PEST
Table of ContentAbout IKEA - kanakIndia Market Overview -
kanakPEST Analysis - kanakSWOT kanak/AbhishekCompetition Mapping -
SakshiAvailable Competition - SakshiIKEAs Strength for India Market
- sakshiDistribution Strategy - AbhishekMarketing Strategy -
AbhishekTarget and Segmentation - AbhishekPositioning and Brand
Personality - AbhishekLaunch Plan x-30,x,x+30 Abhishek/
PankajPricing Strategy - sakshi
Market Overview
Indian Retail Market:
The Indian retail market stood at USD 396 billion in 2011-12 and
is likely to grow further at 12% to increase to USD 574 billion by
2015The market is highly fragmented where around Eighty-five to
Ninety per cent of national production comes from regionally small
size firms falls into the unorganized sector and remaining comes
from the organized sector comprising of leading manufacturer,
importers and dealer/distributors.
Size of Furniture Industry:
Indian furniture and furnishings sector stood at about Rs 66,500
crore in 2010It estimates the market size to reach Rs 1,12,000
crore by 2015*Furniture segment compromises of 65 percent of the
home market and 35 percent of institutions.
The furniture sector of India makes a contribution of 0.5 per
cent of the total GDP. According to the World Bank survey, 20
percent of the furniture industry grows per year and this growth is
expected to come from the rapidly growing consumer markets of Asia,
which signifies that there will bew growth in Indian furniture
sector.PEST Political factorsPolitical & Legal
Economic reforms are slow and inadequate. Political risk2.
FDI100% FDI in SBRTPermission from respective State governments
would be necessary to open new stores30% manufactured products
should be sourced from small and medium enterprises (SMEs). FDI is
likely to be permitted only in the six big metros(Delhi, Mumbai,
Kolkata, Chennai, Bengaluru and Hyderabad)3. Growth of Retail
Industry Organized RetailGrowth of 10.6% between 2010 and 2012 and
is expected to increase to USD 750-850 billion by 2015.Organized
retail, which constitutes 8 per cent of the total retail market,
estimates put the share of organized retail as 20 per cent by
2020.
Source: India Retail Report 2013, Images Group
Source:Bradstreet retail sector overview, Indian retail Report
2013, Images Group PEST Economic factorsEconomic Factors
Source:http://www.worldbank.org/en/publication/global-economic-prospects/data?region=SAS1.GDP
GrowthGDP growth is projected to improve to 6.2 percent in 2014 and
then to rise to 6.6 percent in 2015 and 7.1 percent in
20162.Currency Fluctuation: In the past six months, the dollar/INR
exchange rate has fluctuated by approx. 8 per cent. This may put
considerable currency risk on any foreign investment in India.
3. Low 4 wheeler penetrationPEST Social factorsSocial
Factors1.India is not one market: States in India differ in terms
of culture, language, socio-economic development etc. Further,
different spending power results in different customer segment even
within a state. This makes it imperative on the part of the
international retailers to customize their offerings to suit
regional Indian tastes.
Source:OECD, Morgan Stanley Smith Barney as of jan 2010Indias
middle class is forecast to outpace growth in spending over both a
10 year and 20 year horizon with a projected growth of in 10 year
horizon at 25%2.Indian middle class to spend more: Contd
3. Rise in income levelAs income rise, spending will shift away
from basic necessities like food and apparel and into other are
such as education, recreation, communication, transportation,
personal care product and services. 4.Young Population and Home
OwnershipIndia has a very young population as compared to that of
other major countries.Home ownership rates for India are among the
highest in the world
PEST Technological factors1.Infrastructure Challenge: Roads,
ports, electricity are some of the infrastructure challenges, which
increase the operational cost of the retail chain.
2.Skilled Manpower: One of the major challenges faced by the
existing players is the availability of skilled manpower; any
foreign retailer planning to enter India will have to face similar
challenges.Technological FactorsFurniture and Furnishings Category
faces stiff competition from small time traditional retailers as
well as individual carpenters For furniture retail, options for
investment in back-end infrastructure lies in creation of
manufacturing facilities/warehouses Some of the furniture products
could be sourced from the SME segment FDI in furniture retail is
not expected to face major political deliberations Specialty retail
outlet is best suited structure for this segmentSWOT
AnalysisOppurtunity100% FDISteady GDP growth forecastGrowth of
organized retailRise in Income levelIncrease spending by middle
income groupYoung Population and high home ownership
ThreatsFalling Rupee value affects importsDiverse socio-economic
culturePoor InfrastructureHigh Real estate value/rentThreat from
other low cost homeware specialist such as Walmart etc
StrengthsStrong global sourcing capability.Established Brand
ImageIncreasing Demand in Modern, clean, minimalist design
WeaknessesStiff competition from unorganized retailers 30% local
sourcing could affect IKEA quality standards.Maintaining price
leadership due to high dollar rate etc
Indian Consumption Pattern - FurniturePurchase Decision
Value for moneyDurabilityHigh involvement Purchase/family
affairLess or no research before purchasePurchase decision based on
instinct and product feel at the shopPurchase
OccassionSegmentation
Source: BCG India Consumer Survey 2010
Note: Total No. of households: 239 millionsSource: Euromonitor,
BCG AnalysisAll figures are in percentageSource: BCG India Consumer
Survey 2010Target & PositioningTargetProfessional AffluentUrban
AspirerTraditional AffluentAge Group27 yr - 40 yrs27 yr - 40 yrs27
yr - 40 yrsHouselhold Income15Lacs+5Lacs -14Lacs15Lacs+Profile
HighlightCredit Card User, Own a house,Indulge and Purchase in
Luxury BrandsDreams of owning a house, Does online banking, use
durables of large brandsInvests in gold, Avoids taking loan, family
own numerous consumer durablesPositioningTrendy,Stylish and
ContemporaryYoung and ExperimentalInitial position could be focused
on affordable price but only for a short notice periodPrimary
TargetSecondary TargetDistribution StrategyIKEACOCO StoreCOFO
StoreDistributor/FranchiseeSIS modular Set upCompany Owned Company
Operated StoreDirect to RetailLocated in Malls or Stand Alone
storesCompany Owned Franchisee Operated StoreFranchisee shares the
operating expenditure of the storeLocated in Malls or Stand Alone
stores
SIS primarily to have presence in local furniture hub. Eg
Panckuian road, Tilak nagarPromotional PlanObjective:
The main objective of the communication plan will be to create
news about the launch of the brand and to create awareness about
its presence in India
Announce the launch of the brand Highlight and create awareness
of IKEAs collectionLong term relationship with our stake holders,
distributors/franchisee and consumersLaunch city Delhi
Affinity towards brandsTrend spotter/ followerIndulges in style
and luxuryAttributeswe need to influence purchase decisions at
every stagePre StoreRecommendation from friendsand
colleaguesFeatures/articles in the mediaAdvertising before you go
to the storeInformation from website/internet
In storeInstore display materialServices offeredAmbience
Sales StaffInfluence in making the decisionShowcase of the range
and the possibilitiesUnderstanding of the consumers needs
marketing planStages of Brand FunnelConsumer
MindsetCommunication TaskTouch PointsAwarenessWhat is IKEA?To
inform consumers about the origin and heritage of IKEA
range.Newspaper, DM (acquired base & existing base), Online,
Launch Event, In-store merchandising, PRConsiderationHow good is
the IKEA Furniture?.To demonstrate quality, craftsmanship, care for
detailsPrescriptive Media, Tie up with Banks and communicate to
their platinum/gold card holders, In-store demonstration, catalogue
distributionPreferenceIs there any other furniture better than a
piece by IKEA? I would rather get something madeTo provide
customized coordinated living room as a brand experience
Advertorials in key publications, Participation in consumer and
trade fairs
PurchaseIs it worth spending?To emotionally engage the consumers
and establish as the affordable premium brandFlyers, Tie up with
banks (for EMIs),Price point communicationLoyalty
Why should I go back to IKEA and continue using its products?To
showcase there is more in store for the consumer and create pride
of ownership and label valueCRM,Relationship calls, Online,
exclusive invites, PR, Events with like minded brands
.must communicate at each stage of the brand funnel Launch
PlanLaunch day -360 degree
Live Outdoor near the storeJacket for leading TOI and HTRadio
spot announcing the IKEA store launchCelebrity to Launch the
StoreFashion Show inside the store Followed by Press
conferenceStrong PR coverage
BTLFlash Mob around the storeCreate IKEA Waiting Lounges at T3 ,
Movie theatres and MallsDMDM to TG database DigitalLaunch of India
website and online catalogueLaunch of catalogue AppBannersAdwords,
FB page contest and gift vouchersCompetition
IKEAs Competitive Edge:Cost leadershipConcept and design based
furnitureAlmost 85% unorganized sectorPricing StrategyObjective:To
achieve 10% of Organized furniture market share by 2015E. Aprox
2240 Cr
Penetration Strategy: Cost leadershipProfit based on volume
sales not on value sales Profit maximization in the long term.To
offer the price sensitive TG the lowest price in the category as
compared to Hometown, Style Spa, Godrej Interio.