IKEA

Live your life. Love your home.

• I (Ingvar ) Founders first name• K (Kamprad) Founders last name• E (Elmtaryd) Farm where he grew up• A (Agunnaryd) Home village

The IKEA Business idea

• “The IKEA vision is to create a better everyday life for the many people. We make this possible 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.”

IKEA History

• In 1943, IKEA was founded by Ingvar Kamprad• Based in Sweden• Bright blue and yellow• In 1951, the first IKEA furniture catalog was

published• 1955 IKEA begins designing its own furniture• 1985 The first IKEA store opens in the USA• 1993 IKEA reaches 114 stores • IKEA numbers 1,04,000 employees in 267 stores in

44 countries

Marketing Strategy The IKEA vision is "To create a better

everyday life for the many people.”

The Ikea's mission is “To offer a wide range of home furnishing items of good design and function, excellent quality and durability, at prices so low that the majority of people can afford to buy them.”

The IKEA market positioning statement is "Your partner in better living. We do our part, you do yours. Together we save money."

Product Line

• Bathroom• Laundry • Bedroom • Lighting• Children's IKEA• Living room• Cooking• Secondary storage • Decoration• Small storage• Dining • Textiles• Eating• Workspace• Hallway• Youth room• Kitchen

Reason for choosing IKEA

• Product range– Focuses on good design and function at a low

price– Offers home furnishing solutions for every room in

the home – Something for the romantic at heart, the

minimalist and everyone in between – Coordinated so that no matter which style you

prefer our designers and product developers work hard to ensure that our products meet your day-to-day needs and eliminates the unnecessary

• Low prices

– Low prices are the cornerstone of the IKEA vision and our business idea

– Low prices make well-designed, functional home furnishings available to everyone

– Constantly trying to do everything a little better, a little simpler, more efficiently and always cost-effectively

• A better everyday life

– Taken the straightforward approach to the furniture business, by starting with developing furniture with the price tag in mind. This is the IKEA way, to maximize the use of raw materials in order to fulfill people's needs and preferences by offering quality products at an affordable price

Ikea & the Environment

• Use of wood-recyclable, biodegradable and renewable material

• Select wood that is from verified, well-managed forests that have been certified

• Free disposal of light bulbs• Minimize costs• Selecting the right environmental friendly products• Use leftover material• Employees are “environmental co-ordinators”

working to increase environmental awareness

PORTER’s 5 FORCE ANALYSIS

Threat of Buyers growing bargaining power

– There is a little power because of the existing low-price options

– IKEA ensure that their customers in all aspects will be satisfied for quality service they provide

– Focused their marketing approach on demands and needs of the buyer

– IKEA uses their corporate responsibility as a good public image to their customers

– IKEA Family -card as a membership

Threat of Suppliers growing bargaining power

IKEA has its thousands of suppliers that set standards in delivering the materials

– Because of the low-pricing, IKEA’s profit margin also affects the prices in raw materials than by prices in labour

– IKEA has a wide network of 1300 suppliers. They carefully select the manufacturer of its products. The company has own production factories and designers which makes it less dependent on others

– Bargaining power of supplier could be threat for the profit of the company

Threat of Substitute Products

–There is no specific product that can be a substitute for the furniture but IKEA at least, have to keep up with the latest trends, to avoid becoming out of style–Problems faced due to distribution channels

Threat of Intense Segment Rivalry

– The IKEA’s furniture competitors’ offers different styles and functionality• Conrin targets a new low cost in terms of furniture line; Crate

& Barrel offers a furniture in a box which is subject in higher prices

• Ethan Allen aimed at a more upscale market• Wal-Mart is equipped in a big box furniture that is categorized

under the general store must-have-items, but don’t have much of a style

– IKEA is the most successful in delivering the complete package for the customers that reflects on weak rivalries

– There will always be substitutes for furniture’s but IKEA competes with price and there isn't competitors in same price range

Threat of New Entrants

– IKEA stores do not reach many small towns and this is an opportunity for the new competitors to move into small and midsize cities with smaller stores and less selection. But not easier in city because new entrants have to establish a vast supply chain and create a unique brand name

– The furniture market is already highly competitive - the risk of new entrants is not extremely high - huge capital needed to start the business

References

• http://www.ikea.com/ms/en_US/about_ikea/pdf/FF09_GB.pdf

• http://www.ikea.com/ms/en_US/about_ikea/facts_and_figures/index.html#

• http://en.wikipedia.org/wiki/IKEA• www.ikea.com

Presented By :Fenella Andrade

Live your life, love your home.