IKEA - Assignment 1 - Prepare a Market Research Brief PDF

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Assignment 1 - Prepare a Market Research Brief...

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IKEA Market Research Brief Introduction IKEA, the world largest furniture retailer from Sweden, is renowned for its self-assembled furniture products sold in over 290 stores across 36 countries (IKEA, 2018). Given its affordable yet stylish product lines, IKEA is well-positioned to capitalise on a growing middle class. To keep costs low, IKEA sells its products in flat-packaging and requires consumers to assemble furniture on their own (Loeb, 2012). Such self-assembly, however, has led to cases which have posed significant risks and even tragedies to consumers.

Background IKEA recently recalled 17.3 million of their self-assembled MALM chests and dressers after the death of at least eight children under three years old after the IKEA dresser fell over (Nackstrand, 2017). This resulted in claims that IKEA had failed to consider child safety precautions when designing such products. Despite providing a bracket to attach the product to the wall and warning customers about the foothold hazard, consumers have complained that the drawers were not accompanied with assembly accessories (e.g. screwdriver), deterring them from properly assembling the product with safety as a priority. Furthermore, there have been concerns where renters deem attaching furniture to walls as highly unsuitable given the need for consent from landlords to make alterations in the property (Browne, 2016). On this basis, IKEA’s apparent solution using wall-adhering mechanisms have not been perceived to be feasible by renting consumers, a major segment in IKEA’s lowerpriced product line. The tragedies and challenges accompanying the MALM series have heavily impacted the IKEA’s reputation and reduced consumers’ confidence when purchasing IKEA products, particularly their chest and dressers product line (Lim, 2016). The public negativity towards IKEA’s oversight on product safety precautions may well affect consumer sentiments, consumer trust and, over the long run, IKEA’s market share.

Purpose of the Research Given the impact of such product failures, IKEA Australia seeks to undertake marketing research to understand how consumers in Australia perceive these incidences and develop strategies to reduce the impact of future occurrences. Given that the MALM series is still being sold and recalled in the market, IKEA Australia needs to understand how consumers view the potential flaws and consequences that may arise from the use of this furniture and what motivates them to continue purchasing the product. Before launching a similar dresser product line in the future, IKEA wants to be certain that customers have enough confidence on IKEA’s concern about products’ safety precautions and ensure that there is sufficient demand for the upcoming product line in Australia market.

The key issues that this research need to address include understanding buyers’ attitudes towards unfortunate MALM dressers incidences, the extent to which it affects consumer confidence in purchasing similar IKEA products and how such incidences may negatively impact consumers’ perceptions toward the IKEA brand. Specifically, it is vital to know whether, moving forward, safety precaution of product design alone is a major determinant in purchasing IKEA dresser products, or whether the price, functionality or design of the dresser products play equally important roles.

Objectives Business Objectives:   

To understand whether incidences of IKEA’s defective MALM series dressers will affect the sales of IKEA’s similar product lines in the Australian market. To examine whether such product failure scandals may translate to reduced consumer confidence of IKEA’s brand. To determine what aspect(s) of product improvement to invest in, so as to align with consumers’ expectations.

Research Objectives:   

To examine consumer attitudes towards the MALM product recall and incidences of dresser-caused deaths. To measure consumers’ confidence in IKEA’s claims on their dresser products’ safety precautions. To determine whether safety precautions, price, functionality or design of IKEA dresser product have a larger influence on purchase intentions for household furniture use.

Given that the first two research objectives deal with consumer attitudes and confidence, qualitative research should be conducted to first explore the general sentiments consumers have in response to the product failure and associated incidences. This will allow IKEA to obtain an initial understanding of how consumers feel toward the brand, product line and similar products. The use of focus group interviews is proposed, where IKEA customers across major cities in Australia with IKEA stores will be invited to discuss their experiences, opinions and suggestions. Additionally, telephone interviews may be conducted to provide complementary insights, or where otherwise, disconfirming evidence that may warrant additional interviews. Findings from these qualitative studies may subsequently inform a follow-up quantitative survey to more accurately understand the extent to which these attitudes and confidence are shared across consumers. To address the third research objective, quantitative research would be appropriate to determine which factor(s) are more influential in consumers’ purchase decision. This would require the use of online surveys of a large sample representative of the Australian population consisting of both current IKEA customers and non-customers from various different household sizes in both major cities and regional areas.

Project Scope and Budget The scope of this research should include respondents nationwide with 2-3 focus groups conducted in each of the seven Australian cities with IKEA stores. Each focus group should consist of approximately 10 respondents from both city and rural households, with some groups specifically consisting of participants with young children. Complementary 30-minute telephone interviews will be conducted with 30 randomly selected IKEA registered members across different Australian cities to obtain a variety of responses from different demographic. The online survey aims to collect 1,000 responses from both IKEA customers and noncustomers through social media channels (IKEA website, Facebook page and online sponsored ads). A budget of $50,000 is proposed for this research, covering focus group facilitation costs, participant incentives, interviewer fees, survey development and other survey recruitment related expenses. Table 1 provides a comprehensive view of the proposed project scope and costs.

Method Focus group

Telephone interview

Online survey

Sample Population IKEA customers from major cities with IKEA stores across Australia, with several focus groups consisting specifically of family with young children IKEA customers registered under their member database, randomly selected

Sample Size 10 per group 2-3 focus groups per city, approx. 7 cities

Costs Facilitation fees: $200 per session Incentives: $80 per participant Estimated total: $21,000

30 members

IKEA customers and noncustomers across Australia

1,000 respondents

Interviewer fees: $50 per participant interviewed Incentives: $30 per participant Estimated total: $2,400 Survey development and analysis: $15,000 Respondent recruitment (online ads): $5,000 Incentives: Each entry stands a chance to win one of ten $100 IKEA vouchers Estimated total: $21,000

Table 1. Research scope and estimated costs

Timing Given that IKEA launches a new product series every season, the proposed research should be completed before the next product line is launched in the market. A 3-month period should be allocated for this project, beginning with the qualitative research phase in June 2018. Findings from this research may then inform managers on whether and when to proceed with the quantitative phase, which may require modifying the research objectives to obtain more meaningful insights in line with the qualitative findings.

References Browne, K. (2016). Product safety laws unleash unsafe furniture. Retrieved from https://www.choice.com.au/babies-and-kids/children-and-safety/avoiding-commondangers/articles/ikea-falling-furniture-product-safety-alert-270715 IKEA. (2018). IKEA group stores. Retrieved from https://www.ikea.com/ms/en_AU/about_ikea/facts_and_figures/ikea_group_stores/ Lim, R. (2016). IKEA to recall Malm dressers, chests in China, watchdog says, after Xinhua criticizes 'double standard'. CNBC. Retrieved from https://www.cnbc.com/2016/07/12/ikea-to-recallmalm-dressers-chests-in-china-watchdog-says-after-xinhua-criticizes-double-standard.html Loeb, W. (2012). IKEA Is A World-Wide Wonder. Retrieved from https://www.forbes.com/sites/walterloeb/2012/12/05/ikea-is-a-world-widewonder/#331b318427b9 Nackstrand, J. (2017). IKEA recalls 17 million chests after eight children die from falling furniture. News. Retrieved from http://www.news.com.au/lifestyle/home/interiors/ikea-recalls-17million-chests-after-eight-children-die-from-falling-furniture/newsstory/c32b437219155b7c906c0fd050b178e9...