Introduction of digital catalogue to take on social role for IKEA 16
1.3.3. Social Media Marketing 17
Launching of ‘snap a napper’ Facebook competition 17
IKEA tests Pinterest for promoting new collection in UK 18
1.3.4. Email Marketing 18
1.3.5. Mobile Apps 19
1.3.6. Forums and Blogs 22
1.4. Offline Marketing Strategies 22
1.4.1. Print/TV Ads 22
1.4.2. Loyalty Programs/Discounts/Offers 23
1.4.3. Direct Mail 23
1.4.4. Sponsorship 24
1.4.5. Public Relations 24
IKEA Proposed strategy 25
SMART Analysis 29
ROI IKEA Marketing Strategy 30
Measurement of the Marketing Strategy 30
References 32
Digital marketing strategies
1.1 Corporate Objectives, Marketing Objectives
Corporate objectives
The corporate strategy of IKEA is build upon various pillars. These pillars entail producing products that are cheaper and affordable for its clients. The company endeavors to give better life for individuals who are unable to afford product which are costly. The company uses all the possible means to ensure that customers are able to get what they want from the stores. Lastly, the products are offered at prices which anyone can afford. Mostly, the business engages in online communication, which increases more conversions, and engages its customers in business to enhance its business productivity.
Marketing objectives
The marketing objectives of IKEA are in line with the corporate objectives. The aims at producing furniture which are affordable and stylish, additionally, they are striving hard to boost the reputation of the firm amongst customers and increase the market share. The company also intends to become the leader in introductions of new product. Attaining of a stronger foothold in international markets is also a major objective of the company. The company wishes to capture attractive opportunities of growth and cater for a wide array of clients or stay focused on a specific niche.
1.2 Situation analysis
1.2.1. Competitors in UK
1.2.2 SWOT analysis
SWOT
Strengths – IKEA is well established geographically. Their success factor is due to maintaining consistency of their products and services. The wide ranges of products are not only of high standards but they are able to deliver these to the consumer at a cost conscious level. Strict monitoring guidelines are followed by IKEA to service their customers and evaluate their response. They coordinate with their suppliers to meet the sales demand and identify their best products. They have strong support from suppliers who are in long term engagement with IKEA ensuring costs can be kept to the minimum. The furniture of the company is designed so there are minimum raw material wastages and logistics are arranged, guaranteeing minimum distance between supplier and stores. As the flat packed concept is adapted, bulk transportation is easier, lowering environmental pollution. Their research and development centre is always striving for enhanced products with least impact to the environment whilst keeping costs down. IKEA uses almost 75% of the renewable material in its products. The minimum waste generated is used for renewable energy production, enabling 90% of energy through this method. IKEA offers unique in-store experience enabling whole family can spend the entire day. Facilities like free parking, children centre, restaurants facilities and design concept showrooms attract customers who have various intentions. Whether it is window shopping, family day out or to learn about visualisation and get ideas, IKEA facilitates these. The IKEA catalogue and online website gives access to a wide range of consumers. This enables them to choose products from home and reserve before going to the store to collect. Weaknesses – IKEA’s emphasis on cost cutting may be its demise as they need to continuously derive new innovations. The company does not have its own manufacturing capacity therefore is highly depended on its subcontracted manufacturer. As a result the products may not be of exact same quality in different geographic locations, which can alter the image of IKEA for the consumer. IKEA‘s main hub and majority of the shops are located in Europe. If financial recession hits this region, profits for the group will be highly influenced. Furthermore, the design concept from Europe may not be to consumer preference in different geographical locations. Limitations can be identified with ideas and style of product.The products of IKEA may be seen as targeting niche markets as the consumers have to visit the store, transport the items and self-assemble may be seen as too much hassle. Therefore, level of customer service is limited to in-store help and not beyond that. If purchasing this service from IKEA, consumers will have to pay a premium rate which might lead them to alternatives. Opportunities – As IKEA is spread out worldwide, there are numerous opportunities to expand into Asian and North African markets, targeting the middle class society. The concept of establishing large showroom distributing point will ease its method to expand into new areas quickly. As technology becomes more advanced, the accessibility of internet and online catalogue can enable IKEA’s reach to expand into new areas. The flat pack concept will allow logistics to be arranged easier. Moreover they provide solutions for a sustainable home through information online. IKEA is focused on an image of being environmental friendly and delivering sustainable products to the consumers with less carbon footprint products. They focus on projects with WWF and UNICEF. These social responsibility programs have a positive impact on consumers and the image of the company. Threats – Maintaining low cost with rising prices of raw materials and demands may not be possible. If low cost results in compromise of quality then the consumer’s perception of IKEA will change. Prices of shipping and logistics are also rising throughout the world. Rising inflation levels in the western world is turning consumers for cheaper alternatives of flat packed products. Since IKEAs’ concept, there are numerous rivals in the market today providing alternative flat pack solutions. As the global scale of the company expands it might be difficult to control them under the same family run holding company. IKEA uses Key Performance Indicators (KPI) to identify its strengths (IKEA-Summary, 2011). They are constantly responding to internal and external issues and proactively trying to increase its strengths and opportunities while reducing weaknesses and threats. The consumer has a crucial role to play in this, as they are part of the business model for IKEA. If they withdraw from being active participants, the whole model will fail. There are organisations that concentrate on their brand name and image, lacking focus on customers. Others recognise that they do not run a monopoly and compete through excellent customer focus and services. These companies are small and focus on small genre of sellable items. They are more sensitive to consumer demand due to fierce rivalry and homogeneous goods, for example, supermarket chains or places where consumers shop daily. 1.2.3 Porter’s five forces
Bargaining powers of customers
- There is a little power because of the existing low-price options
- IKEA ensure that their customers in all aspects will be satisfied for quality service they provide
- Focused their marketing approach on demands and needs of the buyer
- IKEA uses their corporate responsibility as a good public image to their customers
- IKEA Family -card as a membership
Power of suppliers
IKEA has its thousands of suppliers that set standards in delivering the materials
- Because of the low-pricing, IKEA’s profit margin also affects the prices in raw materials than by prices in labour
- IKEA has a wide network of 1300 suppliers. They carefully select the manufacturer of its products. The company has own production factories and designers which makes it less dependent on others
- Bargaining power of supplier could be threat for the profit of the company
Extent of rivalry between competitors
- The IKEA’s furniture competitors’ offers different styles and functionality
- Argos competes on low price
- B&Q and Homebase competes on DIY
- IKEA was the first mainstream furniture retailer to create 'room sets' that allow the customer to imagine the full brand experience—even down to the vases or books you might have on the shelves
- IKEA is the most successful in delivering the complete package for the customers that reflects on weak rivalries
- There will always be substitutes for furniture’s but IKEA competes with price and there isn't competitors in same price range
Threat of new entrants
- IKEA stores do not reach many small towns and this is an opportunity for the new competitors to move into small and midsize cities with smaller stores and less selection. But not easier in city because new entrants have to establish a vast supply chain and create a unique brand name
- The furniture market is already highly competitive - the risk of new entrants is not extremely high - huge capital needed to start the business
Threat of substitutes
- There is no specific product that can be a substitute for the furniture but IKEA at least, have to keep up with the latest trends, to avoid becoming out of style
- Problems faced due to distribution channels
IKEA E-Marketing Mix 7Ps
As observed in the continuum of goods-service, as a product, IKEA have tangible as well as intangible facets, and it is the factor company offer to gratify their clients’ needs and demands. Within this facet, people need to think about such factors as the range of product; its design and features; its quality and the advantages it has; packaging; sizing and any further guarantees or warrantees and offerings of better customer service.
Marketing mix is a combination of place, product, promotion, and price strategies which are established for products bought over the counter. The digital marketing approach is rapidly changing the manner people sell the products and services. In fact, in UK consumers now seek the online shops to purchase products and services.
In this regard, IKEA also employed digital marketing strategy, as mentioned in the digital marketing section, and established online stores to attract more customers. The e-marketing mix looks for the components of offering the marketing mix online.
IKEA E-product strategies
People seek a store and observe a product they want, they can touch and assess it. In internet store, this direct tangibility factor disappears. Within the IKEA e-commerce sales are rising at very high ratios (Matz & Grah, 2008). The first reason of all, clear online facts are there regarding the product customers are buying. The customer observes instantaneously regarding the features and facts of product, and they do not require the assumptions of sales persons. www.ikea.com is IKEA online shop offers apparent information and specification about the products.
http://www.ikea.com/gb/en/store/glasgow
IKEA E-price strategies
The pricing factor for any company is always complex to set and must consider lots of deliberations. By tradition, pricing was regarding determining the costs, detecting how much clients are eager to pay, considering rivalry pricing then establishing the price. The online marketing strategy has made pricing so aggressive. Lots of costs, such as costs of store, staff, etc. have left for complete internet shops, putting the pressures of price on conventional vendors. However, IKEA also maintains cheap pricing strategy at its online stores. This marketing strategy easily rewards dedicated customers, which augments more customers to IKEA (http://www.qfinance.com).
IKEA E-place strategies
The online purchasing is one of the immense transformations to the marketing mix. People can buy direct from online companies neglecting retailers completely. The challenging issue for online vendors is to make sure that the product is sent to the client within an opportune time. Location is vital for IKEA within its place strategy. Location on the online marketing can cite to where links are positioned on other websites. Positioning a link on Google.com would increase the traffic of consumer for the company. Understanding the customer and where they visit should assist the company comprehend where to put the links and promotional ads. IKEA greatly understands this; therefore their links always blink on the first page of any searching media.
IKEA E-promotion strategies
Promoting and advertising products online is related with many issues. Getting a domain name that should be recognisable is the initial stage to adopt the strategy of e-promotion. IKEA have effectively placed the brands on its website.
Today, many companies have some type of webpage employed in most if not all advertisements. On other site, placing advertisements in form of banner is a usual way of e-promotion approach. Banner advertisements should be positioned where it is expected that a bulk of customers visits. “Web public relations (WPR)” is another promotional strategy which is widely used by IKEA. News valuable accounts established on products introduces can be set on the website, or articles related with WPR delivered to review sites for visitors. In fact, this online promotional approach will attract more consumers. Direct approach of emailing is also a trend of e-promotions which is also employed by IKEA. The company delivers e-leaflets to lots of respondents with a hope of a small proportion will respond. The direct email approach is also called “Sending Persistent Annoying eMail” (SPAM). To sum-ups e-promotion strategy comprises:
- Promotions through Banner,
- Web public relations (WPR),
- Sending e-leaflets or broachers
- Having a recognisable domain name.
In the UK scenario, these all above mentioned marketing strategies is also linked with IKEA offline marketing strategies. The company do not required any specific efforts to make offline marketing campaigns to appeal English people. The main reason behind is that online marketing strategies already attract more consumers easily and sales persons do not required to make any effort on the potential consumers, because most of the clients come in the IKEA stores with complete products’ information through online service of the company.
IKEA People Strategy
The IKEA brand is established on potent relationships with their customers’ satisfaction. Thus, facilitating and working with people is important to business philosophy of IKEA. President of the company, Mikael Ohlsson made a statement in 2011 in their yearly business report defining his perspective on the business and its prospect. The business, in his view, would be introducing several energy-saving substitutes to traditional light bulbs through their digital marketing campaign. He also committed to minimize the business impact on people.
IKEA Physical Appearance Strategy
When people sell tangible items, they can provide customer the option to try prior to purchase. Fascinatingly, IKEA was a business that comprised sustainability rather early in its business strategy. Most of their products are eco-friendly IKEA has spent in “very green energy solutions” like solar energy. For IKEA, the very large stores are their physical evidence. These stores are located out of city and provide a massive collection of furniture products. Now, the company is increasing its physical appearance through its great digital marketing strategy.
IKEA Process Strategy
This component of the mix is regarding being “easy to do business with” strategy. If people have ever become disappointed at call centers that cannot response the questions, or bothered when they cannot purchase something because the computerized till does not distinguish that it exists, even when people can observe it on the stores, they will understand how vital this factor can be. IKEA’s furniture product is itself through which the company makes its own wooden furniture. Thus, the business possesses forestry sawmills, for example.
IKEA e-CRM Strategy
IKEA desired to establish an e-CRM strategy to develop a more potent connection between the popular brands and tactical customers’ emails. The major goal of the company is to lead brand loyalty, encourage current offers, drive footfall to the store and develop and maintain the customers’ information or database who sign up to the loyalty scheme of IKEA. In this regard, they developed an editorial planned strategy that comprised including the company’s website, e-mails, IKEA FAMILY and LIVE magazine to make sure joined up interaction and line up it with new brand messaging of IKEA: “Home is the most important place in the world.” The design and editorial notion for the customers’ emails is established on new branding of IKEA. The aim of the company is to get people to re-assess the function and quality of their correlation with their residents. Every month, the theme “at home” would alter and the email would comprise content that assisted the company commercial calendar.
1.3 Digital Marketing Strategies
1.3.1. Official Website
- IKEA has made great steps in ensuring that its marketing strategies meet as many clients as possible.
- This has started from making a website that is appealing to the potential clients. All individuals visiting the website are fascinated by a thing or two, a factor which makes them to want to be members of the IKEA community and purchase products.
- Being members of the company would increase the customer base which would in return increase the sales.
- The website allows potential clients to log and sign in as members of IKEA.
- The website is adapted for each event, and has inspiration modules and tools. It offers email newsletter program which is aimed at driving to web contests.
- IKEA has also updated its website www.IKEA.com with a mobile version due to increased mobile traffic to this website.
- This move has helped customers to browse products, come up with list of shopping, determine the latest offers and determine the location of the nearest stores with the updated user-friendly mobile site.
1.3.2. Online Shopping Stores
Introduction of digital catalogue to take on social role for IKEA
Catalogues have increasingly become digital and have evolved into retailers’ branded content hubs (Damian & Calvin, 2012; Drayton 2007). IKEA launched its initial digital catalogue on its website as an app for android, iPad and iPhone devices. The refurbished 2013 catalogue created by the agency comprises of material from the print catalogues and persuades users to scan for funny and educational photo galleries, educational videos and interactive DIY content (Voight, 2012).
IKEA embraced the approach of APP, and this makes its content highly mobile. People are able to use the new catalogue and acts as a demonstrated shopping list as they browse in the stores a concept advocated by Strauss, & Frost (2012). The digital catalogue is superior to printed one as its content can be updated through the year and every page of the catalogue can be shared through email, twitter, and Facebook. However, there is no plan of replacing the widely distributed free print catalogues of IKEA with the digital version. The digital version was aimed at enriching the print version.
IKEA released YouTube for promoting the digital catalogue and this gave previews for the content of the catalogue. The announcement of the video was done through public relations and blogger outreach. This made it to be viewed 316,000 times within five weeks. The catalogue app was as well promoted on the Facebook page of the brand. This Facebook page has almost a million likes. At one moment the company told fans that the new print catalogue had been slow in rolling out, but assured them that it was doing their best. They were urged to check online and tablet/mobile versions to enjoy the available features (Voight, 2012).
1.3.3. Social Media Marketing
Launching of ‘snap a napper’ Facebook competition
IKEA extended the positioning of ‘Sleep like a princess’ that had been used for its range of beds with a competition in Facebook that encourages customers to upload photos of sleeping family and friends. This completion was expected to open just to 1.2 million IKEA family loyalty scheme members and was aimed at showing that if someone sleeps like a princess at night, they will not fall asleep at daytime (Chapman, 2012). In this program, the family members of IKEA were to be sent an email with the subject, ‘Sleep like a princess every night.’ This email was to direct the recipients to the Facebook page of IKEA. From this page the members can enter competition to win everything they require from IKEA to get a perfect sleep at night (Chapman, 2012). There was also a video at the top of Facebook page that was to show comical scenes of certain individuals falling asleep and is designed for encouraging people to snap a napper with prizes to be won by the best participant (Vesanen & Raulas, 2006). The digital activity supports a press campaign that features a real-life princess sleeping on an IKEA bed, together with a radio activity on an absolute Radio.
IKEA tests Pinterest for promoting new collection in UK
In UK, IKEA started a new social media and email campaign that utilizes Pinterest for promoting its freshly made Indian-inspired ‘True Blue, collection. The campaign utilizes the giant Facebook and was initially driven by an email for directing those receiving the mail to a micro-site. IKEA engaged LIDA, a digital and direct marketing agency for developing the campaign. LIDA came up with a micro-site displaying a curtain drawing back to show the collection of products (Voight, 2012). The concept used in this advert was advocated by Zauberman (2003).
