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.

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.