𝕾𝖆𝖚𝖗𝖆𝖇𝖍: 𝕿𝖍𝖊 𝕰𝖝𝖍𝖆𝖚𝖘𝖙𝖎𝖛𝖊 𝕯𝖎𝖛𝖊𝖗𝖘𝖎𝖋𝖎𝖊𝖉 𝕰𝖝𝖕𝖊𝖗𝖎𝖊𝖓𝖈𝖊: IKEA

1) Product

As seen in the goods-service continuum, IKEA as a product have both tangible and intangible aspects, and it is the thing you offer to satisfy your customers’ wants and needs. Within this element, one need to consider such things as product range; its quality and design; its features and the benefits it offers; sizing and packaging; and any add-on guarantees and customer service offerings.

Following are the range of products in which IKEA has diversified itself:

Eating
Desks
Mirrors
Cooking
Bathroom Storage
Children’s IKEA
Beds and Mattresses
Chairs
Clothes Storage
Decoration
Flooring
IKEA Family products
Kitchen cabinets and appliances
Lighting
Small storage
Sofas and Armchairs
Storage Furniture
Tables
Textiles and rugs
Tools and hardware
TV and media furniture

2) Price

Sound pricing decisions are crucial to a successful business and should be considered at both long-term strategic and short-term tactical levels. Within this element of the mix IKEA considers list price and discount price; terms and conditions of payment; and the price sensitivity of the market. Worth remembering is the connection of price to it’s position in the marketing – specifically that only one operator in any market can be the cheapest. Jostling between competitors for this position is rarely wise.

Keys to IKEA's Low Prices

Just how does IKEA manage to offer such consistently low prices? Many people think that it's because the furniture is made cheaply, which isn't exactly true. Read on to find out about some of IKEA's less obvious cost-saving strategies.

Recycling

The Recovery Department (of which, the AS-IS room is part) is responsible for sorting and recycling all recyclable materials, including packaging broken down in-store as well as materials collected from customers at recycling donation bins where available.

Automatic selling

Despite the showrooms showcasing IKEA furniture in real living arrangements (typically located upstairs), IKEA is a warehouse store designed to maximize customer self-sufficiency with minimal reliance on staff assistance. Cost savings stem from reduced wages, training costs and lower design, maintenance and outfitting costs associated with the marketplace and warehouse areas of the stores.

Economies of Scale

IKEA utilizes it's massive economies of scale to secure long-term contracts with manufacturers and to reduce costs of raw materials through bulk-buying. Because of their sheer size, they can demand lower prices for materials which suppliers can afford to give if they have a steady income.

Transportation

All transportation of IKEA products is by cargo container - either via cargo carrier for overseas transportation or via tractor-trailer for ground transport rather than by more expensive air transport. Transportation costs are also minimized by carefully locating distribution centers and stores for optimum travel efficiency (see below).

Minimal packaging

The ubiquitous plain brown corrugated cardboard is the packaging material of choice for a reason - it's cheap, easy to recycle and can be made to fit around almost any product. Small labels on the boxes identify the products within. Printing wordless instruction materials also saves money by eliminating the need to translate the written word to the native languages of the many nations in which IKEA retails.

3) Promotion

This is the element of the marketing mix that most people mean when they talk about ‘marketing’. IKEA is one of the world's largest furniture retail brands. The brand itself is based upon the concept of offering home furnishing products at value prices. The promotions mix includes TV advertising, sponsorship, newspaper and magazine advertising, and many other elements.

Some of its TV advertising is considered controversial whilst others see it as pretty plain. Recent campaigns include the IKEA kitchen party advert ‘Be Happy Inside’ campaign and the kitchen party advert. Obviously their iconic yellow IKEA logo serves to support the brand.

4) Place

Marketers love models that explain the way they work; they love it even more when elements of each model begin with the same letter – hence the use of the word ‘Place’ to describe distribution channels. The IKEA group is an international business, which sells furniture and accessories in Europe, North America, Asia and Australia.

IKEA's main business relates to its retail stores. Many of these stores are in out-of-town locations and do not benefit from the footfall of primary and secondary locations. The stores themselves are very large. Many of the stores even have restaurants, food shops and a Swedish market. Some stores even have a bespoke play area.

5) People

The impact that your people can have on your marketing cannot be underestimated. The IKEA brand is based upon strong relationships with customers and customer satisfaction. So, serving and working with people is central to IKEA's business philosophy. In 2011 its then president Mikael Ohlsson made a statement in their annual report outlining his view on the business and its future. In his view the business would be launching many energy-saving alternatives to conventional light bulbs. He commented that their kitchen range would offer many smart, eco-friendly solutions which would include water-saving taps, appliances and a special system that would sort household waste ready for recycling.

Ohlsson made a commitment to reduce the impact of his business on people, as well as the environment. The business would act responsibly, resources would be used efficiently and costs would be reduced. He also wanted sustainability to become more visible to customers and employees.

6) Process

The process part of the mix is about being ‘easy to do business with’. If you’ve ever become frustrated at call centers that can’t answer your questions, or annoyed when you can’t buy something in a shop because the computerized till doesn’t recognize that it exists, even when you can see it on the shelves, you’ll know how important this element can be. The furniture is made by IKEA itself whereby IKEA makes its own wood-based furniture and wooden components. So for example the business owns forestry sawmills.

The customer drives to the store, selects a product, orders, it, and then collect it, only then to have to drive the product home themselves. This is all part of the low pricing commitment.

7) Physical Evidence

When you sell tangible goods, you can offer your customer the chance to ‘try before they buy’, or at least see, touch or smell. Interestingly IKEA was a business that encompassed sustainability quite early in its strategy. Many of its products are recyclable IKEA has invested in very green energy solutions such as solar power. Physical evidence for IKEA is its very large stores. They are out of town and offer a huge selection of furniture products. Stores tend to be well-equipped with restaurants, very large car parking, the space to move around and modern display technologies.