The Environmental Factors Ikea Marketing Essay

An organization was found about sixty years ago, which is now has become most prominent furniture retailer in IKEA. Founder of this organization was, Ingvar Kamprad. It supplies products in flat packing concept with reasonable values. They have large network of 226 stores across Europe, Asia and America. Currently it is earning $17.7 Billion it uses illustrious annual catalog to market its products. It considers different environmental factors while making domestic and foreign marketing decisions about its products. This paper studies in detail these factors including control international economic interdependency and consequence of trade practices, contracts, physical and demographic infrastructure, corporate social responsibility, cultural diversity, and implementations o ethical aspects in business along with fulfillment of legal duties, political influence on business and its effects on international relations and in last it examines, corrupt practices Act of 1977, and the role of technology.

Influence of Global Economic Interdependence & Effect of Trade Practices and Agreements

As the business is expanding across borders and continents, it’s examines purchasing power parity of customers in different regions before setting it prices. In order to determine Purchasing power parity, level of income, prices, savings, debts and GDP are assessed. (Hennessey and Gillespie, 2010). Some factors that can determine purchasing power parity include economy, trade practices, and agreements. So when, you are going to be global, it is required to build an efficient marketing mix and prices are adapted for targeting in different parts world.

Importance of Demographics & Physical Infrastructure

Demographic factors and physical environment held very significant in developing marketing strategies. Demographic factors include, gender category and divergence, choice patterns of people, buying pattern, norms diversification, ethnicity and race etc. to operate competitively in regard of marketing mix, evaluation of demographic profile of specific region is fundamental step.

Influence of Cultural Differences

IKEA use to target developed countries, as it mainly operates in Asia, USA, Canada and Europe To consider potential growth, and development opportunities. It do not target and focus the developing countries of Africa, South America, and Asia as well. IKEA offers to great extent its similar products in all parts where it has its operations, but similar marketing strategies for each region are different as it does not make sense, it also do not works well if similar strategies are used for all regions, As it is a famous saying in business that “one size does not fit to all”. IKEA introduces different marketing strategies for each region according to its demographic trends and physical infrastructure. For example, IKEA offer various mattresses, but a queen’s bed will not be same in size in United States and United Kingdom. IKEA develops its strategies very seriously; it considers and carefully looks after its competitor strategies, customer’s environment, and psychology in order to meet and exceed their demands. It manages price to such level where they consider it necessary to maintain particular level of sales and developing most attractive environment of their franchises and stores. It do not have aim to be Swedish in style everywhere, rather it changes its products greatly according to every region where it goes to operate and conduct its business. (Schumann, 2009). In response to globalization, its designers has changed the look of showrooms after the visit of Hispanic Californian’s houses and finding out that Hispanics consists of large families and have interest in bright colors.

It causes the unpopularity or even failure of products if they are not changed according to environment and place being targeted, as in the case of not changing the name of baby bed named GUTVIK, a rude word in German language.

Importance of Social Responsibility & Ethics versus Legal Obligations

corporate social responsibility, legal obligations and ethics has become more important among stakeholders. Companies, if operate with single aim of making profit, may indulge in unethical practices and may deceive customers by giving them wrong information. Corporations are now more socially responsible and work for benefit of society in which they are operating. The aim is welfare of consumer by supplying products and services in safe manner, at reasonable prices, and avoiding all those activities in market that may be deceptive. A socially responsible and ethical corporation considers it its responsibility to save customers from inflating prices, potential monopolies, and ensure fair competition in the market. Consumerism and environmentalism are Emerging trends in this regard are which means to benefit consumer and to save environment.

Operating as a socially responsible organization. For example, when issue of used wood chemical being harmful to the customers as well as the environment, was raised, IKEA change it suppliers and manufacturing procedures in order to maintain its image in the minds of the customers. To gain success in industry, it’s important to have good company image among its customers and society at large. Ethics plays important role in forming company’s image. Ethics are major aspect of operations. Ethics include being friendly, conscious about customer safety and health etc. it’s also required by law of countries where IKEA has its operations. In India and Pakistan, it has to face some issues of child labor.

Effect of Political Systems & the Influence of International Relations

Legal and political environment of host countries, effects marketing strategies of companies. Every country has laws to protect customers and companies, these laws often and commonly includes laws regarding marketing contest, safeguard of customers, lending laws and laws related to fair trade etc. there are also some laws to control prices for the sake of customers , to promote fair trade and regulate monopolies. IKEA is also dynamic while it deals in political environment and agreed to a contract in May, 1998 with The International Federation of Building and Wood Workers (IFBWW) for the protection of employees’ right. It also pays attention to lending laws and credit dealings as these laws affect its sales greatly. IKEA has to comply with various laws and regulation of different countries about endorsement of credit card, interest rates, privacy laws, customer rights as well as considering fair lending Acts.

Influence of the Foreign Corrupt Practices Act of 1977 & Influence of Local, National, and International Legislation

It has two important points to focus on, one of these two points is transparency of accounting practices according to securities and exchange commission Act 1934, and second is about corruption of officers at international level.

These acts are intended to prevent and control unlawful activities as such activities are harmful for stability of international markets, and may be harmful for its functioning. Immoral and unlawful activities can damage an organizations reputation and its image in market place. IKEA works in compliance with all rules and regulations of each country, as evidence it always had clear and transparent accounting practices. It has developed its brand image as being high quality provider in the market place, and sincere organization through job search grouping, articulating significance of accounting and store management.

Effect of Technology

Present era is of technological advancement and innovation. It has become necessary to have and use effectively the tools for marketing activities. Marketing intelligence system is largely used in supply by many organizations. This system is helpful in trailing information regarding advancement in technology. (Brennan et al., 2010). IKEA has gathered zip code of their customers when they register for sales but now technology has taken the responsibility for these processes.

IKEA also advanced technology to promote its products, it uses web, email etc this use of new .technology , it has become possible for companies to operate from distant places.

IKEA also used social networking site to link to its consumers, increase its customer base and customer retention. This is simple to reach to all of the families and friends. IKEA has developed a policy that I s helpful to have great success globally. Its efficient polices that has stretched it market share, and stretch IKEA’s designed trends by enforcing the Swedish image, developing the similar environment in each store, even by offering food and quality day care. In order to maintain its image and success globally at the current level IKEA would have to adapt many environmental factors. IKEA is strategizing to provide the low cost, and delivering value to consumers. Marketing and promotion strategies are revolutionized with Facebook and created the ripple effect; to cater highest number of people and making them part of this culture and daily life.