Ikea

July 11, 2010

IKEA

Value Preposition – How product / services are packaged & offered to fulfill customer needs

Reverse positioning – Reduce salesperson, encourage self help (with-drawl of few facilities), Add café, childcare in the middle of the shop (Add new elements)

Tangibalize the intangible

Brand Loyalty: When people choose to buy one product in particular product category because:

1. Right quality product

2. Right priced product

3. Maintains unique taste

4. Innovation from time to time

5. Discounts for old customers

Why Brand Loyalty is important for company: 80% sales are from 20% customers

1. Higher sales volume

2. Premium pricing ability

3. Can retain customers rather than seek out one

Ikea

1. Sales = 67 billion dollars

2. Highly fragmented market

3. Wide range of different products, less variety within a product

4. High level of customer involvement (assembly at home)

5. Saves lot of shipping cost (Flat-package box)

6. Problems

a. Failure to define customer base

b. Maintaining centralized organization structure (logistics issue, cultural issue, delay in shipment)

7. Suggestions

a. Partnering with local partner (Franchise, JV)

b. Provide local management more control

8. “Ikea lite” – By introducing smaller satellite stores in US (Better understand needs of customer, cost might increase due to less scale of production)

Laddering technique – Ask questions to get into the mind of the customer. Example – Failure of stripples, P&G – Pampers lost in Japan (Japan has high rental cost for stores, diper occupied more space; compress air out & vacumise the bag) (Litmus tape on diper, so that mother need not open the diper to check the baby, she used to open it every 20 min prior to that)