The basis of pricing for IKEA is value i.e. low prices or no-frills pricing. They are not a premium pricer or a skimmer. So products are designed, raw materials sourced, the products are manufactured, they are distributed, and they sold by retail, within this no-frills low-cost framework.
Home delivery is available although this is at an additional cost to the customer.
The IKEA group is an International Marketing 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.
IKEA has more than 300 stores.
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.
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 onpeople, 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.
IKEA has a wide range of furniture for children’s rooms, kitchens, bedrooms and living rooms. Products include coffee tables, side tables, TV solutions, DVD storage, shelves, sideboards, bookcases, sofa beds, armchairs, leather sofas and fabric sofas, as well as many other products. So within these segments IKEA then subdivides again. For example in children’s bedrooms there will be play accessories, beds, changing tables, nursing equipment and so on. IKEA has in excess of 10,000 products. Would you like to take a lesson on the marketing mix?
Services include restaurants and play areas.
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.
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.