IKEA – CASE STUDY

SYNDICATE - 10
SUJEET KUMAR CHOUDHARY
SANDEEP KUMAR
MANIK ABROL
YOGESH MAHAR
SHIKSHA KHUSWAHA
SNATA PRUSTY
URVASHI NIRULA
TEJI AHLAWAT
SUSHMA OJHA

Tuesday, October 27, 2009 Ikea Case Study 1

 LAYOUT OF THE CASE
STUDY
•CASE BACKGROUND
•IKEA PHILOSOPHY
•IKEA IN JAPAN-THE FIRST TRY
•IKEA IN JAPAN -THE SECOND TRY
•SIGNIFICANCE OF CONSUMER
BEHAVIOR ANALYSIS
•SWOT ANALYSIS OF “IKEA”
•SCOPE FOR GROWTH
•IKEA’s DRIVERS OF
GLOBALIZATION
Tuesday,•October
SUMMARY27, 2009 Ikea Case Study 2
 CASE BACKGROUND
IKEA
• IKEA IS A SWEDISH HOME FURNISHING
COMPANY.
• FOUNDED IN 1943 BY INGVAR KAMPRAD.
• OFFERS WIDE RANGE OF PRODUCTS AND
GOOD DESIGNS
• OFFERS PRODUCTS AT LOW PRICES.
• PROJECTS SELF SERVICE.

Tuesday, October 27, 2009 Ikea Case Study 3

 CASE BACKGROUND
IKEAS ENTRY IN THE JAPANESE MARKET
The stated case study deals with the entry and performance of IKEA-an
MNC dealing with home furnishings-in the Japanese market.
It deals with the importance of pre and post production market surveys
and the cultural aspects and aesthetics of the consumer behavior.
It also deals with the factors that support and promote globalization.
It deals with the mindset and the mind blocks of the Japanese consumers
that acted as deterrents in the sales of IKEA.
It also states the optimistic approaches , marketing and advertising
strategies that IKEA adopted to gain a foot hold in the Japanese market
and connect with the Japanese people.
It shares the importance of quality of products and brand consciousness
of the Japanese people.

Tuesday, October 27, 2009 Ikea Case Study 4

 IKEA PHILOSOPHY
CONCIEVED BY INGVAR KAMPARD.
FORMULATED – “THE TESTAMENT OF A FURNITURE
DEALER.”
EMPHASISED TO OFFER “FUNCTIONAL TYPICAL IKEA
PRODUCTS,” THAT COVER THE TOTAL HOME AREA.
INTRODUCED THE TERM -“IKEA SPIRIT.”
HE PRESSED ON THE IMPORTANCE AND THE
SUSTAINANCE OF THE IKEA SPIRIT IN THE COMPANY.
IKEA’s VISION – “IS TO OFFER A WIDE RANGE OF HOME
FURNISHINGS WITH GOOD DESIGN AND FUNCTION AT
LOW PRICES.”

Tuesday, October 27, 2009 Ikea Case Study 5

 IKEA IN JAPAN THE FIRST
TRY
 ENTERED THE JAPANESE MARKET IN THE YEAR 1974 BY
JOINT VENTURE WITH A JAPANESE COMPANY.
 IT WAS A FAILED ATTEMPT TO ESTABLISH IN THE
JAPANESE MARKET.
 REASONS FOR FAILURE:
 NO JAPANESE INTERFACE
 LESS DEVELOPED PRODUCT DISTRIBUTION SYSTEM
 LOW ADVERTISEMENT AND LOW BUZZ IN THE MARKET
 NO CONCEPTUALISATION OF JAPANESE CONSUMERS AND
THEIR NEEDS
 HENCE CEO IKEA JAPAN, LARS PETERSSON,(2007-04-10)
STATED THAT-” JAPAN WASN’T READY FOR IKEA AND
IKEA WASN’T READY FOR JAPAN.”

Tuesday, October 27, 2009 Ikea Case Study 6

 IKEA-SECOND PREPARED
TRY
• ENTERED THE JAPANESE MARKET AGAIN IN 2006.
• JAPANESE MARKET WAS MORE OPEN .
• MORE DEEP AND DETAILED MARKET ANALYSIS.
• THOROUGH RESEARCH AND ANALYSIS OF THE JAPANESE
CONSUMER MINDSET AND BEHAVIOR.
• OPENED STORES BY PROPER MARKETING AND ADVERTISEMENT
THEREBY ATTRACTING GOOD FOOTFALL.
• CATEGORISED ITS CONSUMER TYPES AND RANGE.
• PROMOTED LOYALTY IN CONSUMERSHIP.
• DEVELOPED IMPRESSIVE AND IMPACTFUL INFRASTRUCTURE TO
ATTRACT CUSTOMERS OF DIFFERENT AGE GROUPS HAVING
ENOUGH DISPOSABLE INCOME.

Tuesday, October 27, 2009 Ikea Case Study 7

 SIGNIFICANCE OF CONSUMER
BEHAVIOUR ANALYSIS
 CONSUMER FACTORS MUST BE TAKEN IN TO CONSIDERATION
BEFORE PENETRATING ANY MARKET.
DETAILED ANALYSIS OF
 PERSONAL BACKGROUND
 SOCIAL NEEDS
 ENVIRONMENT NEEDS
 PRICE SENSITIVITY
 TO SATISFY THE CONSUMERS BY PUBLICISING THE MANUFACTURING
LOCATIONS AND BRAND QUALITY AND PRICE SO THAT RELATION
AND IDENTIFICATION CAN BE ACHIEVED.
 ESSENTIAL TO KNOW THE COMPETING LOCAL AND INTERNATIONAL
CONSUMER FAVOURED BRANDS.
 TO KNOW THE QUALITY OF PRODUCT THAT A CONSUMER NEEDS.

Tuesday, October 27, 2009 Ikea Case Study 8

 STRENGTHS OF IKEA THAT MADE
THEM SUCCESSFUL IN THE 2ND TRY
 FOCUSSED ON GIVING QUALILTY GOODS AND PRODUCTS
 FOCUSSED ON PROVIDING SERVICES AT LOW AND AFFORDABLE COSTS.
 HAD DONE DETAILED CONSUMER ANALYSIS OF THE JAPANESE CONSUMERS
AND THEIR MINDSET. HENCE ALL THEIR APPROACHES WERE BASED ON
DETAILED MARKET SURVEYS, MAKING THEM PROACTIVE.
 OPENED STORES BY PROPER MARKETING AND ADVERTISEMENT THAT
ATTRACTED GOOD FOOTFALL.
 INTRODUCED GOOD INFRASTUCTURE FACILITIES THAT ATTRACTED THE
ATTENTION, EXAMPLE-THE BIGGEST IKEA RESTAURANT IN THE WORLD.
 DEVELOPED AND DISPLAYED SMALLER APARTMENTS-28 SQUARE MTS-TO
APPEAL TO THE JAPANESE CUSTOMERS AND CULTURE.
 THEY WERE OPTIMISTIC IN THEIR APPROACH ABOUT THE FACT THAT THE
JAPANESE PEOPLE SHALL PREFER LIVING SPACE OVER LOCATION.
 MARKETING AND ADVERTISEMENT WAS BASED ON THE LOOPHOLES OF THE
JAPANESE SOCIETY AND PREVAILING CULTURE DEALING WITH THE PERSONAL
LIVES OF CUSTOMERS TO STRIKE AN EMOTIONAL QUOTIENT.

Tuesday, October 27, 2009 Ikea Case Study 9

 WEAKNESSES OF IKEA-1ST
TRY
THE FIRST TRY WAS A FAILURE-REASONS :
 NO JAPANESE INTERFACE
 LESS DEVELOPED PRODUCT DISTRIBUTION SYSTEM
 LOW ADVERTISEMENT AND LOW BUZZ IN THE MARKET
 NO CONCEPTUALISATION OF JAPANESE CONSUMERS AND THEIR
NEEDS
 THEY FAILED TO STUDY THE COMPETITION THAT THEY WOULD
FACE FROM THE LOCAL AND OTHER INTERNATIONAL PLAYERS
ALREADY IN THE MARKET
HENCE CEO IKEA JAPAN, LARS PETERSSON,(2007-04-10) STATED
THAT-” JAPAN WASN’T READY FOR IKEA AND IKEA WASN’T
READY FOR JAPAN.”

Tuesday, October 27, 2009 Ikea Case Study 10

 WEAKNESSES OF IKEA-2ND
TRY
THEY DECIDED TO CHANGE THE EXISTING TRADITIONAL MINDSET
OF THE JAPANESE CUSTOMERS BASED ON THEIR ADVERTISEMENT
CAMPAIGN-WHICH WAS NOT RECEIVED WELL BY THE CONSUMERS.
THEY TRY TO CONTINUOUSLY FOCUS THEIR EFFORTS IN MAKING
HOME A MORE IMPORTANT ASPECT IN JAPANESE HOUSEHOLDS.
THEY SHOULD INVEST MORE TOWARDS EMOTIONAL QULALITY.
THE JAPANESE PEOPLE TAKE QUALITY FOR GRANTED HENCE THE
PROJECTION OF THIS ASPECT WAS A WASTE.

Tuesday, October 27, 2009 Ikea Case Study 11

 OPPORTUNITIES FOR IKEA
 IT IS A PROMISING BRAND THAT FULFILLS THE CRITERIA OF GOOD
QUALITY –SCANDENAVIAN DESIGNS, WORLD FAMOUS.
 THE ASPECT FOR COMPETITION IS PRICE AND IKEA STANDS FOR
IT,HENCE IT HAS A CHANCE TO EXCELL IN THE JAPANESE MARKET.
 IT CAN FOLLOW THE BASIC MARKETING STRATEGY OF
PENETRATION AND SCHEMING.
 THE JAPANESE YOUNGER GENERATION HAS STARTED TO INVITE
FRIENDS AT HOME, CHANGING TREND. HENCE THERE IS A
POSITIVE CHANGE IN JAPAN TOWARDS HOME FURNISHINGS.
 THE YOUNGER GENERATION IS PREFERRING IKEA, REASONS:
 LOW PRICES, AFFORDABILITY
 DESIGNS THAT ARE STYLISH AND MODERN
DUE TO THESE REASONS THEY ARE READY TO PAY HIGH FARES FOR
TRAVELLING AND FREIGHT.

Tuesday, October 27, 2009 Ikea Case Study 12

 THREATS FOR IKEA
• THE JAPANESE MINDSET IS THE BIGGEST THREAT TO IKEA:
• THE JAPANESE PEOPLE DON’T SPEND ON FURNISHINGS.
• THEY HAVE SMALL HOUSES AND LESS STORAGE SPACE.
• THEY DON’T LIKE SHOWING OFF THEIR CAPITAL CULTURE.
• THEY DON’T LIKE DECORATING THEIR HOMES-
TRADITIONALLY NOT ACCEPTED.
• THEY DON’T HAVE THE CULTURE OF INVITING GUESTS
• THEY TRADITIONALLY LIKE TO SPEND MORE TIME
SOCIALISING OUTSIDE THEIR HOMES.
• THEY SPEND MORE MONEY ON ACCESSORIES AND
PRODUCTS THAT THEY CAN SHOW OFF IN THE SOCIETY.

Tuesday, October 27, 2009 Ikea Case Study 13

 SCOPE FOR GROWTH
• OPTIMUM USAGE OF THE AVAILABLE INFRASTRUCTURE TO
ACCOMMODATE LARGE CROWDS BY ADVERTISING ITS
FLOOR AREA AND THE RESTAURANTS.
• ATTRACTION OF THE CUSTOMERS OF AGE 3O-WELL
ESTABLISHED SERVICE AND BUSINESS CLASS-MORE
DISPOSABLE INCOME.
• ATTRACTING MORE WOMEN, MAKING THE BRAND MORE
WOMEN ORIENTED AND WOMEN FRIENDLY.
• MAKING HOME A MORE IMPORTANT ASPECT IN JAPANESE
HOUSEHOLDS.
• INVITING LOYAL CUSTOMERS, CUSTOMER SATISFACTION
LEADING TO BRAND GOODWILL

Tuesday, October 27, 2009 Ikea Case Study 14

 IKEA’s DRIVERS OF
GLOBILIZATION

• FAST EMERGENCE/ GROWTH OF ASIAN MARKETS.

• LONG HISTORY OF RELATIVELY CLOSED MARKET.
• CREATION OF GLOBAL WORK FORCE.
• POROUS BORDERS BETWEEN COUNTRIES.
• IKEA’s VISION TO PROVIDE GOOD QUALITY
PRODUCTS AT CHEAP PRICES.

Tuesday, October 27, 2009 Ikea Case Study 15

 SUMMARY
 IN TODAY’S GROWING GLOBALIZATION ,IT IS VERY
DIFFICULT TO PENETRATE DIFFERENT MARKETS ACROSS THE
GLOBE WITHOUT KNOWING THE CONSUMER BEHAVIOUR AND
THEIR DIFFERENT CULTURAL ASPECTS WITH CHANGING MARKET.

 IKEA’s BIGGEST CHALLENGE IN JAPAN-TO CHANGE THE

MINDSET OF JAPANESE PEOPLE i.e. TO MAKE THE HOME AN
IMPORTANT ASPECT IN JAPANESE LIFESTYLE.

 IKEA CONCEPT RELIES VERY MUCH ON COMMON SENSE-

THE COMMON SENSE THAT PEOPLE EVERYWHERE IN THE WORLD
WANT -GOOD QUALITY PRODUCTS AT CHEAP PRICES.

 IKEA’s OPTIMISTIC APPROACH - AN IMPORTANT REASON FOR

IKEA’S WORLDWIDE SUCCESS.

Tuesday, October 27, 2009 Ikea Case Study 16

Tuesday, October 27, 2009 Ikea Case Study 17