Chapter 5: Developing a Global Vision

IKEA is doing global marketing. They have customers all over the world. However, they do not alter their products depending on countries or region. Their products and Websites are globally standardized.
For example, IKEA's lether armchair called SKOGABY is sold all over the world without any change. Because of that, they do not have to re-design and re-create new products. They just globally standardize their products and sell them. Of course, this means less design and marketing costs because they already have the design and know how to make it.

Also, IKEA's Websites are standadized all over the world. Let's compare American and Japanese Websites.
America: http://www.ikea.com/us/en/catalog/categories/departments/bedroom/
Japan: http://www.ikea.com/jp/ja/catalog/categories/departments/bedroom/
Those websites are almost same except the languages. This also means less cost of establishing Websites because all they have to do is translating. They do not have to change the structure.
Most importantly, their standardizations are accepted all over the world. If it failed, IKEA's business would be disastrous.

Chapter 4: The Marketing Environment

The environment surrounding IKEA furniture store is diverse because everybody need (or want) their own furniture. Thus, IKEA is taking it into account in order to satisfy different needs and wants.

Social Factors

One of external environmental factors business has to consider is social factors because it is unchangeable and affects customer’s lifestyle, preferences, and expectations. IKEA is taking component lifestyle into account. They understand that people have their own tastes. IKEA’s products are wide in their design and style. For example, they have 83 designs for only fabric sofas and 50 designs for only leather. Some of the products are very simple in design while some are fancy. There are many options for customers who have own lifestyle and tastes.

Demographic Factors

Demographic factors are also very important to think about. We have to know what kind of race and how old our customers are in order to satisfy them because there are differences depending on their demographics. IKEA is selling products for baby’s and kids as well as teenagers and adults.

Ethnicity Factors

Also, it is very important to consider ethnicity. I’m from Japan and have met a lot of people from all over the world. One of the things that I have noticed is that different ethnicity has its own preference. However, I do not see that IKEA differentiates its products according to ethnicity. Nevertheless, every product lines have some simple but modern products so that they fit into almost all lifestyles. Also, customers can assemble parts and create their own products

Economic Factors
IKEA’s one of the missions is to produce products affordable to as many people as possible. Thus, their product price range is wide so that from people with high purchasing power to ones with low purchasing power can buy their products.

Technological Factors
IKEA’s another mission is to make energy they use 100% renewable so they have made solar energy and wind turbine teams to cover up the energy they use. Also, they keep producing environment friendly products (i.e. bottom of my Chapter 3 blog). In addition, they hire their own designers rather than outsourcing so that they can improve their techniques and design.

Political and Legal Factors
IKEA has a lot of lawyers all over the world so that their products or their business do not violate the laws. However, some IKEA’s tv commercials are controversial and banned.  

 

 

Competitive Factors

So far, IKEA is the top in affordable global furniture store segment. Their competitor includes Bed Bath & Beyond. The reasons why IKEA is the leading company are that they have competitive advantages that I wrote in my Chapter 2 blog. Along with the fact that their products are good, just walking their store is fun because their stores are designed to entertain the customers. They have a lot of model rooms, children-play-area, and even restaurant where the customers can try Swedish foods. There is no doubt that many people visit IKEA.

Chapter 3: Ethics and Social Responsibility

Along with making money and producing creative products, IKEA truly think about Corporate Social Responsibility because they care a lot about the planet and people.

 

A Soft Toys Campaign Helping Children

From mid-nineties, IKEA has held a soft toys campaign during holiday season at the end of each year. During the campaign, one dollar of each soft toy sold in all IKEA stores in the world goes to UNICEF and Save the Children in order to improve education for children in Africa, Asia, and Europe. So far, this campaign has made 47.5 million euro ($62,443,500) of donation and helped 8,000,000 children have a good education in about 40 countries.

 

Green Marketing

                IKEA is also environmentally responsible. As a furniture store company, they have to use woods a lot. However, they plant a new tree for a tree they have used. The FSC(Forest Stewardship Council) has awarded IKEA a certificate which shows IKEA is balancing economic, environmental, and social interests.

                In addition, IKEA has invested in installing 250,000 solar panels and 60 operational Wind turbines in countries without good sunshine. Their 9 wind turbines in central Sweden generates renewable electricity that covers 75% of the power needed for all IKEA stores in Sweden. Moreover, IKEA applied sustainability to their products. For example, their LED lamp called SOLVINDEN generates light by using solar and wind power. You can see how it works in this video.

 

Chapter 2: Strategic Planning for Competitive Advantage

The key reason why many people have chosen IKEA's products is that IKEA has competitive advantages.

Cost Competitive Advantage
IKEA products are affordable for most of people to buy. A year ago, I was looking for cheap desk and found out that IKEA's desk was the cheapest but also durable. Its top panel was so sick and wide that I could study with two books, a desk top computer, a cup of coffee, and ice cream. Also, it was stable. I could not believe that it was only $39.99. 
 The biggest reason of its affordable price is because IKEA decides retail price of product at first. After that, it designes and makes product that fits the price. In addition, its designers and developers directly communicate with suppliers in order to reduce the price at factory level. They make adjustments on factory systems to maximize efficiency and use of raw materials. Moreover, one of the most famous IKEA characteristics, the flat package also helps to decrease the cost and price because transporters are able to convey more products at one time with flat packages, and , in addition, IKEA can store more products efficiently with less space.


Product/Service Differenciation Competitive Advantage

One of the most distinct product differenciation competitive advantages is its wide range of products. At first, IKEA products are wide in function. IKEA offers everything we need at home from basics like beds, desks, chairs, curtains, and cabinet, to something we do not usually see in furniture store like plants, toys, and whole kitchens. Also, its products are wide in style. For example, IKEA offers simple carpet as well as colorful or romantic ones. Customers can choose furnitures that fit their house and their preferences.

In addition, IKEA has competitive advantage about its package. As I explained earlier, IKEA's flat-pack allows its customers and transporters bring products home easily. Additionally, IKEA products are designed for most of customers to easily build the products by themselves. Personally, I have ordered a lot of IKEA products and built them all by myself. It usually takes about 30 minutes at most with no difficulty. When I assemble non-IKEA products, I usually need some help from my friends or family, but IKEA products are so easy to assemble that I do not need help at all.

Those IKEA's competitive advantages are attributed to its vision. According to IKEA home page:

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.

Setting clear vision is very important but more importantly, applying the vision to every products is the key to succeed.