income is higher and IKEA products are quite cheap for them even for a relatively higher price. In these countries, IKEA is recognized as a store that sells furniture and other goods for home for low prices (lower than prices of most of its competitors). Thus, because competitors sell similar goods for higher prices, customers are likely to prefer IKEA. In the developing countries like China, IKEA is forced to set prices lower because of lower income levels and most customers cannot afford buying IKEA products for standard prices. Moreover, local competitors have lower prices and customers can prefer them.

 
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19-22. IKEA strategy can be duplicated in theory but it is very hard in practice. Firstly, IKEA is a global famous brand with a long history, and not all competitors have such an advantage. Secondly, IKEA offers unique benefits like simple furniture for low prices that can be easily assembled by customers themselves. The prices are low due to the scale and it is hard for competitors to copy this strategy because it requires a large volume of resources. Thirdly, IKEA has unique regional strategies which are hard to copy quickly too. For instance, it is hard to duplicate local communication strategies swiftly as well as products adapted to local markets. Lastly, prices are different for different markets and not all competitors can afford making prices low in developing countries because they do not have such a large volume of production.

19-23. IKEA expands for 20-25 stores per year but this method can be changed depending on different factors. To begin with, local demand is important. If the region has a high potential demand for IKEAs products, it can open more stores there. If the demand is very low, it may open several stores or not open them at all. In addition, IKEA should open stores according to the amount of resources it has for them because its stores are very large and their construction and organization requires much money and resources. Thus, only the stores that have a potential to cover all the expenses via sales should be opened.

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