IKEA's Global Marketing Strategy


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Case Details:

Case Code : MKTG119
Case Length : 19 Pages
Period : 1998 - 2005
Pub Date : 2006
Teaching Note :Not Available
Organization : IKEA
Industry : Furniture Retail
Countries : Sweden, US and China

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Building the IKEA Brand

The Founder's Vision

IKEA was known for its contemporary yet affordable furniture, even after twenty years of the exit of Kamprad. Though Kamprad had long ceded day to day involvement in the company's activities, his vision and thoughts were deeply rooted in IKEA's culture.

Kamprad's humble beginnings (he was the son of a farmer) had created a unique IKEA culture that was founded on respect for money and an innovative mindset. Kamprad was known for his frugal habits. He flew economy class, he would take the metro to work, drive a ten-year-old second-hand Volvo and avoid designer suits.

This attitude trickled down to the co-workers, who would ensure minimal wastage and cost cutting at every level. As a result, IKEA came up with products that were aesthetically designed and were still available at affordable prices. This aspect greatly enhanced the brand image of IKEA, which was perceived as a company that believed in social equality...

Complete Shopping Experience

IKEA stores were usually located outside urban areas, isolated from other shops. This was done intentionally so that IKEA could create a complete shopping experience for customers.

The IKEA products were themselves beautifully crafted and appealing, and even their stores were so constructed as to enthrall shoppers. The blue-and-yellow buildings was generally 300,000 square feet in size and each store stocked about 7,000 items, from kitchen cabinets to candlesticks.

IKEA targeted middle class customers worldwide. IKEA made shopping easy for customers. For example, right at the entrance of the store, customers could drop their kids at the playroom which had many types of safe play equipment, and then shop on their own in a leisurely manner. The stores were constructed in the form of a circle, to allow shoppers to view all sections of the store...

Localization in Global Markets

According to IKEA, the company's target market was the global middle class which shared buying habits. IKEA's Billy bookcase, Lack side table and Ivar storage system were best-sellers worldwide. The customer spending pattern was also similar across countries. Despite these similarities, IKEA realized that to strengthen its presence in the global market, it was necessary to localize. For instance in China, IKEA produced 250,000 plastic placemats in 2005 to honor the year of rooster...

Excerpts Contd...>>



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