Ass1 Case Study IKEA 3 PDF

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Assessment 1 Case Study for Ikea...

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MKT10007 ASSESSMENT 1 Minor Assignment: CASE STUDY 1. What are IKEA changing about their marketing strategy? Over the years Ikea has constantly evolved its’ marketing strategies with the use of creative physical marketing, for instance in 2016 “Ikea built a Swedish houseboat and ran boat trips between Oxford and Reading, serving Swedish food and drink and offering a craft workshop” (Matt 2017). And digital innovations such as ChatBot – a messenger AI that gains customer feedback in an informal nonintrusive form of surveying and an AR app which lets you choose from a range of furniture to see what it will look like in your home. Ikea has released a series of short TV advertisements focused on product innovation. Aired in the UK these ads deliver the want that the consumer’s house is boring and can be revamped with simple affordable products such as colorful rugs, funky kitchen utensils and classy tea sets. In one of these TV ads titled “Spinning Cups” we are shown 3 elderly ladies looking bored and fed up as they gaze into the camera and sigh. Instantly, the camera pans over to the infamous blue “Frakta bag – a symbol of Ikea’s newness” (Hammett 2018). The focus on the bag suggests that Ikea is now much more of a traditional shopping experience and that these nifty small items inside are all one needs to bring life back into the home. All these TV advertisements can be found on Ikea’s social media pages. “As well as the addition of TV ads, Ikea has added a “New At Ikea” hub on the UK site” (Hammett 2018). As digital marketing dwarves traditional print in consumer exposure, market research and cost, you can see why Ikea have shifted their focus. Ikea has always been the innovative leader in the furniture industry. From the flat pack grab-and-go to the Swedish cafés to serve you after your epic journey through one of their extensive stores. Ikea defines itself as a market-oriented business and has reached a pinnacle in strategically marketed, modern practical furniture across the globe and as covered in week 3 of the learning materials “A company that believes in sustainability will focus on goods and services innovation, and building customer loyalty” (Lunenburg 2019). 2. What do you think has led them to this change? As markets change and consumer buying decisions are swayed, Ikea has stayed innovative. If we look at other furniture stores in the UK such as Homebase, Argos and Habitat, we can see that although successful, have never penetrated the market to the extent Ikea has. The colossal blue and yellow monoliths that are scattered not only throughout the UK, but also globally, attracting consumers for an experience comparable to that of a shopping mall or art exhibition. By switching the consumer’s attention to the smaller household products which can be picked up, handled, then placed in that iconic blue bag, Ikea have now altered the consumer buyer decision making process. Whereas large pieces of furniture are generally a low frequency purchase with many competitors, the neat household items such as dishware, bed sets and toys are considered medium to high frequency purchases. Coupled with Ikea’s low pricing strategy, an incentive is created to visit a store or more importantly the website where the consumer is then exposed to Ikea in its’ entirety.

As we are now immersed in an age where online shopping and home delivery are key to sustainability of any retail business, Ikea are ensuring they are on board. With the product differentiation of the easily transported low cost homewares, Ikea are able to sell more products. The consumer does not get hung up on the cocktail shaker that is £5.99, as the modern-day consumer is accustomed to buying low priced items online without the need for much external research. And just like an upsell at McDonalds, the consumer can purchase these extras on top of furniture ordered online. Ikea’s target market is extremely broad however one thing they have in common is a want for low priced products. One of Ikea’s target market segmentations is renters, The UK Office of National Statistics reported that (2019) “The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.” Ikea has seen this increase and in turn targeted renters who enjoy the flexibility of being able to relocate, taking those Ikea accessories that make a house their home with them. In addition to Ikea targeting tenants, they have also reached out to another market segment, landlords. 3. (In your opinion) are they heading in the right direction? Why? Or Why not? What is important to take from this case study is not only that yes Ikea is taking the right direction, but always have. The major part of being a successful and sustainable company is remaining market orientated. Ikea has seen a change in how and what people shop for and in turn changed lanes to target their markets accordingly. It’s be claimed that Ikea has been late on the arrival of the online shopping movement. However a major part of the Ikea experience is its brick and mortar stores. If we looked at a bird’s eye satellite image, the Ikea store would be prominent, could the same be said for its’ competitors? The store itself it not just a point of sale but also very much entwined into Ikea’s brand and image. According to Ikea’s website they have now opened smaller, more centrally located stores called “planning studios”. Customers can visit these stores, order and pickup from a convenient location, see the display of Ikea rooms and purchase those new household accessories. Ikea’s initiative of opening these studios has changed the consumer perception of the Swedish furniture giant as a now much more approachable shopping experience.

References

Hammet, E 2018, ‘Ikea shifts marketing strategy to focus on product innovation rather than rooms’, Marketing Week, 27 August 2018, viewed on 03 June 2019,

UK Office for National Statitics 2019, UK private rented sector: 2018, viewed 11 June 2019,

Lunemburg, B 2019, ‘Week 3, 2019-OU2-MKT10007-Fundamentals of Marketing-H1, Learning materials on Canvas, Swinburne University of Technology, 26 May 2019, viewed 03 June 2019 Matt, 2017, 'Ikea: the company that’s great at experiential marketing ', Hot Cow, 04 May 2017, viewed 03 June 2019, < http://www.hotcow.co.uk/Buzz-Blog/ikea-the-company-thats-great-at-experientialmarketing.htm.>....