Strategic Marketing Plan
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Introduction
Company Information
IKEA is regarded as the privately functioned company that deals in selling home furnishings that include kitchen products, bathroom accessories; furniture has and operates various related outlets globally. The company aims in providing quality products at affordable price rates. The company was established in 1920 and has come a long way for its successful reputation. The company has more than 300 outlets and operates more than 37 nations including Australia, North America, Europe and Asia (Jiang, et al, 2018). The vision of the company is to provide a better every day livelihood for its people. The mission aims to provide varied products, which are functional and well designed for home at affordably low cost so that most of the people can purchase their product. Here the company aims in increasing its customer base with the marketing concept of high quality at affordable prices. As the organization functions globally, it has encountered various problems such as the furniture, which are manufactured and sold from Switzerland is sold in the USA market at an expensive rate. Here the company is trying to find new solutions that would allow the company to decrease or optimism the cost of shipping. For various nations such as China, the company needs to customize the product, here the IKEA has failed to standardize the product accordingly (Cosmo and Yang, 2017). As the company has expanded with due time, there emerged other similar home furnishing companies that provided its customers with different tastes. This increased the market competition for the IKEA, for which it is necessary to create viable strategies and solutions to cope up with the innovation in the dynamic market environment. The company is successful in functioning in the European markets; however, it fails to cope up with the Chinese market demand. The company has encountered various complexities when they have tried to expand their marketing operation in the developing nations (Nguyen et al, 2018).
Image 1: IKEA Company
(Source: Quang et al, 20170
The report will highlight the SOSTAC evaluation of the IKEA Company. Here it elucidates about the situational evaluation, company objectives, organizational strategies, marketing tactics, the action plan for the implementation of the strategy and monitoring programs for sustainable strategy implementation in IKEA.
Environmental Evaluation
Pestle Evaluation of IKEA
| Pestle Factors | Evaluation |
| Political Factors | Concerning the taxation policies associated with the Ikeas business has been beneficial for its operations. This has been possible for the consistent support from the government. The tariffs related regulations are also favorable for the functioning of the company. This has led the cooperation in maintaining political stability (Wu, 2020). |
| Economic Factors | The business dealings of the company are considered of the highest quality in the American national and European nations. Most of the profits of the company are attained by these two nations. The company has been able to function in a balanced manner in the phases of economic recessions. In the coming years, it has been forecasted that the organization will be encountering high market competition, which will make the company to expand in the international market. |
| Social Factors | The company is encountering social complexities concerning the global marketing periphery. The company has tried to satisfy and cater to the growing market demand, however, it has not been successful in the Chinese market. The company has not been able to influence the customers on the social platform, which is the biggest disadvantage for the company’s marketing operation. |
| Technological Factors | The company is aware of the technological capabilities and most of the time, update the company website with the information about the new product launch or marketing offers. However, IKEA is not proficient in implementing the modern technological capabilities with the interest of the customers. The company lacks in the SEO implementation functions (Yang and Shao, 2019). Here the company is facing complex situations in building up the technological capabilities so that it can cope up with the current marketing and technological trends. |
| Legal Factors | One of the biggest legal issues concerning labor and price. Here the company must focus on the nations where such problems exist. Here quick resolution must be taken into account for making the legal guideline standardized in the daily operation of the company. |
| Environmental Factors | The company takes serious care for protecting the environmental elements in the organization and outside. The company has installed led lights in their factories and the manufacturing locations to optimize the cost of electricity. The company focuses on Green operation techniques that enable the company to regulate the corporate social responsibilities. |
Table 1: Pestle Evaluation of IKEA Company
(Source: Thomsen, 2018)
Micro Trend
Five force Evaluation
| Porters Five Force | Evaluation |
| Suppliers bargaining power | The bargaining power of the suppliers is regarded as low as the number of suppliers is less. This allows the company to shift from one manufacturer to another manufacture to save cost. To establish as smooth supplier relationship, the company has initiated a supplier’s ethical guideline that will help in increasing the number of the customers for buying varied products. |
| Customers bargaining power | The bargaining power of the single buyer is not fusible. The modern customers demand quality products with the combination of technical efficacy that increases the suitability in the product. For attracting the customers, it depends upon the advertisement and the promotions. The bargaining power of the customers is regarded as moderate in the home furnishing industry (Kroon and Nilsson, 2019). |
| Competitive Rivalry | The market competition is high due to the e-commerce market. In the e-commerce sites, there are different home furnishing producers. Companies like Amazon, Alibaba and Flipkart sell different home firming products from different customers, thus making the customers avail of the products from their home only. Most of the companies are following customization of the product that is increasing the interest of the customer to place more orders. The competition for the IKEA is moderate in the current market situation. |
| Threat of Substitutes | The threat related to the product substitutes in the market is considered low. The respires and the capabilities of the products are rare and cannot be copied that making the IKEA product highly recognised and unique. Innovation is another factor that is implemented by the company to provide customers with a wide number of choices (Lebherz and Hartmann, 2017). |
| Threat of new market entrants | The threat related to the entry in the home furnishing market is low. High capital investment is necessary for setting up the factory for manufacturing the products from the new company. The distribution related to such industry needs long term business relationships for trusted delivery in the long routes. Developing a company like IKEA requires long time and sustainable marketing operations. |
Table 2: Porter Five Force
(Source: Roy, 2020)
Customer Segmentation Evaluation
Segmentation of the IKEA – here the segmentation is mostly done based on the psychographic and demographic. The consumers of the IKEA are regarded as educated youngsters with the white-collar people. Here the customs tend to have strong cultural and ethnic roots. The millennial associated with the company have liberal views about the culture and are much concerned with the humanitarian, sustainable practices (Mortimer et al, 2019).
Targeting – the urban population of the nations can be targeted or motivated to purchase the IKEA precuts. Targeting the urban population will help the company in attracting individuals with high disposable income, thus helping the company with market expansion strategies.
Positioning – IKEA Company is, regarded as the top leader in dealing with the home furnishing products. The company has a renowned reputation concerning the store location and the catalog shoppers. The largest home furnishing retail chain provides the customers will good lifestyle products (Sund et al, 2020). The distributors associated with the company are present in less number thus providing the company with the competitive advantages in gaining high-quality positioning in the minds of the customer.
Internal Environmental Capabilities
Mc Kinsey 7S Framework
The seven S frameworks include:
- Strategy – The strategy of the company is built on the element that includes value, design, quality and organizational functions.
- Staff – staffs are the significant asset of the company, where most of the training are formulated in developing the competency skill of the employees
- Style – The Company follows a leadership and lean management style to monitor the functions of the company (Landén and Riltoft, 2018).
- Skills – The skills of the employees in the company are focused on building the deigns of the furniture. The skills that the company looks for in its employees are the leadership skills and management skills.
- Systems – The systems of the company are functioned with the application of the lean methodologies and the six sigma (Sandybayev, 2017).
- Shared Values – The value of the company lies in the product that it needs to sell to the customers at the affordable epode rates.
- Structure – A hierarchical organizational style is being followed by the company that leads to inflexibility and bureaucracy in the global operation (Schneider and Bermudez, 2018)
VRIN Framework
The resources and the capabilities of the company help IKEA to differentiate from the other companies. It helps the people in recognizing the innovation in the product and the models that are used by the company. The products that are made by the company have Swedish designs that help in increasing the value of the product. The resources and the capabilities of the company are considered as rare due to the wood that it uses in making the home furniture (House and Kádár, 2020). The processes used by the company are lean management approaches and cannot be easily found or implemented by other companies. IKEA has the best combination of the design, price and the quality of the product. The resources and the capabilities used by the company cannot be easily inimitable as high production techniques are used by IKEA is the result of the long-term sustainable application. The organizational applicability in the functions is significant as the company has a strong presence in the international market arena (Karlsson and Alm, 2016). Here the organizational managers manage the hyperactive dynamic situations so that the cultural and the marketing relations can be enhanced globally by mitigating the threats.
Strengths and Weakness
The strong product portfolio and the lean management system accompany high customer service is the strength of the company; however, it lacks social media awareness which is not feasible in the long term.
Proposed Strategy
SWOT Evaluation
| SWOT Factors | Evaluation |
| Strengths | § Strong brand recognition and image
§ The product portfolio has various types of home furnishings products which are uniquely designed § Swedish and high-quality designs are implemented for the development of the product § Affordable price of the home furnishings § It has a one-stop-shopping concept (Foray, 2018) § The ambiance of the IKEA retail outlet is attractive and the marketing executives have a friendly attitude § The organizations also provides daycare centers and restaurants § The company also has a very strong international work outsourcing capabilities |
| Weakness | § For most of the customers, assembling the parts of the furniture for making finished products is regarded as unattractive and fails to attractive majority of the people
§ The Swedish designs might not appeal to the customers of the America or China § The adverting capacity is regarded as very weak and does not invest in the marketing or promotional activities § The customers of the company have received complaints that their furniture is not sustainable. |
| Opportunities | § There are various markets that the company has not yet ventured
§ It is necessary to make the customers of IKEA products through advertisement and promotional activities § The company can come up with new store designs that will also attract the high-end customer § The company can channelize technical resources to capture the online market (Mortimer et al, 2019) § Increasing the marketing capabilities on the online platforms or e-commerce will help the company to increase its sales in different parts of the world without physically operating in that nation § Larger stores can be built increased of structuring out small retail outlets § Considering the COVID crisis, the company can also set up online video conferencing to coordinate with their team members. § Additionally, there is an opportunity for IKEA to deliver products at doorstep, by maintaining hygiene and safety protocols. § Moreover, the company can also take part into CSR activities, by distributing free sanitizers and masks. |
| Threats | § The typical threats of the company are that it encounters direct threat from the Wal-Mart, pier, home depot and others
§ The international crisis has the potential to impact the trade in a negative manner § The social trends linked with buying of home furnishings is related when only people move for new housings § The external market forces highlight that other growing companies offer a similar type of products at affordable price rates (Yang, 2016) § It is difficult to function in a nation where people have low disposable income |
Table: SWOT Evaluation of IKEA
(Source: Ehsan Ullah et al, 2016)
SOSTAC Framework
| Situation | Due to the expansion of the company with the course of time, there emerged its competitors, with similar sort of products and services. The competitors started providing its customers with products on the basis of their tastes and choices. This increased the competition within the market and IKEA was unable to cope up with the changes. The business is successfully functioning in the markets of Europe; however, it fails to cope up with the market demands of China. The current situation of the company has encountered several complexities when they tried to expand their operations of marketing operation within the developing nations. |
| Objectives | The objective of the company is to cater to the global as well as the customized requirement of the customers by producing quality products at reasonable prices. |
| Strategy | The strategy of the company is to market, position and segment its products on the overseas markets by conducting a market research, and also, by increasing promotional activities. |
| Tactics | · Locating the business against the competitors.
· Predicting the demands and technologies. · Manipulating the nature of competition with the assistance of strategically placed actions. |
| Action | Differentiating its products by keeping into consideration Porter’s Generic Strategy, where the customers should be able to understand that IKEA’s products and services are different from its competitors. |
| Control | Controlling the competitive environment by undertaking these strategies would help the company to grow and expand its business on the overseas markets. |
SMART Marketing objectives
The smart objectives of the IKEA Company must be the following –
- Specific – to cater to the global and the customized requirement so the customers by manufacturing quality products at affordable prices.
- Measurable – The specific requirement must be assessable so that it can be improved further. Without assessment, it would be difficult for the company to understand the negative and positive marketing impacts.
- Attainable – The goals and the strategy of the company can be attained with a proper marketing plan. The implementation of the marketing plan will help the company in attaining the market goals and the fulfilling the company’s vision.
- Reliable – The marketing plan must be reliable so that it can benefit the customer, by increasing the number of customers. Here winning the trust of the customer is necessary for high sales (Jin-Yuan et al, 2016).
- Timely operation – It is necessary for the company to ensure that the marketing start5egy is being implemented at the right time, right location and for the right customer.
Strategic Marketing Plan
7 P’s of marketing
| 7 P’s of Marketing | Evaluation |
| Product Strategy | The IKEA company must come up new product development design that will help in attracting the modern customers and help in retaining existing customers. Here the company can call up the existing customers so that they can learn about the new home furnishings requirements so that it can cater to the modern marketing requirement. Here the product can be designed to cater to the mends of the different levels of society. The flat packaging idea of the company has helped the customers to carry their products comfortably. As the organization designs its product, so it tends to offer differentiation in the product development strategy. Here the company tries to meet the global requirement coercing the home furnishings (Pires et al, 2019). |
| Promotional Strategy | IKEA must adopt and implement high profile marketing and advertisement campaigns. Here the company can post about their new product launch in the company website and then link it with the social platform channels thus making the most of the customers about their new product initiative. Here the sales executives must bib involved in understanding the requirement often customer. Promotional announcement must also be made by the company for making the after the sales service. This will help the company in increasing the enhancement in customer service. Online advertisement techniques must be implemented by the company to capture the online customers. |
| Place Strategy | There is ample market opportunity for IKEA in Australia, China, Europe, the United States of America, North America and Asia. In all of these nations, the company must adopt lean management techniques in its supply and distribution channel so that it can rescue the cost related to the shipping of the products. Moreover, reeducation in the shipping cost will lead to a reduction in the cost of the product that the company wants to sell to the customers. For the successful implementation of the place marketing strategy, the organization needs to have customer executives who can attain reliable information from the customers concerning the improvement of the product. Here the company can develop research and development centers for improving the location marketing strategy of the company (Wilhelmsson and Persson, 2018). |
| Pricing Strategy | For the new launches, the company can come up with skimming the process techniques that will help the company to save up the cash for further improvement of the product. For the markets with low disposable income, the company must go with the penetration pricing strategy. |
| People Strategy | The company should recruit the appropriate workers and train them properly to grasp the competitive benefits for the organization. Consumers make judgments and provide service perceptions based on the staff with whom they interact. Staff must have the correct knowledge of expertise, strategy and operation to provide the operation that consumers are investing for. Ikea plan to request for the People Financers levy, which signals to consumers that workers are taken good care by the business and qualified to the level of trust (Yang, 2016). |
| Process Strategy | Ikea adequately conducts their procedures including planning growth, method of improving trade, process of customer service etc. in a suitable and able framework. They hold their commitment to their customer support, business vision and their employer’s facilities all the time, which is why the organization understands so much about its internal as well as external organizational mission. |
| Physical Evidence Strategy | Physical proof is among of the 7 P’s, which is responsible for providing interim marketing an essential role in the service sector enterprise. It deals with absolute requirement of the written substantiation evidence. That includes the company’s existing co-ordination as well as standing services (Pires et al, 2019). |
Table: 4 P Marketing Plan for IKEA
(Source: Saraswati, 2018)
Feasibility of the marketing plan
For making the marketing plan feasible, the IKEA Company has a unique model that leads to joining the requirements of the customers along with the given wide range of possibilities on the manufacturing sites. Here the company must have proper knowledge concerning the market requirements. These market requirements must be assessed so that the need of the consumers can be met (Thulin and Rashid, 2017). Here the marketers of the IKEA need to have deep and insightful knowledge about the challenges that the customers face with their home. Here the development of foldable furniture can be focused on. These types of furniture are easy to relocate thus reducing the hazards of the weights related to the furniture. For the successful functioning of the company in the Chinese market, here it is essential to rely on the culture, traditions and taste of China’s heritage to make appealing home furnishing products (Dragičević, 2018). Here the cost associated with the product and the material needed to provide the final design and touch to the product. Here the company can take the help of the technology to develop unique designs and customized designs for their customers. For attaining innovation and creativity in the product, the company management must initiate and implement design thinking methods and other training initiatives so that they can design the viable home furnishing solutions. The company can come up with the design catalogues after every two or three years concerning the designing of the home furnishings products (Larsson and Gadde, 2016). These catalogs can be sent to both new and existing customers. This will help the company to modify the old products and attract new customers. Focusing on lean management and initiation of the six sigma will help the company in improving the quality of the product and producing zero waste. Implementing the artificial intelligence and predictive advertisement will help the company in leveraging the increasing number of customers and increasing demand for the housing trends.
Key Performance Indicators of IKEA
Key performance indicators help the company in assessing the performance of the job related to the various level and departments of the company. The KPI is aligned with the functioning of the firm so that the organizational employees also strive to attain it. Here the performance management approaches are also taken into account. The progress and the development of the metrics related to the KPI assist in developing the information sissy’s and measurement systems throughout the business corporation (Hagberg, 2018). The significant KPI that is necessary for IKEA to take into consideration are monthly sales target, the average spending of the customer, stock turnover rate, cross-selling prices, the average value of the purchase, the total number of orders, the stock related with the sales of the products, the dweller time of the customer in the shop, backorder rate, the return date, and other factors such as, the performance of the employees and the behavior of the stakeholders (Trendafilov, 2018).
Reference List
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