Marketing Strategies and Tactic for IKEA House Market S.A.

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Αλεξάνδρειο Τεχνολογικό Εκπαιδευτικό Ιδρυμα

Θεσσαλονίκης (ΑΤΕΙ-Θ)

Σχολή Διοίκησης και Οικονομίας Τμήμα

Λογιστικής Υπεύθυνος καθηγητής:

Γκιούρης Θεόδωρος

Marketing Strategies and Tactics for

IKEA House Market S.A.

Λαμπριανίδης Κωνσταντίνος A.M: (148/09)

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that succeed not only in getting customers but also in keeping them through being constantly aware of their changing needs. The goal of marketing is long-term customer satisfaction, not short-term deception of gimmicks. This theme is reinforced by the writings of top management consultant Peter Drucker, who stated:

^^Because the purpose of business is to create and keep customers, it has only two central functions-marketing and innovation. The basic function of marketing is to attract and retain customers at a profit. ^^

First, it places marketing in a central role for business success since it is concerned with the creation and retention of customers.

Second, it is a reality of commercial life that it is much more expensive to attract new customers than to retain existing ones.

Third, since most markets are characterized by strong competition, the statement also suggests the need to monitor and understand competitors, since it is to rivals that customers will turn if their needs are not being met.

The modern marketing concept can be expressed as

’the achievement of corporate goals through meeting and exceeding customer needs better than the competition’.

To begin with, company activities should be focused on

Introduction

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providing customer satisfaction rather than, for example, simply producing products. This is often not an easy condition to meet. Secondly, the achievement of customer satisfaction relies on integrated effort. The responsibility for the implementation of the concept lies not just within the marketing department but should run right through production, finance, research, and development, engineering, and other departments. The fact that marketing is the responsibility of everyone in the organization provides significant challenges for the management of companies. In essence, the marketing concept is a philosophy of business that puts the customer satisfaction at the centre of things. One of the company’s mottos is that staff ‘only have permission to say yes’.

Companies also like the Body Shop exemplify what has become known as the ’societal marketing concept’, which holds that companies should deliver customer satisfaction in a way that improves both the customer’s and society’s wellbeing.

The last thing we are obliged to know about is the marketing mix. A key marketing activity is the management of the company’s marketing mix. The marketing mix consists primarily of four major elements:

 Product

 Price

 Promotion

 Place

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These ‘4-Ρs’are four key decision areas and form a major aspect of marketing concept implementation.

i. Product

The choice of what products/services and benefits should be offered to a group of customers is known as the ‘product decision’. An important element is new product/service development. As technology and tastes change, products become out of date and inferior to those of the competition, so companies must replace them with features that customers value.

ii. Price

Because prices represents, on a unit basis, what the company receives for the product or service that is being marketed, it is a key element of the marketing mix. All the other elements represent costs-for example, expenditure on product

design(product), advertising and

salespeople(promotion), and transportation(place).

iii. Promotion

Decisions have to be taken with due attention to the promotional mix: advertising, personal selling, sales promotions, public relations, direct marketing

Introduction

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and internet marketing. By these means, the target audience is made aware of the existence of a product or service, and the benefits(both economical and psychological) it confers to customers.

iv. Place

The aspect of place is to do with those decisions concerning the distribution channels that are to be used and their management, the location of outlets, methods of transportation and the inventory levels

to be held. The objective is to ensure that products and services are available in the proper quantities, at the right time and in the right place.

The strength of the 4-Ps approach is that it represents a memorable and practical framework for marketing decision-making.

In conclusion, for marketing efforts to be effective, it is essential that a planned approach is taken. Planning is

Introduction

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about deciding where we want to go and how we are going to get there. The process of marketing planning involves analyzing the environment and the organization’s capabilities, and deciding on courses of action and ways to implement those decisions. Having a plan gives managers a focal point for decisions and actions. It also stimulates achievement by giving the organization clear targets to aim at, which can be helpful in generating change in an organization.

These are a few words about marketing, at the chapters coming we will analyze IKEA’s marketing strategy and planning as well as its environment and its history.

The Sweden-based inter IKEA Systems BV (IKEA) was ranked 42 by BusinessWeek American magazine in its list of top 100 global brands for 2005.

According to the BrandChannel rankings, IKEA was the number one brand in Europe and Africa.IKEA was the world’s largest furniture retailer that specialized in stylish but inexpensive Scandinavian-designed furniture. Its success was attributed to its vast experience in the furniture retail market, its product differentiation and cost

IKEA’s History

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leadership. In addition to furniture, IKEA also sold utility items such as utensils, hooks, clips and stands. IKEA’s founder, Ingvar Kamprad, had built an international furniture chain of 226 stores in Europe, Africa, Asia and the USA.

It had been successful in almost all countries because it sells a lifestyle that customers around the world embrace as a signal that they have arrived, that they have good taste and recognize value. The British design magazine Icon said, ‘If it wasn’t for IKEA, most people would have no access to affordable contemporary design.’

Kamprad established IKEA in 1943 at the age of 17.

He came up with this name IKEA by combining the first letters of his name(Ingvar Kamprad), followed by the first letters of the farm and village he grew up in (Elmtaryd and Agunnaryd). Kamprad started his business by buying pens, Christmas cards, matches, cigarette lighters, nylon stockings and other items in bulk. Furniture was introduced to IKEA’s product portfolio in 1947 and, by 1951, furniture sales had increased so much that Kamprad decided to discontinue all other products and concentrate solely on selling furniture that was classy and low priced at the same time. In the same year, the first IKEA furniture catalogue was issued, and the first IKEA furniture shop was opened in 1958 at Almhult in Sweden while the first stores outside Sweden were opened in Norway (1963) and Denmark (1969).

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The stores spread to other parts of Europe in the 1970’s with the first outside Scandinavia opening in Switzerland (1973), followed by Germany (1974).

Amid a high level of success, the company’s German executives accidentally opened a store in Konstanz in 1973 instead of Koblenz. Later that decade, stores opened in other parts of the world, such as Japan (1974), Australia and Hong Kong (1975), Canada (1976) and Singapore (1978). IKEA further expanded in the 1980’s opening stores in countries such as France and Spain (1981), Canada (1982), Belgium (1984), the United States (1985), the United Kingdom (1987), Italy (1989), and Poland (1991). The company then expanded into more countries in the 1990s and 2000s. The first store came in Greece at 2001 in Thessaloniki and two years later in Athens too.

There are 5 stores all over Greece at the moment: one in Thessaloniki, Larisa and Giannena

and two in Athens. Germany ,with 44 stores, is IKEA’s biggest market, followed by the United States, with 40 stores. At the end of 2009 financial year, the IKEA group operated 267 stores in 25 countries. The first IKEA store in Latin America

opened on 17 February 2010 in Santo Domingo, Dominican Republic. As of July 2013 the company’s presence in developing countries remains minimal.

The world’s five largest IKEA stores are:

1. Stockholm Kungens Kurva, Sweden: 55.200m²

IKEA’s History

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2. Shanghai Baoshan, China: 55.032m²

3. Shanghai Pudong Beicai, China: 49.400m² 4. Wuxi, China: 49.117m²

5. Ningbo, China: 47.505m²

Older IKEA stores are usually very large blue buildings with yellow accents and few windows. They are often designed in a one-way layout, leading customers counter clockwise along what IKEA calls ´´the long natural way´´ designed to encourage the customer to see the store in its entirely ( as opposed to the traditional retail store , which allows a customer to go directly to the section where the desired goods and services are displayed). There are often shortcuts to other parts of the showroom. Newer IKEA stores, make more use of glass, both for aesthetics and functionality. Skylights are also now common in the self-serve warehouses; natural lighting reduces energy costs, improves worker morale and gives a better impression of the products.

The sequence first involves going through furniture showrooms making note of selected items. The customer then collects a shopping cart and proceeds to an open- shelf ´´Market Hall´´ warehouse for smaller items, then visits the ´´Self Serve´´ furniture warehouse to collect

Store Design - Layout

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previously noted showroom products in flat pack form.

Sometimes, they are directed to collect products from an external warehouse on the same site or at a site nearby after purchase. Finally, customers pay for their products at a cash register.

Most stores follow the same layout of having the showroom upstairs with the marketplace and self-service warehouse downstairs. Some stores are single level, while others have separate warehouses to allow more stock to be kept on-site. Single-level stores are found predominantly in areas where the cost of land would be less that the cost of building a 2-level store.

Most IKEA stores offer an ´´as-is´´ area at the end of the warehouse, just before the cash registers. Returned, damaged and formerly showcased products

are displayed here and sold with an significant discount, but also with a no-returns policy.

The vast majority of IKEA stores are located outside of city centers, primarily because of land cost and traffic access.

Another feature of them is their long opening hours.

Many stores are in operation 24 hours a day with restocking and maintenance being carried out throughout the night.

The IKEA stores are also known for the free IKEA pencils, whereby some people consider it as a sport to colletct as many of these as they can during their visit.

Store Design – Food Markets

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Food markets

Every store includes a restaurant serving traditional Swedish Food, including potatoes with Swedish meatballs, cream sauce and lingonberry jam, although there are variations. Besides these Swedish foods, hot dogs and drinks are also sold, along with a few varieties of the local cuisine, and beverages such as lingonberry juice. Also items such as princesstarta (princess cake) are sold as desserts. In many locations , the IKEA restaurants open daily before the rest of the store and serve an inexpensive breakfast. This breakfast includes eggs, sausage and hash browns and various add-ons like bacon, Swedish pancakes, croissant, small bread roll, slice of cheese, salami and coffee. Refills of coffee, tea, and soft drinks are free of charge within store premises.

Later IKEA replaced most of the branded foods and extended its product range with the introduction of the IKEA label. The new label has a variety of items including chocolates, meatballs, jams, pancakes, salmon, along with various drinks. All IKEA food products are based on Swedish recipes and traditions.

Smaland

Store Design - Smaland

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Every store has a play area, named Smaland( Swedish for small lands). Parents drop off their children at a gate to the playground, and pick them up after they arrive at another entrance. In some stores, parents are given free pagers by the on-site staff, which the staff can use to summon parents whose children need them earlier than expected; in others, staff summon parents through announcements over the in-store public address system. This prompted it to work with two groups of experts to develop products for children. These included child psychologists and professors , who helped to develop products that were good for children´s motor skills, social development and creativity. IKEA also worked with children to understand what they were interested in. Based on the results of this study, IKEA launched its kids´ range of products.

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Rather than being sold pre-assembled, much of IKEA

´s furniture is designed to be self-assembled. The company claims that this helps reduce costs and use of packaging by not shipping air; the volume of a bookcase, for example, is considerably less if it is shipped unassembled rather than assembled. This is also practical for many of the chain´s European customers, where public transport is commonly used, because the flat-pack methods allow for easier transport via public transportation.

IKEA contends that it has been a pioneering force is sustainable approaches to mass consumer culture.

Kamprad calls this ´´democratic design´´, meaning that the company applies an integrated approach to manufacturing and design. In response to the explosion of human population and material expectations in the 20^th and 21^st centuries, the company implements economies of scale, capturing material streams and creating manufacturing processes that holds and resource use down, such as the extensive use of Medium-Density Fiberboard (MDF), also called ´´particle board´´. It is an engineered wood fibre glued under heat and pressure to create a building material of superior strength which is resistant to warp. IKEA uses cabinet-grade and furniture- grade MDF in all of its MDF products, such as wardrobes

Products and Services - Furniture

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and kitchen cupboards. IKEA also uses wood, plastic and other materials for furniture and products. The intended result is flexible, adaptable home furnishings, scalable both to smaller homes and dwellings as well as large houses.

Not all furniture is stocked at the store level, such as particular sofa colours needing to be shipped from a warehouse to the customer´s home ( for a delivery charge). The item can also be shipped from the warehouse to the store. Some stores charge an extra fee for this service, but not all.

IKEA has also expanded its product base to include flat-packed houses, in an effort to cut prices involved in a first-time buyer’s home. (This practice is not new; the American retailer Sears Roebuck and Company sold houses under the Craftsman brand in a similar fashion).

The IKEA product, named Boklok was launched in Sweden in 1996 in a joint venture with Skanska. Now working in the Nordic countries and in the UK.

Manufacturing

Although IKEA household products and furniture are designed in Sweden, they are largely manufactured in

Products and Services – House and Flats, Manufacturing

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developing countries to keep costs down. China accounts for about 2½ times as much supply as Sweden. For most of its products, the final assembly is performed by the end-user( consumer). Swedwood, an IKEA subsidiary, handles production of all of the sompany´s wood-based products, with the largest Swedwood factory lovated in Southern Poland. According to the subsidiary, over 16.000 employees across 50 sites in 10 countries manufacture the 100 million pieces of furniture that IKEA sells annually.

IKEA furniture uses the hardwood alternative particle board and Hultsfred, a factory in southern Sweden, is the company´s sole supplier.

IKEA also gave its products one-word( rarely two- word) names in order to identify them. Most of the names are Scandinavian in origin. Although there are

some exceptions, most product names are based on a special naming system developed by IKEA.

 Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs:

Swedish place names ( Klippan etc)

Products and Services – Product Names

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 Beds, wardrobes, hall furniture: Norwegian place names

 Dining tables and chairs: Finnish place names

 Bookcase ranges: Occupations

 Bathroom articles: Scandinavian lakes, rivers and bays

 Kitchens: Grammatical terms, sometimes also other names

 Chairs, desks: men´s names

 Fabrics, curtains: women´s names

 Garden furniture: Swedish Islands

 Carpets: Danish place names

 Children´s items: Mammals and birds

 Curtain accessories: Mathematical and geometrical terms

 Kitchen utensils: Foreign words, spines, herbs, fish, mushrooms, fruits or berries, functional descriptions

 Boxes, wall decoration, pictures and frames, clocks: Colloquial expressions

For example, DUKTIG( meaning : clever, well-behaved) is a line of children´s toys, DINERA(meaning: (to) dine) for tableware etc. Company founder Kamprad, who is dyslexic, found that naming the furniture with proper names and words, rather than a product code, made the names easier to remember.

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What is more IKEA publishes an annual catalogue, first published in Swedish in 1951. IKEA published 197 million catalogues in 2010, in twenty languages and 61 editions. It is considered to be the main marketing tool of the retail giant, consuming 70% of the company´s annual marketing budget. The catalogue is distributed both in steores and by mail, with most of it being produced by IKEA communications AB in IKEA´s hometown Almhult, Sweden where IKEA operates the largest photo studio in northern Europe at 8000 square metres. The catalogue itself is printed on chlorine-free paper of 10%-15% post consumer waste, and prints approximately 175 million copies worldwide annually, more than 3 times as much as the Bible.

The 2013 catalogue is smartphone compatible, containing videos and photo galleries that can be accessed via an app by scanning the catalogue´s pages, while the 2014 catalogue incorporates an augmented reality app that projects an item into a real-time photograph image of the user´s room. The augmented reality app also provides an indication of the scale of IKEA objects in relation to the user´s living environment.

Products and Services - Catalogue

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Finishing with IKEA´s marketing ideas, in common with some other retailers, IKEA has launched a loyalty card called: ´´IKEA family´´. The card is free of charge and can be used to obtain discounts on a special range of products found in each IKEA store. In conjunction with the card, IKEA also publishes and sells a printed quarterly magazine titled IKEA Family Live which supplements the card and catalogue. The magazine is already printed in thirteen languages and an English edition for the United Kingdom was launched in February 2007. It is expected to have a subscription of over 500.000.

IKEA family, as other loyalty cards, allows for lower prices. The main, generally unusual difference is that it allows for free tea or coffee( from Monday to Friday at most locations) at IKEA restaurant.

Products and Services – IKEA Family Loyalty Card

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IKEA is owned and operated by a complicated array of not-for-profit and for-profit corporations. The corporate structure is divided into two main parts: operations and franchising. Most of IKEA´s operations including the management of the majority of its stores, the design and manufacture of its furniture, and purchasing and supply functions are overseen by INGKA Holding, a private, for- profit Dutch company. Of the IKEA stores in 43 countries, 303 are running by the INGKA Holding. The remaining 47 stores are being run by franchisees outside of the INGKA Holding, with the exception of IKEA Delft which is not franchised.

IKEA Holding is not an independent company, but is wholly owned by the Stichting Ingka Foundation, which Kamprad established in 1982 in Netherlands as a tax- exempt, not for-profit foundation. The Ingka Foundation is controlled by a five-member executive committee that is chaired by Kamprad and includes his wife and attorney.

Corporate Structure - Profits

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Profits

The net profit of IKEA Group in fiscal year 2009 was 2.538 billion euros on sales of 21.846 billion. Because Ingka Holding is owned by the nonprofit Ingka Foundation, none of this profit is taxed. The foundation´s nonprofit status also means that the Kamprad family cannot reap these profits directly, but the Kamprads do collect a portion of IKEA sales profits through the franchising relationshio between Ingka Holding and the Inter IKEA Systems.

Despite the fact that IKEA´s turnover in enormous enough, it is claimed that dodging taxes is a part of its policymaking. The Berne Declaration, a non profit organization in Switzerland that promotes corporate responsibility, has formally criticized IKEA for its tax avoidance strategies. In 2007, the Berne Declaration nominated IKEA for one of its Public Eye ´´awards´´ , which highlight corporate irresponsibility and are announced during the World Economic Forum in Davos, Switzerland.

Corporate Structure – Control by Kamprad

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Control by Kamprad

IKEA´s complicated corporate structure allows Kamprad to maintain tight control over the operations of Ingka Holding, and thus the operation of most IKEA stores.

The Ingka Foundation´s five-person executive committee is chaired by Kamprad. It appoints the board of Ingka Holding, approves any changes to Ingka Holding´s bylaws, and has the right to preempt new share issues. If a member of the executive committee quits or dies, the other four members appoint his or her replacement.

In Kamprad´s absence the foundation´s bylaws include specific provisions requiring it to continue operating the Ingka Holding Group and specifying that shares can be sold only to another foundation with the same objectives as the Ingka Foundation.

The INGKA Foundation is officially dedicated to promoting ´´innovations in architecture and interior design

´´. With an estimated worth of 36 billion dollars, the foundation is unofficially the world´s largest charitable organization, ahead of the much better known Bill and Melinda Gates Foundation, which has a net worth of

Corporate Structure – Charitable Giving

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approximately 33 billion dollars. However, most of the Group´s profit is spent on investment, the foundation expects to spend 45 million on charitable giving in 2010, compared to the Gates Foundation, which made gifts of more than 1.5 billion dollars in 2005.

IKEA is involved in several international charitable causes, particularly in partnership with UNICEF, including:

 In the wake of the 2004 Boxing Day Tsunami, IKEA Australia agreed to match dollar for dollar co-workers´ donations and donated all sales of the IKEA Blue Bag to the cause.

 After the 2005 Kashmir earthquake, IKEA gave 500.000 blankets to the relief effort in the region.

 IKEA has provided furniture for over 100 ´´bridge schools´´ in Liberia.

 In the 2008 Sichuan earthquake in China, IKEA Beijing sold an alligator toy for 40 yuan( 3.70 euros) with all income going to the children in the earthquake struck area.

 IKEA also supports American Forests to restore forests and reduce pollution.

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In September 2005, IKEA Social Initiative was formed to manage the company´s social involvements on a global level. IKEA Social Initiative is headed by Marianne Barner.

The main partners of IKEA Social Initiative are UNICEF and Save the Children.

On 23 February 2009, at the ECOSOC event in New York, UNICEF announced that IKEA Social Initiative has become the agency´s largest corporate partner, with total commitments of more than U.S. 180$ million.

Examples of involvements:

 IKEA through IKEA Social Initiative contribute 1€

to UNICEF and Save The Children from each soft toy sold during the holiday seasons, raising a total of 16.7€ million so far. In 2013, each IKEA soft toy , Lufsig, created from a storm and sold out in Hong Kong and in Southern China because it had been misnamed in Chinese.

 IKEA Social Initiative provided soft toys to children in Burma after Cyclone Nargis.

 Starting in June 2009, for every Sunnan solar- powered lamp sold in IKEA stores worldwide, IKEA Social Initiative will donate one Sunnan with the help of UNICEF.

 In September 2011, the IKEA Foundation pledged to donate 62$ million to help Somali refugees in Kenya.

IKEA Social Initiative

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 According to the Economist, however, IKEA´s charitable giving is meager, ´´barely a rounding error in the foundation´s assets.´´

In 1990, IKEA invited Karl-Henrik Robert, founder of the Natural Step, to address its board of directors. Robert

´s system conditions for sustainability provided a strategic approach to improving the company´s environmental performance. In 1990, IKEA adopted the Natural Step framework as the basis for its environmental plan. This led to the development of an Environmental Action Plan, which was adopted in 1992. The plan focused on structural change, allowing IKEA to ´´maximize the impact of resources invested and reduce the energy necessary to address isolated issues.´´ The environmental measures taken include the following:

1) Replacing polyvinylchroride( PVC ) in wallpapers, home textiles, shower curtains, lampshades and furniture-PVC has been eliminated from packaging and is being phased out in electric cables.

2) Minimizing the use of formaldehyde in its products, including textiles.

Environmental Performance

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3) Producing a model of chair ( OGLA ) made from 100% post-consumer plastic waste.

4) Reducing the use of chromium for metal surface treatment.

5) Using wood from responsibly managed forests that replant and maintain biological diversity.

6) Using only recyclable materials for flat packaging and ´´pure´´ (non-mixed) materials for packaging to assist in recycling.

In 2000 IKEA introduced its code of conduct for suppliers, called the IKEA way of purchasing….shortened to IWAY. Today IWAY is a totally integrated part of IKEA´s purchasing model. IWAY covers social, safety and environmental questions. Today IKEA has around 60 IWAY auditors that performs hundreds of supplier audits every year. The main purpose with IWAY is to make sure that the IKEA suppliers follows the law in each country where thay are based. Most IKEA suppliers fulfill the law today with exceptions for some special issues, one being excessive working hours in Asia, in countries such as China and India.

Most recently, IKEA has stopped providing plastic bags to customers, but offers reusable bags for sale. The IKEA restaurants also only offer reusable plates, knives,

Environmental Performance

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forks, spoons, etc. Toilets in some IKEA WC-rooms have been outfitted with dual-function flushers.

In August 2008, IKEA also announced that it had created IKEA GreenTech, a 50€ million venture capital found. Located in Lund ( a university town in Sweden), it will invest in 8-10 companies in the coming five years with focus on solar panels, alternative light sources, product materials, energy efficiency and water saving and purification. The aim is to commercialize green technologies for sale in IKEA stores within 3-4 years.

To make IKEA a more sustainable company, a product life style was created. For the idea stage, products should be flat-packed so that more items can be shipped at once;

products should also be easier to dismantle and recycle.

Raw materials are used, and since wood and cotton are two of IKEA´s most important manufacturing products, the company works with environmentally friendly forests and cotton, whereby the excessive use of chemicals and water is avoided.

Marketing is another part of IKEA´s life cycle and a portion of the paper used for its catalogues is sourced from responsibly managed forests. The catalogue is also smaller, so that less paper is required, less waste is produced and more catalogues can be shipped per load. To sum up, company´s executive managers and Kamprad as well created these marketing methods to improve IKEA´s economy system and maintain them healthy till now.

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Advertising and marketing constitutes a substantial share of a retailer`s annual expenditure and TV has been the most dominant mode of campaigning until internet marketing started chipping the limelight away.

IKEA , the world`s largest home furnishing retailer, is one of the early adopters of the digital mode of marketing and has made maximum use of the social media clubbed with massive emphasis on its digital catalogue which forms the core of the retailer`s marketing strategy.

With 226 operational stores across the world, IKEA`s digital marketing strategy remains almost uniform- extensive use of social media with separate country pages for respective markets and an ever increasing stress on digital catalogue applications which can downloaded on app stores such as Google Play and the Apple Store.

´´The 2013 edition of the IKEA catalogue application was downloaded almost 10 million times!`` IKEA informs.

´´Ever since 1951 the IKEA catalogue has been a source of inspiration, a reference for home furnishing knowledge; even as it continues to evolve and improve, making the most of the latest possibilities,`` it says. The latest catalogue that IKEA launched in 2014 has 59 editions.

Advertising - Achievements

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The target audience is very adept at using social media and it will be important to keep a strong presence across all platforms. These platforms allow for rapid engagement and the creative strategy of “ HI Design + Lo Price Our Endless Possibilities,” to be integrated across all social platforms. Social platforms will help to create a strong affinity for the brand, which is consistent with the marcom goal of increasing customer brand awareness in the US 5-10%.

TV: A 30-second advertising commercial will be able to reach the target audience and set the tone for the rest of the marcom promotions. Broadcast media is a great catalyst momentum for the IKEA brand and social/digital will be able to benefit from this investment.

Facebook: There are a minimum of 1.5 lakh fans on each of IKEA`s country pages. The USA page has the highest following measuring about 3.411.985. The retailer`s social teams pose questions, links to photo albums, and post YouTube clips to increase engagement.

Twitter: IKEA has separate twitter feeds for all its country-specific twitter pages. The US page alone has

Advertising – IKEA’s Presence on Social Media and its Media Tactics

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2.522.000 followers while IKEA Canada page has 6.566.000 followers. IKEA makes these pages engaging by fascinating its followers to indulge in campaigns such as celebrating the ´Bring your Own Friend Day (BYOF).

E-Commerce/CRM Platforms: In order to increase customer engagement and web penetration by 25% it will be important to use the latest CRM technology to capture customer information. In order to achieve the marketing objective set for 2015, new methods and incentives will be need to be brought to the market. These efforts will help to keep email campaigns relevant and personalized to each recipient.

Pinterest: This is an obvious choice for a retailer which deals in home furnishings, as this claims to be the official ´visual discovery tool`. Making best use of Pinterest, IKEA visually presents its merchandise to local markets in the UK, USA, Canada and other countries.

Google + : IKEA`s USA page entered Google + only recently ( January , 2014 ) and has the lowest following out of all of its pages. The retailer has apparently not been

Advertising – IKEA’s Precence on Social Media and its Media Tactics

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able to make much use of its platform even as the main page was launched in December 2011.

Outdoor Campaign: While promotion of its catalogue through online mode constitutes almost 70 percent of its annual marketing spend, IKEA also makes judicious use of OOH (Out Of Home) by creating high engagement outdoor campaigns – one being in Paris (around the Gare Saint Lazare ) where the furnishing retailer, based on the fact that half of the French people live in places with bathrooms smaller than 8sqm, installed a life sized bathroom on one side and a laundry room on the other. To add interaction to the 3D panel, IKEA deployed two actors (at peak commuting times in the morning and the evening ) to stand on the panel pretending to perform everyday bathroom activities such as showering or shaving.

Indoor Garden, London: Besides outdoor bathrooms in Paris , IKEA also created indoor gardens in London. IKEA with the help of the JCCaux ( world largest outdoor advertising agency ) took to the indoor environments of Waterloo and Liverpool rail stations in the UK, to show to commuters that they could make more of their outdoor spaces as known as their gardens. A pop-up shop invited commuters to sit down and observe the wide range of outdoor solutions available in the IKEA store that could help them transform their outdoor space.

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Billboard-fitted wardrobes, Vienna: IKEA advertised the advantages of its particular flexible wardrobe by

´´dressing`` a Gewista (Austria`s leading company in the field of outdoor advertising) billboard with a PAX door that passers-by could slide open in order to discover IKEA`s solutions that help fit anything into a wardrobe.

Storage units in Shanghai Metro station, China: In Shanghai, IKEA took to the busy metro station to advertise their stackable filing cabinets. The metro columns were fully swatched to take the shape of the boxes. Price tags were also part of the wrap, making each column look like an actual product display.

During initial stages of entry into new markets, IKEA has well gone through a phase of trial-and-error learning before it could hit the bull`s eye. Quite naturally , when the retailer entered USA, it had to transform moose and advertising slogan, ´´IKEA: The impossible furniture store from Sweden.`` to ´´It`s a big country. Someone`s got to furnish it.`` because the former was projecting a wrong image of the retailer.

In a very saturated retail market, IKEA needs to keep improving upon the Ingvar Kamprad formula. The target audience has many choices and brands to select from

Conclusion

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when it comes to buying lifestyle furniture products. With so many competitors trying to solicit and engage with customers it will be necessary to present a unified and coordinated approach to all marketing communications viewed by the customer. Implementing an integrated approach will help to insure consistency of messaging across all platforms of engagement. The fundamentals of : customer, cost, convenience, and communication will be the heart of any business decision implemented in 2015.

Focusing on the customer is the first and foremost objective of this campaign. A strong creative position will be utilized of ´´Hi Design + Low Price.´´ The second part of the positioning statement, is the value proposition of ´´

Our Endless Possibilities,´´ which can be further segmented by : kitchen spaces, living spaces, outdoor spaces, bathroom spaces.

The IKEA brand is very well-known by some markets, but relatively unknown to markets outside the metropolis area. By increasing broadcast, social media and public relations efforts and extending the current media reach will help to start a new dialogue with prospective customers.

From a cost perspective, IKEA will be able to offer price reductions during the year the campaign is run for select products. For customers who regularly frequent IKEA, new sales promotion tools such as establishing a customer loyalty program will work to deepen brand affinity. A customer loyalty program will offer specials

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based upon buying history. Being able to build a database and track purchases made by customers will allow IKEA to see what is working and what isn´t working. If something is working, then more sales promotion should be based around that product.

In order to communicate with the target audience, email will be the best way to quickly engage. This medium is currently being under utilized and marketing should focus efforts on this platform. If IKEA worked at building up the current email distribution list, it could then be leveraged and used in conjuction with a content management system in order to capitalize and segment customers based upon region and shopping preferences.

Anything is possible in retail, but the possibilities our endless at IKEA. By committing to a comprehensive integrated marketing plan the customer will see more of what IKEA has to offer in 2015. As a company, the future is bright and with the right marketing mix IKEA will be poised to meet the challenges of a tough economy, and continue to provide customers with endless possibilities. This is

´´our´´ year to be : everywhere, sustainable, intriguing, creative, unstoppable, and most importantly endless.

Conclusion

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References Internet sources:

1. IKEA – Wikipedia, the free encyclopedia

2. ETRetail.com (An initiative of the Economic Times) http://retail.economictimes.indiatimes.com/news/h ome-and-decor/furniture-and-decor/how-ikea-uses- social-media-to-emerge-a-marketing-

success/30857725

3. Lund Universityhttp://lup.lub.lu.se/luur/download?

func=downloadFile&recordOId=1324408&fileOId=

1324409

4. IKEA Case Study from http://www.staffs.ac.uk/

5. IKEA Service Strategy from http://www.slideshare.net/

6. IKEA Marketing Strategy Presentation from http://www.slideshare.net/

7. IKEA Marketing Idea from http://www.slideshare.net/

References

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8. IKEA MBA Brand Marketing Study from http://www.slideshare.net/

9. Integrated Marketing Plan for IKEA from http://www.slideshare.net/

10.Evaluating Marketing Strategies from http://taylorlundy.weebly.com/

Books:

1. David Jobber and John Fahy (2003) Foundations of Marketing, London: McGraw-Hill

2. John Fahy & David Jobber (2012) Foundations of Marketing, 4th edition, London: McGrawHill.

Marketing Strategies and Tactic for IKEA House Market S.A.

Marketing Strategies and Tactics for

IKEA House Market S.A.

Contents