IKEA Homework 2018 PDF

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mandatory homework assignment about Ikea case study. Provided questions and correct answers, they questions will also be featured in the Final multiple-choice exam. ...

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Homework: IKEA (10 points)

1. How does IKEA describe their primary target audience in America? (3 points) Americans are known for never switching out their old furniture. So when they see furniture that is “lifetime guaranteed” they are immediately drawn towards it. With that being said, Ikea designed a campaign to get Americans out of this notion of using a piece of furniture for a lifetime. Ikea describes their primary target audience in America as “a sort of person who traveled abroad, liked taking risks, liked fine food and wine, had a frequent flier plan and was an early adopter of consumer technologies such as Walkmen, laptops and cellphones.” Citation: Moon, Youngme. “IKEA Invades America.” Harvard Business School, 14 Sept.

2004, pp. (8).

2. For each of the four P’s, list one tactic that IKEA uses to differentiate itself in the US market. (4 points) 1. Price: Cheap prices. They are able to offer these prices since the customers must pick up each item of the furniture separately and MUST assemble it at their own place. With flat boxes, when Ikea gets their supplied parts from suppliers, they are not shipping air; in assembled furniture they would be shipping out air. These flat boxes allows Ikea to pay less and in part, customers would also be paying less. 2. Product: Offering food and cheap furniture. With the add on of food, most big retail stores do NOT offer dine in services. Their food brings more joy to customers there since they don’t need to worry about stopping elsewhere if they get tired/hungry from shopping. 3. Promotion: IKEA would create ads that mocked the American customer, AKA “Unboring. “By mocking them this creates a funny and more relatable store, making customers more inclined to go and test out new things. 4. Place: Everything Ikea had in store was essentially self-service. You walk around the store if you see something minor (lamp, iPad holder) you can put it in your basket, but if you see a desk that you like, you’ll have to jot it down on your notepad (both supplied by Ikea) and pick it up at the selfservice center. Additionally, Ikea designs its store like a maze or they call it a rollercoaster. There are arrows at the ground to keep you walking around the store and finding what you need. With kitchen to room models, these demo rooms allow you to test out each room so you could imagine it at your own home.

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3. Some analysts have suggested that IKEA might improve their market share and reach simply by opening small scale, boutique style furniture outlets in strip malls. Referencing some of the concepts you’ve learned in class thus far, make a cogent argument for or against this strategy (3 points) I believe that if IKEA starts opening boutique style furniture outlets people would be less inclined to go. IKEA is already well known for being a large and cheap wholesale furniture store. If they start opening smaller stores, customers would know that the prices there would spike and less inclined to go. Customers would rather stick to the norm then venture out and explore smaller and more unique stores. For example, Levi’s tried experimenting with tailored suits and that failed because people already had a preconceived notion of what Levi’s sold which was jeans. Same applies here for IKEA. IKEA is a BIG store and every customer that walks into it knows that they’ll be lost and trapped in there for hours, if they were to open small stores, customers wouldn’t know what to think of it.

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