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A Case Study Of Ikea With Global Communication Marketing Essay

INTRODUCTION

The present era of globalization has greatly influenced the business practices which need to integrate advanced knowledge and expertise of a diverse range of media technologies and systems in order to gain competitive advantages. Today, consumers live at a moment when every important idea, story, brand, image, sound and relationship is apt to travel across every available channel of communication and this spread of media content is fuelled top-down by the consolidation of media industry and bottom-up by popular access to new tools of grassroots media production and distribution (Baker, 2000). It is significant to note that each medium has its own affordances, its own market, and its own cultural status and when diverse media interact with each other to constitute the communication environment; a strong business network is formulated. This paper is intended to highlight the business strategy of an incomparable international company i.e. IKEA, by specifically focussing on it global media communication stratagem.

1.1 COMPANY OVERVIEW

IKEA is an international company and one of the most famous home furnishing brands of Sweden that has stores in many parts of the world with operations in 42 countries and a total number of 70 000 employees of which 59 000 work in Europe. The prime objective of the company is to “offer a wide range of well-designed, functional home furnishing products at prices so low, that as many people as possible will be able to afford them” (IKEA, 2002). The idea is to produce and sell the best product for the lowest cost. In IKEA, the customers can find an extensive variety of products that they need to furnish their home (IKEA, 2006). It started out in the 1940s and the group is solely owned by the Foundation through a holding company (INGKA holding B.V). The biggest expansion has been in the late 90th The first IKEA store opened in Sweden 1958, outside Scandinavia the first store opened in 1973 (Switzerland). In 1985 the first establishment in the US were made, 1998 in China and 2000 in Russia. Table: 01 represents the brand positioning of IKEA, worldwide.

Table: 01 KEY STATISTICS

EUROPE

NORTH AMERICA

ASIA/AUSTRALIA

Turnover per region

80%

17%

3%

Purchasing per region

66%

4%

30%

Co-workers per region

59000

9000

2000

The bulk of the operations are the retail business with 165 stores in 22 countries and a total of 75% of the employees in this area. IKEA has been selected as a choice of brand that is positioned in UK and other EU based countries however, it is still growing and maintaining its competitiveness across the globe and by preferring it as the brand of choice, it is anticipated to benefit from the exceptional experiences and the rational strategies of a leading brand as IKEA.

Table: 02

COUNTRY

EMPLOYEES

STORES

EWC-REP

Germany

10800

31

2

Sweden

7100

13

2

United Kingdom

6000

11

2

France

4500

13

1

Netherlands

2800

10

1

Italy

2500

8

1

Austria

1700

5

1

Spain

1500

5

1

Norway

1400

5

1

Denmark

800

4

1

Finland

300

2

1

Belgium

1700

4

1

1.2 IDENTIFYING THE NEED FOR GLOBAL EXPANSION

The worldwide expansion of media markets has created an urgent need to understand the incessantly emerging global media culture which has given rise to the cross- pollination of national and international cultural traditions, and the new styles and genres developing in this context (Grieves, 2005). The business world of today needs to comply with the digital landscape possessing significant challenge for the businesses concerned with the notion of global expansion as adaptation to these new technologies potentially accelerate long-standing trends towards the world culture, insuring access to international markets (Belch and Belch, 2006). IKEA started to utilize innovative communication technologies and e-business activities as a tool to effectively commune across the globe, approximately in the year 1996. The strategic management needs to position the global communication media as the centre of attention, in order to effectively penetrate the brand worldwide; with the aim of obtaining maximum benefits from the advanced technological methods. IKEA is striving to drastically improve its brand positioning by means of adopting good communication strategies as presently the brand’s operations are mainly in EU countries and have not accomplished to capture the potential market like India, having a large consumer base of 1.15 billion. It is also important to note that, a new economic policy has been formulated in India and is being welcoming for the participation of the foreign companies to invest in the country, therefore; this could be the best occasion for the brand to establish its value within the Indian market. The inventive notion of IKEA to produce and sell the best product for the lowest cost is exceedingly captivating for the Indian consumer base, where the larger segment of population belongs to the middle class, eager to adapt contemporary living style within affordable price. In accordance with the underlying fact, IKEA must have a comprehensive strategy that ensures to provide the most important characteristics associated with the global expansion of the brand with a particular emphasis on the utilization of media communication contrivance.

STRATEGIC MODEL OF GLOBAL MEDIA COMMUNICATION

For the purpose of situating the international brand of IKEA in the Asian region, specifically in India, a strategic model for effective media communication has been proposed (Figure: 01)

FIGURE: 01 MODEL OF GMC

followed by the detailed explanation of every single phase of the proposed model. The

proposed model also identifies various factors to be taken into consideration before implementing the strategy. In a market that has become more global but also more volatile and in constant change, there is a demand for companies to become more effective, flexible and agile (Christopher, 2005). Following are some key factors to be well thought-out in order to achieve the objective of global expansion of the brand.

2.1 COMMUNICATION CHANNELS

A variety of TV channels with their extensive penetration across the globe is the most effective way to reach out and convey the message within the masses. With the continuously evolving trends the impact of advanced e-tools has become very common (Bovee and Thill, 2009). In addition to print media, radio, phone, emails and chat options a number of social networking websites and blogging is utilized by the business organizations, as a resourceful technique to promote their products.

2.2 MANAGING TRUST AND RELATIONSHIPS

In order to gain the trust of the consumer it is essential to build up strong relationship by proving the reliability of the brand. The reliability of the brand depends upon how effectively the message has been communicated to the target audience especially during the initial phase of introducing a brand (Griffin, 2008). TV commercials reach to the masses and also speak out loud about the brand image as the face of the brand is directly in touch of the audience. Once the credibility of the brand has been accepted by the target audience, the focus of the communication can be shifted towards task orientation i.e. the profitability of the organization.

2.3 LANGUAGE & CULTURAL DIVERSITY

Regardless of the efficacy of the communication technique that has been developed with a concept of expanding business activities, the most critical aspect is the use of the correct language or recognizing the importance of the local languages spoken by the target groups that a brand is intended to reach. According to Grosse (2002) the biggest challenges in managing communication strategy are the intercultural environment and to manage the technology and handling cultural differences. Since the proposed strategy is to communicate with the Indian populace hence, language consideration is of great significance.

2.4 TECHNOLOGICAL CHALLENGES

Using technology for communication has two possibly obvious areas of concern, one is making sure that the technology works and second is to ensure the efficient use of technology (Grosse, 2002). There could be resistance from a populace segment either not familiar or comfortable with the use of advanced e-tools used for communication and therefore, the strategy must be a blend of communication techniques depending upon the understanding of the target audience.

SKILLS FOR EFFECTIVE COMMUNICATION

The strategy must be directed by a proficient team that has an in-depth understanding of communication and are also appreciative towards language and cultural diversity.

RATIONALE OF PROPOSED COMMUNICATION STRATEGY

A wide range of communication tools are used as means of reaching the consumers with the advertising message for the positioning of a brand image. The proposed strategy is a blend of utilizing global media communication tools with an aim to position IKEA within the Indian market which has a large consumer base but also posses immense cultural diversity and hence a blend of strategic plan is anticipated to attain the desired results of expanding the operations of IKEA, though in a different backdrop but with a strong consumer base.

3.1 SETTING-UP THE AGENDA

The agenda for the set of activities as proposed in the model is specified as follows:

Introduce the brand prominence by conveying positive message to the target audience;

Develop the understanding of the target audience about the conception of the brand by utilizing media source as a vital tool of communication;

To improve the growth and profitability of the organization by global expansion.

3.2 IDENTIFYING THE INTERNAL & EXTERNAL CLIENTS

The internal clients are directly involved in the fieldwork including decision-makers, other key stakeholders, the researchers and team working on the brand expansion project. It is significant for the internal client to exchange information on a regular basis that may generate a dynamic stratagem benefitting all partners (Morgan and Pritchard, 2000). The external clients are the general population or the target audience to which the brand is intended to be introduced.

Figure: 02 STRUCTURE OF COMMUNICATION STRATEGY

SELECTED THE TARGET REGION

MIXED MEDIA COMMUNICATION STRATEGY

E-TECH

TOOLS

RADIO

TELEVISION

PRINT MEDIA

IMPLEMENTATION

FEEDBACK

ANALYSIS

STRATEGIC REVIEW & ALTERATION

NEW IMPROVED &

EFFECTIVE STRATEGY

IDENTIFIED

THE NEED TO EXPAND

3.3 TARGET AUDIENCE

The initial phase to situate the brand of IKEA with the help of smart strategy based on global media communication is to identify the needs within the target audience in order to devise a plan that is best suited with the needs of consumer and equally benefits the organization.

After reaching out to the consumer base and creating a community of interest by identifying needs and forming relationships, the next step is to implement the selected strategy.

MIXED COMMUNICATION STRATEGY

The purpose of specifically designing the brands is to persuade consumers to exhibit the behaviour that will make the organizations to achieve their vision statement and fiscal objectives. Therefore, the communication and marketing strategy of a brand has direct and compelling influence upon the business goals of an organization. The communication channels serve as the me­dium that is used to transmit the key information about the brand to the target audience and also provide means to develop the understanding that the organization expect to achieve from those who receive their message. The most significant brand building activity is relationship building through effective communication channels and once the connection with the consumer base has been developed, it needs to be constantly reaffirmed by the brand through regular advertising, publicity methods, social networking platforms and brand extensions (Masterman and Wood, 2006). The exercise is generally aimed to reinforce the bond with consumers by offering products or services that bring them more close to the brand. Based on careful analysis of IKEA’s brand image and Indian consumer market, a mixed communication strategy has been proposed, inclusive of the following communication mediums:

4.1 PRINT MEDIA

The use of print media specifically newspaper, offers wide penetration within masses in a sophisticated manner. Newspaper can be the main source of handy information which can provide up-to-date information to a larger segment of audience as it is conveniently accessible. Furthermore, regional newspapers can also be utilized to spread out the message to local community.

4.2 NON-VISUAL MEDIA: RADIO

The scope of Radio as a medium to cater to both advertisers as well as consumers is immense as it may provides a mean to reach out to a mass audience of Indian market. National radio stations reach most remote areas where there is no TV network. Furthermore, the biggest differences are that Radio is a completely local medium and hence the promotions campaigns can tailor to meet local tastes. It is cost effective medium with a lesser turnaround time.

4.3 VISUAL MEDIA: TELEVISON

Reaches large audience, increasingly including rural population and is the best medium for strategic selection as larger segment of the TV audience in India are household women and for a brand like IKEA, women based consumer market is much preferable as it greatly involves home furnishings.

4.4 E-TECHNOLOGY

Globalisation has drastically shortened the distances between people all over the world by the help of electronic communication media (Pike, 2008). The communication has now become swift and speedy with larger opportunities for interactive contact. E-mediums like email, chats, blogs and social networking sites have significantly improved the global connectivity and have also offered a platform for businesses to exceptionally grow within the desired market segment. Though India is recognized as a third world country, but the technological advancement in the region has been tremendous and therefore, integrating e-based communication strategy within the expansion plan is of fundamental meaning.

EVALUATING THE GLOBAL COMMUNICATION STRATEGIES

The media communication strategy has the capability gravely influence a brand image in a positive or a negative manner. It is important to note that, when an international brand approaches a developing country to position its brand by progressively promoting the brand image with the help of media communications, there is a possibility of consumer base resistance due to certain factors as for example, the media may portray the brand image as a symbol of modernity that may not be acceptable for conservative segment of populace. If the correct message has not been conveyed by effective communication channels it is quite possible that the brands may be portrayed as the vanguards of a foreign domination which can be very damaging to the image of a brand (Guffey, 2009). More importantly, any bad news about the brands can spread like wild fire across borders, as for instance; Coke found out in Belgium, where the outsides of some bottles were contaminated with a fungicide, causing a health scare (Kotler and Armstrong, 2007).

5.1 FEEDBACK OF THE RECIEVER

The process of communication is not a one way course and is comprised of two essential elements i.e. producer and a receiver as in business terms communication is the method of sending message to the consumer and receiving positive or negative reaction from the consumer based on their experiences (Kanuk and Schiffman, 2006). After the implementation of a communication strategy it is important to test the effect of the message and the communication tool before finalizing it as a permanent exercise. Adjustments to the strategy must be essentially based on the consumer’s feedback.

5.2 IDENTIFYING THE STRENGTHS

IKEA is an exceptionally good quality brand having simpler yet powerful range of products that have an excellent reputation worldwide. To compete within the Indian market IKEA needs to identify its core competitors. The brand itself is exceedingly complacent but since it is reaching out to new market segment therefore, it needs to build deeper engagement & relationship building with the target audience (Keller, 2006). The blend of communication stratagem has the tendency to offer the brand with distinctive competitive advantage however; IKEA needs to spot few alternatives in order to profoundly establish the brand in the target market.

5.3 IDENTIFYING THE WEAKNESSES

Being new to the Indian market, IKEA might face a number of difficulties to successfully run and sustain an effective media communication campaign. The ever-changing global environment also illuminates the need to adapt effectively and promptly with the environment. Furthermore, the promotional strategy becomes ineffective, when consistency has not been maintained to communicate with the target audience. It is also very significant to develop a media communication strategy with extensive regional or global campaigns in a logical consequence (Pickton and Broderick, 2006).

CONCLUSION

Global marketing is the process of focusing an organization`s resources on the selection and exploitation of global market opportunities consistent with and supportive of its short and long-term strategic objectives and goals (Baker, 2000). This paper is an attempt to propose the best possible media communication strategy to situate the brand of IKEA which is an internationally recognized brand across the globe; in the larger consumer base market i.e. India. It has been constituted that the strategic measures and communication strategies needs to be constantly reassessed. It is very crucial for the brand managers to fix on the best course of action for their brands in a particular market, based on a critically analysing the relevant internal and external influences of the target setting upon the brands. The study has developed the global brand proposition model with a unique framework by evaluating the associated environmental factors and thereby, suggesting a blend of communication strategies that is best suited to IKEA. The ideas of the mixed communication strategy expressed in this paper are driven from the strategic model for global media communication. The main objective of this paper is to analyze the ways by which IKEA competes in global environment specifically in the selected region i.e. India, by using different communication tactics as the potential means of communication. The study concludes that for a global positioning of a brand, a company must be cautious in utilizing the media communication techniques prior to globalizing its operations as the tactics might fail and result in loss of profit or even closure of the company and therefore, choosing a correct communication strategy is of great substance.

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