THE IDEA

For the many people

The IKEA Concept starts with the idea of providing a range of home furnishing products that
are affordable to the many people, not just the few. It is achieved by combining function,
quality, design and value - always with sustainability in mind. The IKEA Concept exists in
every part of our company, from design, sourcing, packing and distributing through to our
business model. Our aim is to help more people live a better life at home.

Bringing the IKEA Concept to life

The IKEA Concept comes to life in many ways: Through our worldwide stores, in the IKEA
catalog, via the web and apps, and most importantly in millions of homes around the world.

IKEA is known globally for its low prices and innovatively designed furniture. In China,
however, it faced peculiar problems. Its low-price strategy created confusion among
aspirational Chinese consumers while local competitors copied its designs. This case study
analyses how IKEA adapted its strategies to expand and become profitable in China. It also
assesses some lessons the company learnt in China that might be useful in India, where it
plans to open its first store by 2014 and 25 stores in 10 to 15 years.

The marketing concept and philosophy is one of the simplest ideas in marketing, and at the
same time, it is also one of the most important marketing philosophies. At its very core are
the customer and his or her satisfaction. The marketing concept and philosophy states that
the organization should strive to satisfy its customers' wants and needs while meeting the
organization's goals. In simple terms, "the customer is king".

The implication of the marketing concept is very important for management. It is not
something that the marketing department administers, nor is it the sole domain of the
marketing department. Rather, it is adopted by the entire organization. From top
management to the lowest levels and across all departments of the organization, it is a
philosophy or way of doing business. The customers' needs, wants, and satisfaction should
always be foremost in every manager and employees' mind. Wal-Mart's motto of
"satisfaction guaranteed" is an example of the marketing concept. Whether the Wal-Mart
employee is an accountant or a cashier, the customer is always first.

As simple as the philosophy sounds, the concept is not very old in the evolution of marketing
thought. However, it is at the end of a succession of business philosophies that cover
centuries. To gain a better understanding of the thought leading to the marketing concept,
the history and evolution of the marketing concept and philosophy are examined first. Next,
the marketing concept and philosophy and some misconceptions about it are discussed.
A companys mission builds on its vision and values by setting out how it
intends to implement the vision in the long term. IKEAs mission focuses on
sustainable long term growth by investing in the future which benefits its
employees, customers and suppliers. IKEA invests the majority of its profits
back into the business, into existing and new stores, product development,
sustainable solutions and by continuously lowering prices for customers.
IKEAs mission is based on its belief that sustainability should not be a luxury
good but affordable for the majority. Several examples of this approach are
listed below:

During 2013, as part of its sustainability drive, IKEA reached its goal of
phasing out wooden pallets from its global transport network; it now only uses
paper pallets and loading ledges. Cotton is used in many of IKEAs products.
Because conventional cotton farming is often harmful to the environment and
the people who grow it, IKEA works with the cotton farmers to raise social and
environmental standards, and strictly prohibits child labour in its supply chain.
72% of the cotton used is from more sustainable sources certified by the
Better Cotton Initiative, of which IKEA is a founding member.

IKEA supports projects that benefit more than 110,000 farmers helping to
halve their water and chemical pesticide use, and cut the use of fertilisers by
one third in some regions. This in turn helps to increase farmers earnings.
The company is aiming to sell 100% sustainably sourced cotton by the end of
2015.

When designing new collections IKEAs designers, product developers and

technicians work closely with local suppliers, with all the development work
undertaken at the manufacturing sites. Activities such as this together with
getting a first-hand experience of the end user (the customer) of a product
through the home visits, aids IKEA designers in having a better understanding
of the functionality and requirements of a product, for example, how it would
be used and where

Page 3: Values
Having a vision and mission statement are important, but a business also
needs a set of values. Values are the beliefs and guiding principles that
influence the activities of the business and how it operates. IKEAs values
guide all its activities and are based on the belief that every individual has
something valuable to offer. These values help to set the culture within the
company. Culture is the assumptions, beliefs, behaviours and routines that
are the characteristics of the company.

For IKEA, its culture is based on a spirit of togetherness, enthusiasm and fun
IKEAs culture is based on a strong set of values that steer and support its
vision, the following are examples of its values:
One of the ways IKEA finds out about the needs of its customers is by
undertaking home visits. Every year thousands of homes are visited so that
IKEA can gain feedback and ideas on what sort of products its customers are
looking for, these ideas are then used as the starting point of the design
process. For Marcus Engman, Design Manager Meeting people in their
homes is the best way for us to learn more about their needs, dreams and
living situations. And that helps us create even better living solutions. Home
visits arent only important for developing IKEA products, they also help us
create solutions that are relevant on a local level.

Togetherness and enthusiasm IKEA believes that by working together, its

co-workers have the power to solve seemingly unsolvable problems. For
example, from the early stages of the design phase, IKEA product developers
and designerswork with a diverse team of technicians, manufacturers and
specialists. This special partnership helps to keep product prices low and to
find the latest techniques to create products the IKEA way.

Cost-consciousness this value is about maintaining products at low prices

through keeping costs low.

Togetherness this value emphasises the importance of IKEA co-workers

having mutual respect for each other, customers and suppliers. IKEA works
side by side with individual suppliers directly at their factories. This enables
the company to use the most efficient, cost-effective and creative ways to
bring their designs to life. Its this special spirit of togetherness that allows us
to make advances in smart product design, packaging and distribution.

Accept and delegate responsibility

IKEA promotes its coworkers with potential and the culture helps to
stimulate them to exceed their expectations. As Petra Hesser HR Manager
says You can always be yourself, everyone has a voice and its a company
that encourages open dialogue. IKEA wants co-workers that can help build on
that culture - straightforward and down-to-earth people with a willingness to
learn.
Leadership by example for IKEA this means that its managers act
according to the IKEA values and create an atmosphere of well-being and
also expect the same from their co-workers.

IKEAs values guide it in everything it does and allows the company to

maintain the highest ethical standards and to be a good partner in society.

Price

The basis of pricing for IKEA is value i.e. low prices or no-frills pricing. They are not
a premium pricer or a skimmer. So products are designed, raw materials sourced, the
products are manufactured, they are distributed, and they sold by retail, within this no-
frills low-cost framework.

Home delivery is available although this is at an additional cost to the customer.

Place

The IKEA group is an International Marketing business, which sells furniture and
accessories in Europe, North America, Asia and Australia.
IKEAs main business relates to its retail stores. Many of these stores are in out-of-
town locations and do not benefit from the footfall of primary and secondary
locations. The stores themselves are very large. Many of the stores even have
restaurants, food shops and a Swedish market. Some stores even have a bespoke play
area.

IKEA has more than 300 stores.

Promotion

IKEA is one of the worlds largest furniture retail brands. The brand itself is based
upon the concept of offering home furnishing products at value prices.

The promotions mix includes TV advertising, sponsorship, newspaper and magazine

advertising, and many other elements. Some of its TV advertising is considered
controversial whilst others see it as pretty plain. Recent campaigns include the IKEA
kitchen party advert Be Happy Inside campaign and the kitchen party advert.

Obviously their iconic yellow IKEA logo serves to support the brand.

People

IKEA is one of the worlds largest furniture retail brands. The brand itself is based
upon the concept of offering home furnishing products at value prices.

The promotions mix includes TV advertising, sponsorship, newspaper and magazine

advertising, and many other elements. Some of its TV advertising is considered
controversial whilst others see it as pretty plain. Recent campaigns include the IKEA
kitchen party advert Be Happy Inside campaign and the kitchen party advert.

Obviously their iconic yellow IKEA logo serves to support the brand.

Process

The furniture is made by IKEA itself whereby IKEA makes its own wood-based
furniture and wooden components. So for example the business owns forestry
sawmills.
The customer drives to the store, selects a product, orders, it, and then collect it, only
then to have to drive the product home themselves. This is all part of the low pricing
commitment.

Pysicial Evidence

Interestingly IKEA was a business that encompassed sustainability quite early in its
strategy. Many of its products are recyclable IKEA has invested in very green energy
solutions such as solar power.

Physical evidence for IKEA is its very large stores. They are out of town and offer a
huge selection of furniture products. Stores tend to be well-equipped with restaurants,
very large car parking, the space to move around and modern display technologies.