IKEA Case

What are the factors for the success of IKEA?

The factors for success of IKEA can be attributed to many different philosophies woven within IKEA. One thing IKEA always focuses on is seeking to balance cost-effective labor with the company’s product quality standards. To save money on labor and production, IKEA constantly is on the lookout for opportunities to build supplier relationships in developing countries. IKEA also made it so all furniture was designed to ship disassembled, and all of the products were transported flat. The flat packaging not only makes it easier for customers to transport furniture home, it also saves the company on shipping. IKEA also focuses on design or the products it sells.
The company’s corporate slogan, “Low price with meaning,” captures their commitment to offering tasteful, cleverly designed products that do not always make the customers feel cheap. The IKEA shopping process has also been referred to as immensely appealing by customers. Upon entry shoppers are gently guided into a predetermined path through model bedrooms, kitchens, living rooms, and bathrooms. The atmosphere is always bright and inviting. IKEA stores include childcare centers and restaurants. All of theses amenities allow the customer to feel more comfortable and contribute to the success of IKEA.

What do you think of the company’s product strategy and product range?

I agree with the current product strategy being used by IKEA to evaluate its product lineup. I believe this strategy is the cause of IKEA’S wide product range, thus leading to its success. To evaluate the extent of IKEA’s product range in relation to price categories, IKEA uses the Product/Price Matrix. Using the Matrix enables IKEA to explore every possible niche within their market, by not only product type, or price, but both simultaneously. This is a very smart move on IKEA’s part because they offer a product in every category, at every different price range (high, medium, or low). The best feature of the matrix is that IKEA is able to identify any gaps in the company’s lineup. If a gap is noticed in the matrix, the market opportunities available are clearly identified. Overall, I feel this is the best possible strategy for IKEA’s products and evaluating the ranges of these products.

What are the downsides of shopping at IKEA?
For most furniture shoppers, IKEA comes to mind. After all, IKEA is ideal in many ways. IKEA boasts of locations all over the world, and is known for their large selection and ridiculously reasonable prices. But is IKEA necessarily the best option? For most, it is because of their cheap costs. In other ways, IKEA might not be the best alternative.
At IKEA there are thousands of options. Their showroom is enormous; it's a never ending maze with each section specialized in each room of the house. In each department there is a wide selection of options. For example, if you're looking for a bed, IKEA has many different styles and sizes, with varying prices. However, most of what you will find is very reasonably priced. IKEA's more dependable items are usually a little more pricier. Take, for instance, their MALM collection. A queen sized bed frame in the MALM collection is only $199.00. Not bad. But the bed frame is made of fiberboard and particleboard. Particleboard is a low-density fiber board; in other words, the bed is made of pressed wood chips, sawmill shavings and saw dust! None of which are very sturdy or dependable. Aside from that, IKEA is known for having to assemble most of the furniture yourself. If you're a handyman, or someone experienced with tools, this is not an obstacle. But for the rest of us, assembling some pieces might be slightly difficult and will generally result in us doing something wrong, striping a hole or not securing a piece as tightly or properly as possible. Weighing all these factors, along with the general wear and tear furniture takes over time, it is wise to say that within a couple years, the furniture will fall apart or disintegrate in some way or another.
Unfortunately, the reason why IKEA can afford to be so cheap is merely because the bulk of their furniture is made of such low quality materials. On the flip side, however, IKEA is ideal for other household essentials such as storage units, kitchen utensils, textiles, decorative objects, and other furnishings that require little or no assembly and are not major furniture items, such as sofas, beds, dressers, or tables and chairs.
Shopping at IKEA can be a fun experience, and if cost is you're main concern then you will love IKEA for their low prices and huge selection. But if you're a wary shopper and take into consideration time for assembling your own furniture, and if you plan on making a big investment and don't plan on buying furniture again in a couple years time, then you might want to consider shopping elsewhere.

How would IKEA make Value Proposition for its Customers? How could they make it even more attractive?

Consumer preferences are different in America, than in Scandinavia, Europe, and Asia. IKEA must take this into consideration when trying to appeal to the American furniture market. Americans love quality products that are durable, and those are two things that IKEA does not necessarily focus on. IKEA currently gives up quality for low prices. To accommodate the American market, IKEA should focus more on providing products that will last, and not be disposable after a few years of use. Not to say that IKEA shouldn’t still provide its lower prices items, they should just expand their products in terms of quality.
Another aspect that current American retailers offer, that IKEA lacks, is customer service. During a consumers shopping experience at IKEA, there is little interaction between the consumer and IKEA employees. Instead of a do-it-yourself shopping trip, IKEA should focus on having more employees on the floor to assist customers when help is needed.

 

What would be the model of IKEA in India?

IKEA will invest 1.5 billion euros ( Rs. 10,500 crore) to set up 25 mega stores in India in a move certain to cheer the government, which is battling charges of a policy standstill and dipping investments. I know that this idea is being toyed with for quite some time now. The reports also mentioned that the Indian Government’s move to allow foreign firms to own 100% of the retail ventures from a previous 51% comes from a serious lobbying from IKEA who would like to have a complete ownership of its business in India. It was initially stated that IKEA would have to procure 60% local material, but a little birdie has it that this figure has been reduced to 30% now. The government is trying to relax a lot of its red tapism for IKEA. One of the reasons could be a recent blow which came by way of a lot of foreign investments being withdrawn from India. If the Indian Government manages to get IKEA in ,then it will surely be a booster to the lagging FDI.

IKEA has a more or less same business model around the world. It would be for us to wait and watch if IKEA’s quick-fit furniture model would impress the Indian consumers. Not to forget our customer base is still a majority of people who want to have their furniture made by the local carpenters. It will be hard to penetrate into the minds of this customer who has an affinity towards the rich Rajasthani wood work or antique designs, as compared to the flat, geometrical, do-it-yourself kit. Most importantly, I hope they pay attention to the fact that no Indian homes have the same kind of furniture, call it social status or I-have-the-better-one attitude, variety is what the consumer here targets at. The Do-it-Yourself could be a fun activity at school but Indians prefer paying some rupees and getting their work done. So, in such a situation, I am a little sceptical if these consumers would want an ‘assemble yourself’ type of home.

On the other hand, it would be a very pessimistic attitude to completely disregard the Indian mindset of trying out new things. We do have a portion of the urban young class which has travelled well and would not mind trying out a new idea. Though I was not able to find anything on their Indian business model, I really hope that IKEA understands that the Indian Government and the Indian Consumer, both, are different entities all together and even if it manages to impress the Indian Government and get an entry, it will be an entirely different ball game to get into the homes of Indian consumers.

Hope that, once in, IKEA would be able to give the Indian Consumers a better outlook in designing their homes than just another mall to visit with their families during the weekend!!

Water Use It Wisely: Social Marketing

Lets begin with an extremely basic question:

How do you prompt change?

The answer which might click would be “through fear”, “Sensationalism” or “A just say NO approach”. True, it may involve some aspect of these elements, but a truly successful social marketing campaign is more likely to result from a thorough understanding of your target audience, knowing their motivations and barriers, and a sensible, clearly defined call to action that conveys obvious benefits.

Social marketing is a process that applies marketing principles and techniques to create communicate, and deliver value in order to influence target audience behaviors that benefit society as well as the target audience. (P.Kotler, N.R.Lee, U& M.Rothschild, personal communication, September 19,2006).

Take the issue of water conservation. In Arizona, most folks know that water is a precious commodity, but when the city of Mesa committed itself to creating and publicizing a solid conservation campaign, it was imperative that the message be delivered in a way that would not only compel viewers to conserve water but would give them the tools to do so. It wasn’t about preaching. It had to truly motivate change.

“Water-Use It Wisely” was the catalyst for change. Created in 1999 by Park&Co, a Phoenix based marketing agency, the campaign has become North America’s most comprehensive water conservation program, with over 350 private and public partners, including corporate sponsors as Lowe’s and Home Depot and outreach efforts through the EPA and USAID.


Return on Marketing Investment (ROMI)
A 2004 survey conducted by the Behavior Research Center asked respondents about their awareness and recall of the campaign message, their behaviors regarding water conservation, and overall attitudes about the issue since the launch of the campaign. The findings were as follows:

Ø    8 out of 10 metro-Phoenix residents surveyed recalled the “Water-Use It Wisely” slogan.

Ø    51% recalled the slogan “There are a number of ways to save water, and they all start with you.”

Ø    63% indicated they had seen, heard, or read information about water-saving tips at home.

Why it worked?
The proven success of “Water-Use it Wisely” is based on two major principles of social marketing:

Ø    Identify the motivators and barriers of your target audience

Ø    Design a campaign to highlight these motivators and overcome the barriers.

In other words, the benefits from doing (or not doing) the intended behavior must outweigh the costs in order to motivate and sustain change. Additionally, the behavior must be tangible and easy to do in every day life.

For example: “Use a broom instead of a hose to clean your driveway and sidewalk and save up to 80 gallons of water” or “Turn off the water while you brush your teeth and save 4 gallons a minute.”

These are just a few of the water-saving devices highlighted throughout the campaign that gave viewers clear calls to action that they could easily do.

Doug McKenzie-Mohr, the venerable ‘guru’ of social marketing, frequently expounds on these principals and illustrates in his book. Fostering Sustainable Behavior, that there are three reasons why people won’t change a behavior:

Ø  They don’t know about the problem and/or how to change their behavior.

Ø  They perceive the behavior change as too difficult.

Ø  They believe there is greater benefit from their current behavior than the new behavior.

 

10 Steps to Successful Social Marketing
Authors Philip Kolter, Ned Roberto, and Nancy Lee outline in their book: Social Marketing, Improving the Quality of Life, twelve elements to a successful social marketing campaign.

1) Take Advantage of What is Known
The Water - Use It Wisely campaign is the product of three independent studies by Mesa, Phoenix and the Arizona Municipal Water Users’ Association. Each study revealed a consistent and compelling finding: Citizens were saying, “Don’t tell us to save water. Show us how to save.” This was the “Ah ha!” moment that helped us arrive at the creative foundation of the campaign.

2) Promote a Single, Doable Behavior, and Explain in Simple, Clear Terms
Once we identified our target market, then it was imperative that we communicate a clear, tangible call to action. We highlighted the water-saving device, described the behavior we wanted our customers to adopt, and stressed the benefits. For example, “The next time you replace a flower or shrub, choose a low water use plant for year-round landscape color, and save up to 550 gallons each year.”

3) Use a Tangible Object or Service to Support the Target Behavior
As our research clearly indicated, it’s not enough to just tell people to save water, we have to show them how. That’s why all 100+ water saving tips have a tangible object associated with them, as a toothbrush or a wrench. The toothbrush serves as a prompt of shift in behavior by turning off the water while you brush your teeth, wherein the wrench serves as a tangible tool that can be used to fix a leaky pipe. These visual prompts help the consumer to better interact and identify with water conservation, and in turn, promote the desired behaviors that ultimately lead to the benefits associated with conserving water.

4) Understand and Address Perceived Costs and Benefits
A crucial component of the WUIW campaign was the information received through surveys regarding initial perceptions of costs and benefits with water conservation. It is these perceived costs and benefits around which the campaign is created and directed.

Costs/Barriers:
Studies revealed that the majority of consumers weren’t knowledgeable about water conservation techniques. Also, it ranked fifth in percentage of concern among seven local problem issues raised; air pollution and traffic congestion being numbers one and two. Studies also showed that consumers in multi-family dwellings (apartments) had little awareness of their water consumption as it was included in their rent, and as such, they weren’t as motivated to practice conservation.

Benefits and Motivators:
A 138-gallon pyramid outside of a local Home Depot to visually demonstrate the average amount of water used every day by each citizen in metropolitan Phoenix. The most consistent reaction we received to this 16-foot tall display was shock. People had no idea how much water they were using, which makes water conservation a much more important endeavor.

5) Make Access to your Message Easy
Successful social marketing campaigns provide target audiences with easy ways to sign up or take action. With Water - Use It Wisely, we call this “Omnipresence on a Budget.” We strove to have our message everywhere so that it was convenient to interact with, simple to understand, and easy to put into practice. The logo itself is a call-to-action, making the message and the resulting behaviors very accessible.

6) Develop Attention-Getting & Motivational Messages
The campaign creative featured bright, eye-catching colors with simple icons such as a watering can or wall clock to illustrate the specific water-saving devices or tips. The creative stressed the ease at which anyone can conserve water day to day.

7) Use Appropriate Media & Create Audience Participation
The WUIW campaign used tent cards at restaurants reminding patrons that water would be served only when requested. Additionally, the campaign was promoted in several ways including: on water bills and newsletter inserts, on movie theatre slides, on airport signs, and on municipal trucks, among others.

8) Provide Response Mechanisms that Encourage Recommended Behavior
One of the best ways to demonstrate to your target market that they are making a difference by adopting the desired behavior is by showing tangible results, either on a cost or statistical basis. Billing envelopes and utility newsletters are great places to reinforce the message and the brand. With WUIW, showing consumers declines in their water consumption along with the related water savings is an undeniable and consistent way to prove the benefits of their behavior change. It is also an ideal way to continue promoting the water conservation message over time. The WUIW campaign has continued to use water bills and newsletters for these purposes.

9) Allocate Adequate Resources for Research
Research is like a road-map to effecting behavior change. Unanswered questions are critical to the success of a campaign. We need to know what the concerns and barriers the target audience has about adopting this new behavior.

10) Track Results and Make Adjustments
Finally, administering a campaign is a little like playing golf. You have to make adjustments along the way to stay on course and reach your goal. With Water - Use It Wisely, we first did a benchmark study to better understand our consumers’ mindsets toward conservation. Then we conducted follow-up surveys every two years to determine how successful the campaign was and what changes needed to be made to reach our goals. After four years, we found that Water - Use It Wisely had achieved an 80 percent market penetration regarding awareness, and that 33 percent of those surveyed said they had made the desired behavior changes to use water more wisely due to the campaign.

getting into PLACEMENT COMMITTEE: An INGREDIENT to MBA DIDACTICS

            Starting the journey at a Master of Business Administration (MBA) College buds plenty of hopes and wants. The time moves on with a life which sounds hectic. But if observed minutely, it’s full of exposure, inculcating lots of experience and moreover elucidating an enigma within us. Looking beyond knowledge through lectures, an MBA college comprises of many committees and clubs. The one which happens to be the dream of many is being a member of ‘The Placement Committee’. 

           Generally, at MBA Colleges placement process is a student driven process. This is undertaken by ‘The Placement Committee’, under the able guidance of the faculty advisers and the Placement Office of the Institute. Being a part and parcel of this Committee is neither impossible (as one’s belief and working towards that goal can make anything possible) nor a cake walk. Elaborative views on the normally followed steps for getting selected for the same are mentioned as under:

  (1)   Filling the Application form:

It might come into the mind that, ‘why this obvious point has been included?’ The fact is that it’s the first step of exploring an opportunity. Although thinking on different aspect is required, but implementation is the major step in any field of management. Many students use to miss this opportunity either by getting into the loops of thinking or not prioritizing their wants.

  (2)   The First actual elimination:

Those few who dared to sustain the factual elimination round (i.e. filling the Application form), here comes the actual elimination round. It comprises of dozens of assignments having stringent specifics and moreover, tight deadline.

Why Stringent and Why Tight?

Answer to both the question is testing individual’s future commitment with constraints.

Many might find it harsh and difficult to manage, when

§  there are plenty of pre-reads for lectures

§  the season of assignments have begun

§  surprise quizzes have already started intimidating

§  interviews of other clubs and committees have already been started (which too need to be taken into consideration as a back-up for ‘The Placement Committee’)

§  seminars, conclaves and lecture series have started utilizing(consuming) the whole time

The managerial tactics comes into picture under these circumstances. Realization of the facts and folklore of management have already started sowing the seeds.

  (3)   Team work round

To be precise it’s a test of more of your team work rather than the group work (a team comprises of a set of people having different skill sets, while a group consists of people having similar skill sets). It helps to learn gathering information, dividing work, listening to each others view points and finally implementing the same.

  (4)   Presentation Skill

The main aim is to ‘Present’ your capabilities in a way to ‘Represent’ your college. The overall process is designed to test the look & feel of individual’s effort, the heart & will of joining ‘The Placement Committee’ and need not mention the depth & skill in preparing the presentation.

  (5)   Rigorous Interviews

Interviews are taken into two parts:

a)      By Senior Placement Committee

Seriously depicting, the interviews are conducted in such a way that will project ‘A to Z’ of an individual.

Why you? Why MBA? Strengths and weaknesses? What extra? Family? Background? How will you project your college? Why your college? What’s the specialty in the students? Negotiation skill? Crtical questions which you won’t have imagined? Questions which need diplomatic answers.

Numerous such questions and situations are fired one after the other, as if Darwin’s theory of ‘Survival of the fittest’ is being tested.

The perception after the interview gets over: “I wasn’t grilled this much even at the time of getting to the college”. But it’s required to scan every bit and pieces of an individual. If these steps are not followed, it may create a disaster at later point of time.

b)     By Faculties and Professors

This is a Human Resource (HR) round with genuine questions. Few of the questions are expected and rest of them is random. The faculty uses their experience to judge an individual and its worth.

  (6)   Result Declaration

After all these days, the most awaiting results are announced with few happy faces ready to take up the challenge.

  

            The real future master in Business administration is the one who even after getting selected stays humble and down to earth. All the students in the college should be treated equally by them. Managing one’s own studies along with all those Placement Committee’s work is the biggest challenge, when you have exams coming, assignments pending, summer and final placement dates approaching. The main target is in bringing the best possible companies for recruitment. At the same time, the committee also makes sure that prospective employers get a fair chance to select the students of their choice. All those skills on which they are judged upon during the selection process, this is the correct time for implementation. The placement team works throughout the year to make these events successful. Also, this gives practical exposure to the students. All these concurrent tasks help in bringing out the best manager out of an individual. Positive mind-set and commitment is the key to success. Hence, it can be concluded that getting into The Placement Committee is an ingredient to MBA didactics.