Product and Brand Management Ikea Assignment
Is Ikea a successful global brand? Why has it been successful?
Ikea is a very successful global brand, not because it has 226 stores in Europe, Asia, Australia and the United States with 410 million shoppers a year, not because other global brand like Wal-mart stumbled in Brazil, Germany and Japan but for Ikea’s unique cultural branding that merges the value and fashionable design to ensure the creation of an affordable contemporary household goods (not just the furniture with 5-10% sales in each country with Ikea stores) for the middle-class. This uniqueness of its corporate DNA is the main reason why the Ikea is so successful globally. The ...view middle of the document...
To design beautiful products that are inexpensive and functional posted a huge challenge. It is Ikea’s policy to discard the
design that won’t be made affordable, no matter how inspired it represent. The design is an important part of what make this brand a global cult brand but it won’t stand out if the brand is only about the contemporary design and missed the “frugality” part.
How important is design to Ikea’s positioning and brand equity?
Without the design part, the Ikea’s brand will be just like that of Wal-Mart. With the strength of Wal-Mart, Ikea’s won’t be able to compete with Wal-Mart for the economies of scales since there won’t be any differential products between Ikea and Wal- Mart. The only difference between these two companies is the design (contemporary design) part of the brand. Ikea holds the position to be the affordable contemporary designer for the household goods with the affordable price. With this differential branding position, Ikea does practice the economies of scale with a network of 1300 suppliers in 53 countries, as it just like Wal-Mart, worked hard to find the right manufacturer for the right product. Ikea started the business as a furniture store, but the sale of the furniture only constituted 5 to 10% of the sales in each country with Ikea stores opened. For most customers, Ikea stands not only for the contemporary design and affordable furniture but also the complete household goods from picture frame to candlesticks.
How defensible is Ikea’s brand equity in its target markets? Why and Why not?
To grow the market, Ikea’s main targets are US, Russia and China markets. We can conduct a SWOT analysis for Ikea for its targeting market competitiveness.
Economies of Scale in the affordable Contemporary Design household market. Identifiable concept with clear strategy of cost leadership
Target consumers- middle class consumers.
Recognizable store structure - a huge range of home furnishings within the same area.
Ikea is privately held, thus the pressure from the financial market for quarterly growth and profit.
Limited manufacturing capabilities, the current model can only grow 20 stores in a year
Quality concerns in some regions
Cultural differences in the some diversified markets as in the US, China, and Japan
The fast growing Asian countries with an affluent middle class represent opportunities for Ikea to penetrate and sell its concept of affordable contemporary design of uplifting lifestyle.
Focus on differentiated products for the Asian markets
Competitors: Kmart and Target Corp. in the US. Fly in France.
Japan Nitori Co. in Japan.
From this SWOT analysis, that we identify the strengths and weaknesses of Ikea...