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.