Ikea report Essay

Executive summary This report describes the importance of market research, the target market and market segmentation. How a business can use a situation analysis and SWOT to provide a direction for Ikea. This examines how types of customers and buyer behaviour will impact marketing strategies. Evaluates as a key marketing strategy for Ikea as a case study. Analyses marketing strategies can be used to achieve marketing objectives and describes some ethical and legal things that a business must manage and respond to while marketing. Business Overview Ikea is a well-known global brand with hundreds of stores across the world. In order to improve performance, it must assess its external and competitive environment. This will reveal the key opportunities it can take advantage of and the threats it must deal with. Ikea responds to both internal and external issues in a proactive and dynamic manner by using its strengths and reducing its weaknesses. Through this, Ikea is able to generate the strong growth it needs to retain a strong identity in the market. Ikea’s passion combines design, low prices, economical use of resources, and responsibility for people and the environment. The company’s products, processes and systems all demonstrate its environmental stance. For example, clever use of packaging and design means more items can fit into a crate, which means fewer delivery journeys. This in turn reduces Ikea’s carbon footprint. Ikea believes that there is no compromise between doing good business and being a go od business. It aims to go beyond profitability and reputation. Ikea is intent on becoming a leading example in developing a sustainable business. This will create a better everyday life for its customers. Market research When Ikea conducts market research it is important that the business first determines its information needs. The business should have some idea about the type of information it is looking for. It could vary from customer profiles or brand awareness through to attitudes towards certain new products. Once its information needs are established, the business can determine the most appropriate research method. This is primarily done by IKEA group although individual stores would use sales reports in order to  gather data about the types of customers and popular products that are particular to the area or store. The Target Market The target market is a group of customers for whom a particular product has been developed. The business hopes that these people will buy the product when it is made available in the marketplace. Some products appeal to all consumers, while others have limited appeal. A business needs to understand the nature of consumer markets. The three types of markets Ikea appeals to are Consumer, Mass and niche. The products in Ikea produce are universal to all and with their flat pack design they fall into the niche market. Ikea focuses on meeting the customer demands and satisfying their needs. Ikea’s main focus is that of the selling orientation. Market segmentation Market segmentation is the process of breaking down a total market into small markets It allows businesses to focus their efforts and resources on a section of the market. By focusing on a particular target group, It would consider the features that consumers of this target group would be looking for in a product, the appropriate promotional strategies to generate awareness of and sustain interest in the product, and the most suitable pricing policies and distribution channels. Market segmentation and product/service differentiation,Demographic segmentation, dividing consumers into groups based on selected demographics, so that different groups can be treated deferent Situation analysis and SWOT Situation analysis is the way in which a business can examine the current position within the market and provides them with direction for their marketing campaign. SWOT is the first stage of planning and looks at the Strengths, Weaknesses, Opportunities and Threats involved in a project or business venture. For example, one of Ikea’s key strengths is its strategic aim to use no more material than necessary in the production of each item. One particular table, the NORDEN table, uses knotty birch wood. The knots in this wood usually mean it is rejected by other retailers and manufacturers as unsuitable for use. However, IKEA has made the knots part of its design feature. Types of customers. psychographic segmentation, this is based on lifestyle and personality, values and interest, Ikea does not divide the store into sections but you have to walk through the whole store before you can exit, this is a strategy to sell more products. The types of customers vary from people, households, firms, educational institutions, government, clubs and societies, religious organisations. The customers that account for most of Ikea’s sale is the bold customer. Ikea is a business that is not aiming towards a purchase occasion but the usage rate of their product, being household items they aim for their products to last well and function to a good quality standard. Ikea has a good user loyalty with a wide range of buyers from the types of customers. Consumers see how affordable Ikea products are and how well they last, as long as they don’t mind putting the product together. The buying process would not be different from Ikea customers but the free yearly catalogue gives purchasers time to plan a trip to Ikea as the Ikea stores are not usually located conveniently due to the large floor space required to house their product. Ikea stores are not usually located outside the inner metropolitan area for this reason. There are psychological, sociocultural, economic and government reasons why people shop or don’t shop are Psychological segmentation Branding. Ikea is ranking 41 in the world’s most valuable brands. The brand name alone is worth 8 million. The brand image for Ikea stands for affordable, contemporary design and its flat pack product range that gives Ikea its identity. The brand name or logo essentially provides a message to the people of the quality and value associated with that product, when they see it they immediately form judgements on the quality, a strong brand name is essentially enhancing the relationship between a business and its customer. Marketing and strategies Product Ikea’s products are tangible, Product matters because it is the reason that customers go to Ikea in the first place. Ikea has the market in flat pack furniture and the unique design attracts customers and meets their needs, this product could include the prestige of owning the product which would also relate to psychological factors. Place Place matters because it is how the customers access the product. The Ikea experience is more than just products, it is a retail concept laid out in such a way that families, singles, couples etc. can enjoy shopping for furniture. A day at Ikea has been described as more of an outing than a shopping trip. Price Price matters because it is at the heart of the Ikea concept. Flat pack furniture cannot compete on price with upmarket, fully assembled pieces, so it is essential that Ikea continues to keep its prices below the competition. Price including pricing methods, market and competition based, Competition based pricing is the commonly used pricing strategy. Promotion Promotion is the most public aspect of marketing and it matters because it helps to drive customers into the stores in order to buy furniture. Ethical and legal. Ikea is recognised as a business that is both legally and ethically a responsible business that looks beyond profit and develops a positive workforce with these practices, advertising is very powerful in developing the wrong or wright idea and misleading advertising is bad ethics. Developing products in 3rd world country is considered unethical because they get payed well below minimum wage. Ikea produces environmentally responsible products, the flat pack design would be argued that it minimizes wastage and the cardboard would be environmentally friendly. The role of consumer law deals with Deceptive and misleading advertising which could be false information about products features and content, false special offers which don’t exist and  overstating the benefits that a product will provide to the consumer. Price discrimination, giving preference to some retail stores by providing them with lower prices than is offered to the competitors of those retailers. The competitor and consumer act aims to discourage the price discrimination in the business environment. Implied conditions and warranties is a great way for a business to ensure the product will last at least the warrantee time, this attracts customers and the consumer expects the business to fulfill their legal obligation to provide a refund or replacement or the product if there is a manufacturing problem within the warranted date, regardless the business by law. Resale price maintenance, this aims to balance the profit maximization of a business, Ikea ensures that the quality of a product in one country doesn’t differ from another. A manufacturer cannot refuse to sell the goods to a retailor if the retailor intends to sell the product for below the recommended price.