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.

Chapter 15: Retailing

IKEA is a home-furnishing company and has a lot of retailing stores around the world. All IKEA’s retailing stores are classified as destination stores which mean that customers visit IKEA as their main destination. Their stores are located in isolated place but accessible from urban area. This cuts the cost of the land. Also, there are few competitors.
Destination stores are usually a little bit difficult to go because they are a little away from urban area. Customers have to drive a car or pay more money for trains. However, IKEA Brooklyn store that I visited is very easy to go because they are doing free ferry transportation service on weekends. It took about only 15 minutes and also we were able to see nice view of Manhattan Wall Street and Statue of Liberty!



Free Ferry

In addition, IKEA has their original Swedish restaurant. Because of isolated location, there is no restaurant around it in order to prevent customers to back to restaurants in Manhattan.

Inside the store, I found out that IKEA is doing Trading Up strategy which persuades customers to buy more expensive products than ones they intended to buy before coming. IKEA put high quality and expensive products and cheaper products together in the same place. Because of this, customers are tempted to buy higher quality products because they can easily find out the differences of those products. (example in following picture: Left Shelve $29.99 : Right Shelve $69.99) In addition, customers can compare and contrast products on in IKEA. They do not have to go to other stores to look for cheaper products or higher quality products because IKEA’s products are so wide in price range.

 

IKEA's retailing stores are designated to make customers happly while shopping.



Chapter6: Consumer Decision Making

Psychological factors are affecting consumers’ decision-making a lot. One of the psychological influencers is consumers’ motivation that drives consumers to want products. Without motivation to buy, no business can succeed no matter how their products are good. One theory called Maslow’s hierarchy of needs shows that there are five levels of needs, and that when people satisfy one need, higher-level of needs become important. All levels are following.

1. Physiological needs

People at this most basic needs-level expect basic function. This means that those people do not want high quality but tend to focus on price since basic function is enough to satisfy them. For example, a student who just transferred needs a bed they can have a good night sleeping on. He or she wants to buy a cheap bed that has decent quality. Thus, those people tend to focus more on price. IKEA is offering at least one cheap product in each product lines in order to appeal to them.

2. Safety needs

At this second level, people want security. IKEA’s products are very strong and well designed. For example, they use thick strong board for their desks so that customers cannot happen to break it.

3. Social needs

At this their level Social needs, people want love and sense of belongings. IKEA is especially doing well at this stage. They put model rooms in their stores and pictures that show family with their furniture in their catalog so that customers can easily imagine how their life is going to be with their family if they buy IKEA’s products. This stimulates customers’ needs for love and sense of belongings.

4. Esteem needs

Unfortunately, I do not think IKEA is doing well in terms of esteem level. At this level, people want self-esteem, recognition, and status. One thing IKEA is doing for this level is to make their products easy to assembly so that most of people can assembly by themselves in order to make them to feel accomplishments. However, I think this is not enough in order to satisfy esteem-needs.

5. Self-actualization needs

At this final level, people want self-fulfillment and self-expression. In order to satisfy this need, IKEA offers diverse products in order to give the customers many choices. Since the number of possible combinations of IKEA’s products is infinity, customers can express themselves by purchasing IKEA’s furniture.

As you can see, this is how IKEA stimulates customer's motivation to want and buy their products.