IKEA is a global furniture and home goods retailer founded in Sweden in 1943. It now has over 300 stores worldwide, 172,000 employees, and annual sales of 33.8 billion euros. IKEA is known for its affordable furniture and accessories achieved through efficient designs that flat-pack for low-cost shipping. The company focuses on making high-quality, functional home goods accessible to many people around the world.

2. 2015 Facts & Figures
Source: IKEA Website
172,000
Employees
33.8 B Sales
(Euro)
884 million
visits
11 M m2
Retail
Space
300+ Stores
Worldwide
Ingvar Kamprad, at the age of 17, founded IKEA in
1943.
From matchboxes to household goods to furniture,
IKEA kept on expanding it’s product line.
Ingvar Kamprad Elmtaryd Agunnaryd

3. Affordable solutions for a better living
As-Is Section
IKEA Museum
IKEA Cafe
IKEA Child
Essentials
Kitchenware Huge Floor Space

4. The INCEPTION
• Discontinue all
products and focus on
low price furniture
• In 1953, the first
furniture showroom is
opened in Almhult,
Sweden.
The INNOVATION
• Due to pressure from
competitors they
started making their
own furniture
• Price reduction
motives led to design
for flat packaging
The INAUGRATION
• 1958, the first IKEA
store is opened in
Almhult
• In 1965, the
monumental IKEA
store in Stockholm is
inaugurated

5. Strengths
• Attractive product design
• Market leadership
• Solid financial position
• Vast, yet focused product range
Weaknesses
• Weak presence in Asia
• Damaged reputation due to a series of
incidents
• Competitive advantage difficult to sustain
• Lack of flexibility due to its size
Opportunities
• More emphasis on CSR
• Increasing presence in developing countries
• Formation of strategic collaborations
• Adding premium range of products into
portfolio
Threats
• Social treads (building online help to guide
customer)
• Market forces (lower prices and economic
scale)
• Economic factors (price strategy)
SWOT

6. New Product
Development
Process
Product-
Strategy
Council
Group of
Senior
Managers
IKEA’s
Product
Lineup
Priorities
Consumer
Trends
Globe-
Trotting
Council
Members
Product
Manager
Product’s
Target Retail
Price
Matrix
Overseen by
Consisted of
Who Establishes
Based on
Identified by
Then
Decides
Using
Product
Strategy

7. Product
Strategy
The Matrix
Price Range /
Style
Scandinavian
(Sleek Wood)
Modern
(Minimalist)
Country
(Neo-Traditional)
Young Swede
(Bare Bones)
High
Medium
Low
3 Basic Price Range
&
4 Basic Styles
Within each price range the company would survey the
competition to establish a benchmark and then set its own
price point 30% to 50% lower than those of its rivals.
For each Product Type – A Separate Matrix
 Set Retail Prices
 Identify Gaps in
Product Lineup

8. Product
Strategy
In some cases, different product
components would be sourced from
different suppliers. These different
pieces will come together in the store
only when customer would select each
pieces individually.
High Quality / Expensive Material:
On visible and stress prone
surfaces/areas
Low Quality / Cheap Material:
On less visible surfaces and areas
which were less likely to undergo stress
Target Retail Price of Proposed product is established
Selecting Manufacturer
• IKEA worked with 1800 suppliers in 50+ countries
Balance Cost-Efficient Labor with Company’s Product
Quality Standards
Lookout: Building supplier relationships in
developing countries
Encourage internal competition among suppliers
Focus:
Cost Efficiency

9. Product
Strategy
Design – Handled in-house via Internal Competition
Company’s furniture was designed to ship disassembled.
All products were transported ‘Flat’ => Flat-Packaged Boxes
High Volume usage
Savings on shipping costs
Products retail price could remain low

10. Low Price with Meaning
Quality home furnishing products at affordable prices
 Low prices are the cornerstone of the IKEA vision, business idea and concept.
 The basic thinking behind all IKEA products is that low prices make well-
designed, functional home furnishings available to everyone.
 The vision is to create a better everyday life for the many people.
Democratic Design
Form follows Function
Low prices with Meaning
Good Design
+
Good Quality
+
Good Price

11. IKEA wants to be viewed as:
 Affordable
 Do-It-Yourself
 Having Well-Designed, Functional Products
 Innovative
 Entire Family-Friendly
Brand Positioning Statement
To, working middle class families, IKEA is a brand in the furniture retailing category
that manufactures stylish furniture at an affordable price because their vision is to
create a better everyday life for many people
 The above positioning statement incorporates the original IKEA business idea which has
successfully positioned the brand as a leader in value-priced, practical design.
 Additional verbiage identifies an international customer focus driven by localized style and taste.

12. Brand Mental Map

13. Brand Personality

14. Profile of Competitive Brands
Key point of difference for IKEA is that none of IKEA’s competitors offer as broad a range of styles, types and quality levels
within every category of home furnishings as IKEA!

15. American Market
Case goods &
Upholsted
Furniture 90%
Top 10
Retailers
14.2%
Two types of
Stores
Low end
• Walmart
• Cheap Shops
High end
• Luxurious stors
• Jordan Furniture
Types Of Stores

16. Various payment options easy credit
High touch sales consultants
Offered interior design services
Huge inventories
Variety of styles
Substyles
Quality and service
Sales people educated customers on Grains of wood, construction techniques, longevity & durability
One goal: To make customers believe the products which they buy will last a lifetime

17.  Americans are reluctant to buy new furniture
 Change their spouse often but not furniture
 Every retailer offered free delivery services or sometimes additional fee
 They offer to set up the new furniture in customer’s home and discarded
the old ones
 Customer should wait for a few weeks but everything will be done during
that day.

18. IKEA Invaded America
Opened first store in Philadelphia in 1985
Challenges Faced In America
Sofas and beds
were not soft
enough
Portion sizes
were too small
Americans had
a not to let go
mentality
Product
dimension in
cm not inches
An Average American?

19. Shopping
at IKEA
Showroom
• Make yourself at home
• Talk to the sales staff
• They are proud of their
prices
Before you go
• Make a list of
everything you
need
Market Hall
• Many speciality shops
gathered together
IKEA Restaurant
• Feeling Hungry?
IKEA For Kids
• You Shop, Kids Play
• Children’s Furnishing
• Care and feeding of
children
Self Service Area
• Flat is Good
• Trolley’s for
everyone
Everything but barter
• You can use any mode
of payment

20. People visit an IKEA Store for the first time

21. 2003 to 2016
 IKEA launched its e-commerce portal
 IKEA expanded to other European countries, Asia Pacific and
Middle East.
 It currently has over 375 stores in more than 50 countries

22. IKEA - Revenue over the years
Source: IKEA Website

23. UVP
Good
Quality
Low
Price
Glocal
Design
Family
Time
Unique
Store
Layout
Choice

24.  Suburbs & large cities
 Shops for a Bargain
 Prefers Inexpensive but durable furniture with
good design
 People who are working in cities other than their
hometown
 Middle and Upper-Middle income families
 Fun, Funky & Aspirational
 Slow shoppers that plan full day visits
 Expect minimal customer service
Customer Persona
 IKEA understood that ‘One size doesn’t fit all’
 IKEA officials conduct workshops, seminars and
house visits to understand customer habits and
preferences
 15 homes in Mumbai, Bangalore and Delhi have
been given IKEA products for a test run
 It took 6 years for IKEA to start its inaugural
store in South Korea due to extensive customer
analysis
 IKEA had to lower its price by almost 50% in
China so as to match the price of the local
furniture retailers

25. 2
1
5
4
0
1
2
3
4
5
6
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Price
Design
Design Vs. Price
walmart office depot
ethan allen IKEA
Brand Perceptual Map (IKEA)

26. IKEA – The Road Ahead
 €50 Billion Revenue and 500 stores by 2020
 Expand presence in emerging markets such
as China & India
 Enter new markets such as Brazil, South
Africa & Nigeria
 IKEA bought a 23 acre plot in Navi Mumbai for
400 crores and will build a 4,00,000 sqft store
 IKEA purchased a 13 acre plot in HITEC City,
Hyderabad and will build a 4,00,000 sqft store
 IKEA is planning to purchase a 3,50,000 sqft
land in Borivali, Mumbai for 900 crores
 It plans to open 25 stores in India by 2025
IKEA in India