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Marketing strategies and techniques used by IKEA

Paper Type: Free Essay Subject: Marketing
Wordcount: 1835 words Published: 1st Jan 2015

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IKEA’s supply chain is worldwide with sales in more than 250 own shops in 24 nations and 32 outer franchisees in 16 nations. The shops are supplied through 31 division centers, or straight from the 1,350 suppliers in more than 50 nations. IKEA’s supply chain subsequently has a worldwide spread with both sales and buying in all major areas of the world. IKEAs enlargement has been huge and sales are still increasing.

IKEA marketing strategy

The IKEA creates good relationships with their customers. The IKEA conception stand on the basis of the market positioning statement. They are committed to develop merchandise design, consumer value and bright answers. By using inexpensive materials in a new way and diminishing production, distribution and retail fees, their customers advantage from low costs.

Low price will lose its appeal if it does not have fine value for money. This is where IKEA is able to make a true difference. IKEA is committed to having a good relationship with their suppliers and so they are able to buy good quality, cost-effectively produced designs that are bought in bulk to keep prices down. By making all their furniture flat packed the cost on transport and assembly will be much taken down.

Function

IKEA products stand on the basis of a functional access to design. IKEA design means products that are eye-catching, useful and user friendly. They are made of the most appropriate equipments for their purpose, they don’t have unnecessary elements and they give authentic answers for exact home furnishing needs.

The IKEA product range provides a very broad option trying to fulfill every customer and to cover all roles in the home. The products are up to date and user friendly so they are useful enough for everyday use.

IKEA only focus on necessary advertising activities. Unnecessarily commercials are disallowed. This is why we rarely see IKEA commercials in television as they only advertise during certain festive season of the year.

The right quality

The quality of a manufactured goods must be appropriate for the intentional use. IKEA products are subjected to accurate tests to ensure that they satisfy national and international safety standards.

3. The solutions that IKEA sought in order to eliminate the uncertainty in the supply chain, hence not feeling the impact of the bullwhip effect.

Presently IKEA opens shops on a average rate of number of 10 or 20 each upcoming year in order to increase the market share in the upcoming five year.

The speed of increasing rate of selling, allotment channels and the scheme of increasing towards 30% of its interior marketing elements each year, supply chain planning is regarded as a huge challenge. The supply chain requires manage and levels of visibility to keep costs down and keep away from outdated stock and/or stock outs.

The IKEA supply chain is mainly make-to-stock (MTS) and only a few manufactured goods are made to clients’ request. As a result, the entire supply chain is greatly relying on forecasts. The areas and the shops have usually had a strong power and a high degree of local freedom in terms of planning and placing replacement demands. This has led to a parted supply chain planning with local optimization and a lot of manual intervention with plans all the way through the supply chain. Moreover, due to common lack circumstances some areas have intentionally overvalued demand to make sure delivery, which in turn has led to inequity in terms of demand coverage. Thus, some marketplaces have suffered from stock outs during long times, while other marketplaces have ended up with out of date inventories. Forecasting has been done on a local level with roughly 120 users striving for dissimilar aims and using different ways. Part of the description to this is that IKEA has lacked a common and structured tactical planning of demand and replenishment. In terms of ability planning, all different parts of the supply chain (stores, warehouses, areas, etc.) tried to optimize its own part of the supply chain, leading to a set of imbalanced supply plans with a low and unbalanced whole throughput with long replacement times for the supply chain as a total.

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4. The strategies that IKEA adopted to retain the suppliers and the customers loyalty across the globe

The IKEA’s main precedence aims the Porters three generic policies to continue all the way through its powers to fight in the worldwide market. The value-chain is renovated by a co-operative focus. The firm must focus on exact manage and solidity of the product combine,

to keep price headship in the market, interior production should be overwhelmed by opponents in order to characterize a strong position. Therefore providers are usually located in low-cost countries, with close nearness to raw-materials and contact to allocation ways. These providers make regulated commodities for the universal market, which size gives the firm with the opportunity make use of economies of size. IKEA’s function is not only to globally combine operations and essentially design manufactured goods, but also to find an useful combination of low price, equivalence, skill and value. A regulated manufactured goods strategy doesn’t indicate absolute cultural senselessness. The corporation is rather answering to internationally combining buyer tastes and fondness. Retail outlets all across the globe carry the essential manufactured goods extend which is world widely admitted, but also puts huge stress on the manufactured goods lines that appeal to local client fondness. IKEA has transformed the value chain access as well by combining the client in the process and adopting a two-way value structure among clients, providers, and IKEA’s head offices. In this international sourcing plan, the client is a provider of time, labour, information, information and transport. Meanwhile, the suppliers are clients, receiving technological help from IKEA’s company technological headquarters throughout a variety of business services. The corporation wants clients to comprehend that their part is not to consume worth, but rather to make it. IKEA’s function in the value chain is to assemble providers and clients to assist them additional plus value to the system. Clients are obviously notified in the lists of what the company’s business systems offer, and what they are expected to include to the final process. To cover-up the client with high-quality merchandises at a low price, the company must be able to discover providers that can convey premium stuffs at low price per entity. The head offices with technical help, leased tools and the essential tactics needed to create high quality objects. This long-term provider association does not only make better manufactured goods, but also put in interior worth to the providers. Besides, this value-chain alteration differentiates IKEA from certain opponents.

5. Agile Manufacturing techniques of any adopted by IKEA

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This is the planning process of IKEA.The Begins with the corporate sales planning (1) which sets the frames for the tactical demand related activities (2) business ground. Initially set up to input to the global need planning process (3), Subsequently drives the supplier (4) and the planning of the distribution supply chain (transport, warehouse, and store planning; 5a-c). In the following, the sub-processes in IKEA’s core component planning process are described into more detail. Note that this article does not cover the operational distribution supply chain, i.e. transport, warehouse and store planning (5a-c). The global operational functioning is owned by acentral function at IKEA of Sweden (IoS), where decisions concerning the number of articles, purchasing, suppliers, distribution, store coordination, and so forth, are made. As such, IoS is the centre of all planning activities in the new planning process.

6. The working methods that ensured a balanced supply chain

IKEA needs to place tremendous pressure on its supply chain to lower costs.

Although it has been generous to fledgling factories in Asia and Eastern Europe -by investing in technology and safety equipment so the manufacturer can supply the volume IKEA require – this often means its supply chain is very dependent on IKEA.

This dependency makes it easier for IKEA to drive down price, which is common practice in retailing. Some of IKEA’s suppliers have little choice but to lower their prices. This is especially true of those factories that used to make doors, for example, but now make billions of IKEA bed headboards with peculiar measurements instead. They are completely dependent on IKEA’s scale, a blessing for some manufacturers, is double-edged.

IKEA’s supply chain is highly mechanized. It was a pioneer of the automated warehouse and the first company to have a warehouse run by robots. IKEA owns 27 cavernous hangars where products rest between factory and store. These warehouses span 10000000 cubic meters across the globe, from Shah Alam in Malaysia to Peterborough in the United Kingdom.

7. Conclusion

A steady development of the Ikea retail business appears to be the focus for the company in the near future, with strategies unlikely to include aggressive expansion into new areas, but rather building and developing in old. However, some changes may be seen with the development of e-commerce, which in the long term, this may have detrimental effects on the revenue of bricks and mortar Ikea stores, but positive effects on turnover for the company as a whole, and thus is the main example of how the company is aligning itself to address the key threat to its traditional stores. Consumers may find Internet shopping preferable, as the Ikea reputation means that they are already assured of the quality and craftsmanship of Ikea products, which is opposed to the present belief of Ikea that customers should be able to feel and check the quality of products before purchase.

Ikea has turn themselves into aggressive expansion-based strategy over the last few years, although the weakness of the external consumer market means that sales growth over the next few years should remain relatively modest.

The development of e-commerce, making shopping at Ikea more convenient, may also have a positive impact on sales, although no progress has been visible on this front of late, and as such Ikea has been very guarded over its profit levels. However, profit margins may fall in the short term as result of the expansion into existing and new emerging markets, with the company facing high set up costs and low spending power, as well as several other external issues in developing markets.

 

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