Ikea Case Study and Marketing Strategies

IKEA Case Study and Marketing Strategies in Singapore

Table of Contents

1.0 Executive Summary
2.0 Ikea Company Profile
3.0 Ikea’s current segmentation bases and target markets
        3.1 Geographic Segmentation and IKEA Target Markets
        3.2 Demographic Segmentation and IKEA Target Markets
        3.3 Psychographic Segmentation and IKEA Target Markets
        3.4 Behavioral Segmentation and IKEA Target Markets
        3.5 IKEA’s Positioning Strategy
4.0 Customer Value Provided by IKEA
4.1 Best Product Value Provided by IKEA
4.2 Best Service Value Provided by IKEA
5.0 Marketing Program Proposal
5.1 Product Strategies
5.2 Price Strategies
5.3 Promotion Strategies
5.4 Place Strategies
6.0 Conclusion
7.0 References

1.0 Executive Summary

IKEA being a household name established since 1943 had more than doubled its’ revenue over the last decade. With near to 70% of the total sales coming from Europe, Asia remains as IKEA’s “last frontier”. The challenge is elevated with China as the world’s manufacturing engine, India as global innovation chain, Japan as global quality leader and many other countries within Asia shifting to higher gear reaching out aggressively for a share in the global furniture market.

However, IKEA can overcome these challenges by leveraging on the company’s culture and steers toward its’ guiding beacon of “offering low price functional products with Do-it-yourself concept and reaching out to as many people as possible (IKEA’s philosophy)”.

Cities in Asia are growing phenomenally with housing demand outstripping the pace of supply. In most cities, these sudden growth of housing demand are fuelled by investors who will rent out the unit upon building completion. This resulted in owners or tenants not willing to purchase new furnitures due to short term stay. IKEA has to focus their sales in countries that have high number of homeownership who stays in the unit. This will allow the company to maximise sales potential.

Singapore has more than a million units of government-built housing with 87.2% home ownership. This number is projected to grow with the government announcement of future housing plan. Therefore, Singapore is well position to be the main city in asia for IKEA to launch a new concept of furniture specifically for the local market needs.

Although Singapore’s government is building more public housing, the total floor area per unit is getting smaller. Escalating housing cost coupled with shrinking floor-size are pushing end-consumers towards a “Swiss-Army multi-purpose tool” types of furnitures. IKEA applied the similar concept with its’ range of sofa-beds but is missing out consumer's needs with bedrooms convertible furnitures. By capitalising on its strength of easy transportability (Flat-packing) and ease of assembly (clear assembly instructions with required tools), IKEA will be able to offer this space saving convertible furniture to both existing customers and also reach out to new group of customers who are interested only in space saving convertible furnitures.