Chapter 7: Business Marketing

Disintermediation
IKEA is doing disintermediation. They do not outsource designing their furniture but they hire designers as their employee and design by themselves. By doing this, IKEA is able to cut cost of the design and also increase coherency among their products.

 

Business marketing

IKEA is famous for home furnishing retailers, which means business to consumer marketing. However, they are also doing business marketing and have a website specialized for business marketing. (Here is the website)

In this website, they are suggesting that their products make your restaurants look better and more spacious. (There are videos)

The following picture shows how their products look good in restaurant.

 

Moreover, IKEA is showing that their furniture like bed and sofa are smart choices in hotel room.

 In addition, their products are good to go as office furniture. For example, they are describing how supportive their chair is. Also, they are selling plants by saying that plants make office more fresh and you feel comfortable in your office.

 

Chapter 8: Segmenting and Targeting Markets

Multisegment targeting strategy

IKEA is doing multisegmenting strategy. They are segmenting their products into a lot of different income-levels. Their mission statement is to offer products affordable to as many people as possible. This strategy is totally related to their mission statement. Business usually segments their products into three or four income level like lower, middle, and higher income level. However, the world is not so simple. There are a lot of people who are in between lower and middle income level and middle and higher. Also, we do not buy furniture frequently so we think and discuss a lot about which products we should buy. IKEA’s wide price range of product helps us to decide which one is appropriate to buy. For example, following table is name and the price of IKEA’s one-person-chair product line. They have 20 different products with 13 levels of price.

One problem is cannibalization. However, they are doing customer management called IKEA Family, which helps efficient inventory management. Also, as our textbook mentions, “In many cases, however, companies prefer to steal sales from their own brands rather than lose sales to a competitor.” As long as inventory management is good, cannibalization is not necessarily bad thing.

 

Chapter 11: Developing and Managing Products

IKEA habe been creating so many products but they never stop creating new products consistently. Because of their wide procuct line mix, it is almost impossible for them to add new product lines. However, they are focusing on deepening their product lines. Thus, their new products are usually additions to existing product lines.

Additions to existing product lines

IKEA recently added steed bed named DUKEN to their bed product lines. Most of their beds are made of woods so IKEA deepened their bed product lines by adding affordable steel bed.

In addition, they added new floor lamp called IKEA PS 2012 and new table lamp called LYRIK to their floor lamp and table lamp product lines. IKEA PS 2012 is girlish and beautiful. They added these products because they probably found out that they did not have products specifically for female.

Moreover, IKEA keeps producing new strange lamps. They are trying to offer something new to living room.  However, those products are so difficult to coordinate, and deepening product lines is not always good choice.  I'm not sure if people actually want these new products.



 

Chapter 16: Integrated Marketing Communications

IKEA is using combination of advertising, public relationship, promotion, and personal selling promotional mix in order to reach target market.

Advertising

This tv commercial tells us that we can design our own kitchen and how tough IKEA's kitchen is by shooting "a kitchen party." It says the kitchen are guranteed lasting for 25 years. In addition, the tv advertising is trying to induce viewers to go to web page at the endo of the advertising. The web page(http://www.ikea.com/gb/en/catalog/categories/departments/kitchen/) explains details. 

Public Relations
IKEA is trying to earn public acceptance and understanding by showing on the web page that they are doing something good for the environment. They have put a lot of solar panels on their retail stores and it cuts use of electricity. In 2010, IKEA started putting solar panels on 7 stores in California, a store in Arizona and Southeast, and 2 stores in East coast. These 11 systems contains about 30,000 solar panels and generate 6,800kw electricity. 

Also, they made yearly summary video which explains what IKEA is doing.

Sales Promotion

During upcoming Thanksgiving holiday, they are doing discounts in order to increase motivation of customers to come to IKEA retail stores.

Personal Selling
IKEA's employees working in their retail stores are so helpful. If we tell them what we are looking for, they will make and print item lists of the products. After payment, we can easily arrange for home delivery at delivery area.


By using those product mix, IKEA is trying to reach target market efficiently.

Chapter 10: Product Concept

IKEA's ProductsIKEA's products are consumer products because their products are designated to satisfy consumer's wants. IKEA's main products are obviously furniture, utensil, and everything we need in our house. In addition, their store is also their product since product does not need to be tangible. People can have a lot of fun just looking around IKEA store with their friends and family. Not only after buying their products but before buying the products, IKEA is offering products for customers. IKEA's store is like an furniture amusement park. There are many different kinds of model rooms that people can actually see and feel. Also, customers can enjoy Swedish meal in IKEA restaurant in their stores so restaurant service is also IKEA's important product.

IKEA's product mix width is very wide. Their products include chair, table, bed, lamps, tree, kitchen, Swedish restaurant, and so on.
Moreover, IKEA's product line depth is very deep. For example, their arm chairs product line includes over 50 different kinds of arm chairs.

In addition, IKEA has high brand equity because most of people know what IKEA is doing and they have high brand loyalty. Since IKEA's products are affordable and cheap for the quality of products, people tend to buy many IKEA's products at onece.

Also, IKEA's products are all private brand. They design, produce, and sell all by themselvs. They do not let other company to design their products. Thus, IKEA's products have high coherency and credibility. All products are tough and easy to assemble. Those are why people keep buying IKEA's products and the stores are always crowded.

Chapter 18 Sales Promotion and Personal Selling

IKEA's loyal marketing program "IKEA FAMILY"
IKEA is doing loyalty marketing programs in order to make their customers to buy several times. They are issuing free IKEA FAMILY card. Altough we have to give them our information used for IKEA's marketing starategy, we can get many benefits for free by joining IKEA FAMILY. If we join IKEA FAMILY, we can get discount on some products and in their in-store restaurant. In addition, they offer the members a chance to win $100 IKEA gift card every time we visit IKEA store for free. Movere, IKEA is offereing premiums for the members. Every time we visit, we can have a free cup of coffee or tea so we can drink while walking around the store. Also, as an incentive to join, they offer a free frozen yogurt for the first time to vist as an IKEA FAMILY member.

Discount
IKEA is also doing special discount offers in order to encourage customers to buy more or to make  opportunity to buy something a litlle too expensive to buy at regular price. Right now, they are offering 15% discount on $4,500 or more kitchen and 10% discount on $3,500 or more kitchen.



 In-store Promotion   Point-of-Purchase Promotion
In addition, they are doing not only online promotion but Point-of Purchase Promotion inside their store. If we are walking around the store, we can see some posters and it offers discounts. For example, a chest in a picture below is discounted by $50. Since those discout is promoted inside the store, it can induce impulse of customer to buy.

 

IKEA is doing those mixed promotional strategies in order to offer incentives for customers. They are very good at making incentives by sales promotion.

Chapter 17 Advertising and Public Relations

Advertising

IKEA’s advertising strategy is categorized as institutional advertising. They are making their image better by advertising. For example, IKEA’s tv commercial that I attached above is doing very well. The commercial shows that IKEA is supporting customer’s long and happy home life. 
Moreover, this magazine advertising below is very good to show how important to get good bed. Interestingly, those ads are focusing on how customers are expericing their lives with IKEA's products while other home-furnishing companies tend to focus on price or how good the quality of their products are.

Public Relations

IKEA is focusing more on public relations than advertising. They uploaded this video on Youtube and their website. This video is indicating that IKEA is professional about home-furnishing by showing that they are considering not only products but also customers. Altough space is the one of the biggest problems when it comes to home-furnishing, few home-furnishing stores do not consider it or actually do cosider it but fail to tell customers about it. IKEA focused on this problem. And, they considered a solution to it and are telling it to customers through public relations so that customers know that IKEA is actually considering society and customers in addition to making money.
In addition, they are using IKEA website to publisize themselves. On the website, they are showing what they are selling, who they are, and what they are doing for society.

IKEA's advertising and public relations strategies are both institutional. They succeeded creating and maintaining their good image for society.