3.1 About IKEA
3.1.1 IKEA Corporate
IKEA is a privately-held, international home products retailer that sells flat pack furniture, accessories and bathroom and kitchen items in their retail stores around the world. The company, which pioneered flat-pack design furniture at affordable prices, is now the world's largest furniture retailer.
IKEA was founded in 1943 by 17-year-old Ingvar Kamprad in Sweden and it is owned by a Dutchregistered foundation controlled by the Kamprad family. The company which was originated in Småland, Sweden, distributes its products through its retail outlets. As of August 2009, the chain has 301 stores in 37 countries, most of them in Europe, North America, Asia and Australia.
- Riddhima Chopra, IKEA Case Study, 2009, p 3
3.1.2 IKEA Malaysia
IKEA first opened it’s store in Malaysia in 1996 at One Utama Chopping Complex in Mutiara Damansara, Selangor Malaysia. It then moved to its own bigger 36,000 sq metres building next to IKANO Power Center in the same city in 2005. Now, IKEA Malaysia have distributed 750,000 copies of the IKEA 2010 catalogue. The IKEA Malaysia store has 584 employees and 2,000 parking lots complete with 480 seats at their dining cafe furnished with their very own furniture design. There is also a rumour whether the mega furniture conglomerate will open another store at Ampang or Cheras.
3.2 Business Description
IKEA sells flat-pack minimalist modern desiged home and office furnitures at afordable prices. Their furniture lines ranges from living room, dining, kitchen, bedroom, bathroom, safe for children toys, eatting and room, workspaces, home organisation storage systems, home decoration, eating and cooking tools, textiles, and lighting. They also provide delivery and assembly services. Their IKEA Friends membership club pledge to give their members sale previews, monthly benefit buys and 0% Instalment Payment Plans.
Ikea does not just focus on selling furnitures. It also holds reposnsibilities to ensure environmentally friendly and safe for customers from a health perspective; implement IWAY (IKEA Code of Conduct) which covers working conditions, the prevention of child labour, the environment, responsible forestry management and more; play a part in preventing the climate change by improving our overall energy efficiency and reduce our emissions of greenhouse gases as well as to create innitiatives to improve the rights and life opportunities of the many children by creating substantial and lasting change.
3.3 History Timeline
The IKEA Concept began when Ingvar Kamprad, an entrepreneur from the Småland province in southern Sweden, had an innovative idea. In Småland, although the soil is thin and poor, the people have a reputation for working hard, living frugally and making the most out of limited resources. So when Ingvar started his furniture business in the late 1940s, he applied the lessons he learned in Småland to the home furnishings market. Ingvar's innovative idea was to offer home furnishing products of good function and design at prices much lower than competitors by using simple cost-cutting solutions that did not affect the quality of products. Ingvar used every opportunity to reduce costs, and he scraped and saved in every way possible - except on ideas and quality.
- Riddhima Chopra, IKEA Case Study, 2009, p 3
- Reyes, Zhong, Chen, IKEA Case Study, 2009
3.4 Key People
3.4.1 Corporate Structure
3.4.2 Organizational Structure
- http://www.theofficialboard.com/org-chart/ikea
- Welcome Inside, IKEA Yearly Summary.pdf, 2010, p 10
IKEA Malaysia General Manager & Franchise Shareholder - Joseph Lau
IKEA Malaysia Store Manager - Mike King
3.5 Location & Subsidaries
Contact IKEA Malaysia
No.2 Jalan PJU 7/2, Mutiara Damansara,
47800 Petaling Jaya, Selangor Darul Ehsan, Malaysia
Tel - (603) 7726 7777
Fax - (603) 7726 6255
Email - customerservice.ikeamy@ikano.asia
Contact IKEA Sweden
IKEA Handla Hemma,
PO Box 700 343 81 Älmhult
Telephone - 0476-815 2000
Fax - 0476-168 88
Kitchen - kokhemma@ikea.com
Company - businessorder@ikea.com
Other furnitures - handla@ikea.com
3.6 Brands, Major Products & Services
IKEA products are identified by single word names. Most of the names are Swedish in origin. Although there are some notable exceptions, most product names are based on a special naming system developed by IKEA in conjunction with Colin Edwards (international naming expert and furniture enthusiast).
IKEA Product Name Meaning
- Upholstered furniture, coffee tables, rattan furniture, bookshelves, media storage, doorknobs -Swedish placenames (for example: Klippan)
- Beds, wardrobes, hall furniture - Norwegian place names
- Dining tables and chairs - Finnish place names
- Bookcase ranges - Occupationss
- Bathroom articles - Scandinavian lakes, rivers and bays
- Kitchens - grammatical terms, sometimes also other names
- Chairs, desks - men's names
- Materials, curtains - women's names
- Garden furniture - Swedish islands
- Carpets - Danish place names
- Lighting - terms from music, chemistry, meteorology, measures, weights, seasons, months, days, boats, nautical terms
- Bedlinen, bed covers, pillows/cushions - flowers, plants, precious stones
- Children's items - mammals, birds, adjectives
- Curtain accessories - mathematical and geometrical terms
- Kitchen utensils - foreign words, spices, herbs, fish, mushrooms, fruits or berries, functional descriptions
- Boxes, wall decoration, pictures and frames, clocks - colloquial expressions, also Swedish place names
- For example, DUKTIG (meaning: good, well-behaved) is a line of children's toys, DINERA (meaning: (to) dine) for tableware, KASSETT (meaning: cassette) for media storage. One range of office furniture is named EFFEKTIV (meaning: efficient), SKÄRPT (meaning: sharp or clever) is a line of kitchen knives.
Company founder Ingvar Kamprad, who is dyslexic, found that naming the furniture with proper names and words, rather than a product code, made the names easier to remember.
- Riddhima Chopra, IKEA Case Study, 2009, p 8 - 9
3.7 Corporate Vision
To create a better everyday life for the many people.
3.8 Corporate Mission
In order to uphold their vision, IKEA states their mission as to offer a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.
IKEA also strives on supplying goods and services to individuals in a way that has an overall beneficial effect on people and the environment.
3.9 Current Promotional Strategy
3.9.1 Room for What Matters Most for You
Mike King wrote this statement about what is in store for IKEA’s 2011 Catalogue:
Room for what matters most.
A private place all to yourself, room for friends and family to relax together, a spot to stay connected, a corner for your most treasured possessions - with all of the things your home has to handle, can you still find room for dreams like these? Of course!
So, in 2011, IKEA focuses mainly on what individual needs and crave for. It is about handling everything on your own and having your ownd space in your own home by arranging it your way.
- IKEA Catalogue, 2011, p 4
3.9.2 Extended shopping hours on weekdays
From 1 - 31 December 2010, IKEA Malaysia is extending their opening hours on weekdays till 11pm daily in the conjunction of Year End’s Sale and the festive month of Hari Raya Aidiladha and Christmas.
3.9.3 Enjoy savings when you revamp your kitchen with IKEA
IKEA is offering a RM30 Voucher for every RM300* spent on customer’s new IKEA kitchen. Plus, a special package deal for kitchen appliances from FAGOR.
3.9.4 Kitchen Hide and Seek contest
RM500 Voucher is being given out weekly for anybody who can find 10 hidden items the quickest in the photos of weekly kitchen idea showcase on IKEA’s website. The campaign lasts untill 31st November 2010.
3.9.5 Pay with your Citi Rewards points or enjoy Citibank 0% Easy Pay at the IKEA store.
- http://www.ikea.com.my/common/pdf/about-ikea/Citi2136-CWP-IKEA.pdf
3.9.6 The IKEA iPhone App for the 2011 Catalogue is ready for downloading
Search "IKEA Catalogue" by Inter IKEA Systems B.V in iPhone App Store and it can be downloaded it right away into iPhone. Other mobile devices such as the Blackberry, those supported by Google Android and Microsoft Windows 7 will be able to view a digital version of the IKEA Catalogue 2011 online at www.IKEA.com.my.
- http://www.ikea.com.my/en/about-ikea/news/
3.9.7 IKEA Soft Toy campaign
For every soft toy you buy between 1 November – 24 December 2010, IKEA Social Initiative will donate RM5 to UNICEF and Save the Children to support the education of the most disadvantaged children. And this year’s campaign is all about inviting you to join us in the Soft Toys movement so that together we can help realise children’s right to education.
Since the start in 2003, the annual Soft Toy campaign has raised a total of 23.8 million euros proceeds which have helped improve the lives of more than eight million children in Asia, Africa, Central and Eastern Europe.
- http://www.ikea.com.my/en/about-ikea/responsibility/local-efforts.asp
3.9.8 Bring back IKEA old Catalogues
In conjunction of IKEA’s Sustainability Efforts, customers can drop their old IKEA catalogues into the recycling bin located close to the Exchange and Returns counter on the Ground floor of the local IKEA store.
- http://www.ikea.com.my/en/about-ikea/news/
3.9.9 World Environment Day 2010
5 June 2010, World Environment Day, marks the first anniversary of IKEA Malaysia's Say "No" to Plastic Bags initiative. Since June 2009, IKEA Malaysia has discontinued distribution of free plastic bags to raise awareness of its pollution to the environment and to encourage reduction in the usage of plastic bags. By charging 20sen for each bio-degradable plastic bag, IKEA hopes that it will encourage customers to bring their own reusable bag to shop.
A total of RM91,027.20 has been collected during the first year of this initiative. The proceeds go to an on-going Mangrove Tree Planting project at Kuala Selangor Nature Park.
80 IKEA co-workers and members of the media came together on this day for IKEA’s first Mangrove Tree Planting session at Kuala Selangor Nature Park. 400 mangrove saplings were planted to help reduce the harmful effects of carbon dioxide emissions, which is the major threat to global warming. This is an on-going mangrove trees planting project at Kuala Selangor Nature Park, which IKEA Malaysia is supporting with the proceeds from the sales of biodegradable plastic bags.
- http://www.ikea.com.my/en/about-ikea/responsibility/local-initiative/world-environment-day.asp
3.9.10 IKEA turned off its external lights during Earth Hour 2010
Earth Hour 2010 took place on Saturday 27 March at 8.30pm (local time) and was a global call to action to every individual, every business and every community throughout the world. It was a call to stand up, to take responsibility, to get involved and lead the way towards a sustainable future. The people turned off their lights and joined together in celebration and contemplation of the one thing we all have in common – our planet. For a consecutive second year, IKEA Damansara turned off its external and fascade lights in support of Earth Hour 2010, from 8.30pm – 9.30pm on Saturday, 27 March 2010.
- http://www.ikea.com.my/en/about-ikea/responsibility/local-initiative/2010-earth-hour.asp
3.9.11 SUNNAN Lamp Campaign
For every SUNNAN solar powered lamp sold in IKEA, one lamp will be given to UNICEF to light up the life of a child. This is a small but important contribution to improve the lives of children in developing countries. SUNNAN comes in five bright colours and is sold at RM95 at the IKEA store.
- http://www.ikea.com.my/en/about-ikea/responsibility/local-efforts.asp
3.10 Current Marketing Objective
3.10.1 Short Term
The IKEA concept is based on the market positioning statement. "We do our part" focuses on their commitment to product design, consumer value and clever solutions. By using inexpensive materials in a novel way and minimising production, distribution and retail costs, their customers benefit from low prices.
The IKEA product range is developed to be extensive to have something that appeals to everyone and to cover all functions in the home. The products are modern not trendy so they are practical enough for everyday use.
IKEA is the home furnishing specialist - IKEA products are functional and appealing; they enable people to improve their home life through practical solutions to everyday problems.
Function - IKEA products are based on a functional approach to design. IKEA design means products that are attractive, practical and easy to use. They don't have unnecessary features, they give genuine solutions for specific home furnishing needs and are made of the most suitable materials for their purpose.
- Riddhima Chopra, IKEA Case Study, 2009, p 10
Large volumes + flat packs = low costs - IKEA works in various ways not only to rationalise and simplify distribution, but also to minimise the impact this part of the business has on the environment. The secret is to calculate as exactly as possible how many products will be needed to satisfy demand. This eliminates any unnecessary costs for production and warehousing.
- Riddhima Chopra, IKEA Case Study, 2009, p 12
Convenient shopping - The IKEA store offers "everything under one roof", most of it available for immediate take-away. IKEA offers service where they need it, but allows customers to make most of the decisions themselves. This means that they need to make it easy to choose the right products by displaying them correctly, describing them accurately and having a simple returns policy.
A day out for the whole family - IKEA aim to look after thier customers by planning for their needs. Not only do they provide inspiration and ideas, but they also encourage people to touch, feel and use the products on display to see how they would fit into their own home. They have new products arriving all the time, seasonal themes, play areas for children, special events and a great value family restaurant.
The right quality - IKEA products are subjected to rigorous tests to make sure that they meet national and international safety standards.
- IKEA Catalogue, 2011, p 18 - 19
Swedish IKEA - The key IKEA messages all have their roots in the Swedish origin of IKEA. Swedish furniture is light and fresh yet unpretentious. The warm welcoming Swedish style has become a model of simplicity, practicality, and informality that is now world renown.
- Riddhima Chopra, IKEA Case Study, 2009, p 10
3.10.2 Long Term
Sustainability - IKEA also concentrates in sustainability of their product and the world. People can lie down on DVALA bed fitted sheets and still can make a difference to the world because the series are manufactured using less cotton, water and chemicals. - IKEA Catalogue, 2011, p 18 - 19
IKEA Social Initiative - IKEA Social Initiatives mission is to improve the rights and life opportunities of the many children by creating substantial and lasting change. IKEA main partners are the two leading global organisations for children's rights, UNICEF and Save the Children.
- http://www.ikea.com.my/en/about-ikea/responsibility/
Climate change - IKEA determined to play a part in preventing the climate change by improving the world’s overall energy efficiency and reduce our emissions of greenhouse gases.
- http://www.ikea.com.my/en/about-ikea/responsibility/
3.11 Media Expenditures
IKEA StoreIKEA stores are usually very large blue buildings with few windows and yellow accents. They are designed around a "one-way" layout which leads customers along "the long natural way." This layout is designed to encourage the customer to see, feel and experience IKEA products and services (as opposed to a traditional retail store, which allows a consumer to go right to the section where the goods and services needed are displayed). Most IKEA stores offer an "as-is" area at the end of the warehouse just prior to the cashiers. Returned, damaged and formerly showcased products which are not in new condition or taken out of the IKEA product range are displayed here, and sold with a significant discount, but also with a "no-returns" policy. - IKEA Catalogue, 2011, p 6
IKEA Catalogue
IKEA publishes an annual catalogue. First published in Swedish in 1951, the catalogue is now published in 55 editions, in 27 languages for 36 countries, and is considered to be the main marketing tool of the retail giant, consuming 70% of the company's annual marketing budget. The catalogue is distributed both in stores and by mail. Most of the catalogue is produced by IKEA Communications AB in IKEA's hometown of Älmhult, Sweden where IKEA operates the largest photo studio in northern Europe at 8,000 square metres in size. The catalogue itself is printed on chlorine-free paper of 10-15% post-consumer waste.
- IKEA Catalogue, 2011, p 9
IKEA Website (www.ikea.com.my)
In 1997, IKEA joined thousands of other companies online when it introduced its site on the World Wide Web, aptly named the "World Wide Living Room Web Site." The web site not only offered information about the company, its origin, and its future vision, but also made it possible for customers to see IKEA's merchandise on their computers at home. Part of the company's catalog was available for viewing online, and information about new product lines and pictures of the items were present.
- http://www.fundinguniverse.com/company-histories/IKEA-International-AS-Company-History.html
Print Advertisements
Designed to advertise IKEA’s newest product range and also to remind people of IKEA brand and its serices. IKEA print ad always focuses on the organized function of IKEA products and services. Pictured here is the newest international IKEA Kitchen Shit print ad about IKEA’s Assembly Service
- http://adsoftheworld.com/media/print/ikea_kitchen_shit
IKEA Online Advertisements
IKEA also invest on putting their ads on other websites which are linked to their website. The above picture shows IKEA’s home space solution flash web banner on a Dubai website. People can play by clicking and dragging the banner into the shape they choose and watch as the IKEA furniture pieces work within each newly allotted space. The right side picture is IKEA’s Kitchen Hide & Seek Contest advertised on Yahoo! Messenger Insider that can automatically be seen by YM users when they signed into YM.
- http://adsoftheworld.com/media/online/ikea_resizearoom
IKEA Bus Stop Advertisements
- http://www.toxel.com/inspiration/2008/10/03/creative-bus-stop-advertisements/
Social Networking Site (IKEA Facebook Tag Campaign)
The agency, which has a long-standing relationship with Ikea (dating back to 1996), used one of the most popular and basic functions on Facebook, tagging pictures, and used it to IKEA’s advantage to promote its showroom products. After creating a Facebook profile for the store manager, Gordon Gustavsson, the team then uploaded IKEA showrooms images to Mr. Gustavsson’s Facebook photo album over a two-week period.
Facebook friends of Gustavsson were then encouraged to tag items in the photos with their names, for a chance of winning that object for free.
As word about the campaign spread, the photos were tagged within seconds of being uploaded and requests came rolling in for more pictures. People used their Facebook profiles, newsfeeds and links, email and other forms of word of mouth to tell their friends and family.
The photo tagging promotional giveaway took off like wildfire making the Malmo Ikea store widely popular in just a few weeks. Throughout the world blogs have picked up the story, like Marketing Media in Russia, Ninja Marketing in Italy, La Voz de Galicia in Spain, TV Internety in the Czech Republic, Bright and Molblog in the Netherlands, Brand Republic & eConsultancy in the UK, Mashable, iMedia Connection and CNET in the USA.
“Instead of just looking at a banner with furniture, we got people them to personally promote IKEA” said Forsman & Bodenfors on their YouTube video.
- http://www.viralblog.com/widgets-social-apps/ikeas-facebook-campaign-gets-praise/
IKEA’s latest TVC (IKEA lets 100 cats loose for new TVC)
Ikea (UK) has created a new campaign involving filming 100 cats making themselves at home inside a superstore.Mother created the campaihn with the tagline "Happy Inside",
"The idea behind the work is that cats know better than anything what makes them feel happy inside, they live their lives in pursuit of their own comfort," said Feh Tarty, creative director at Mother. "So we released a hundred cats in to the Ikea Wembley store, for real, to see where they went and what furniture made them happy."
Ikea's TV campaign is part of a wider marketing push to launch the Swedish retailer's 2011 catalogue, which will include press advertising, in-store media and a Facebook page, developed by the communications agency Cake, and a "making of" video.
- http://mediacafe.com.au/_webapp_656088/Ikea_lets_100_cats_loose_for_new_TVC
3.7 Product Sales History
In October 1st 2010, privately-owned Ikea has published its financial results for the first time, revealing a 7.7% rise in sales. Total sales were 23.1bn euros ($31.7bn, £20bn) for the year ending in August, the company said. The growth may reflect international expansion, and the Swedish furniture retailer did not give a separate "like-for-like" figure that strips out the effect of new store openings. But it did say it made 2.5bn over the previous year, despite a global recession that saw sales rise by just 1.4%.- http://www.bbc.co.uk/news/business-11454578
SØREN HANSEN, Vice President and CFO of IKEA Group had this to comment about IKEA’s sales growth in 2009 inside IKEA FY09:
Total revenue grew by 1.4% to 21.8 billion EURO, which was equivalent to a growth of 3.1%, when adjusted for currency effects. The growth came entirely from the opening of new stores. Sales in comparable units fell by 1.1% globally in a very
difficult market situation.
Despite the modest sales growth, we managed to grow our operating income by 4.4% to a total of 2.8 billion EURO. The fall in raw material prices and a strong focus on operating expenses supported this development.
3.13 Consumers & Stakeholders
3.13.1 Consumers Demographics
Age - Very wide. But, their main target is for 26 - 40 years old adults.
Marital Status - Focused on newlyweds, young parents, single parents
Gender - Both Male and Female
Education - Graduated from higher education
Occupation - Employed either working on their own business or working with bigger companies
Income Range - Middle Income people from RM2,000 to RM5,000 a month
3.13.2 Consumers Psychographics
- Perception
- Concern about their family safety and health
- Concern about the world social and environment problems
- Not skeptical towards world modernization - Learning
- Able to comprehent the important need of environmental friendly products and sustainability - Motivation & Needs
- Need to buy affordable but modern and trendy looking home furnitures and decorations, sometimes in a bulk
- Looking for children and animal safe products - Attitude & Personality
- Fun to be around, positive towards life, likes to organize things, able to do things on their own - Lifestyle
- Trendy, Modern, Minimalist
3.13.3 Primary Stakeholders
- INGKA Holdings Supervisory Board
- IKEA Group Board of Directors
- Inter IKEA System (Franchise companies)
- GÖRAN GROSSKOPF - President of INGKA Holdings
- INGVAR KAMPRAD - Senior Advisor of INGKA Holdings
- ANDERS DAHLVIG - President of IKEA Group
- HANS GYDELL - President of Inter IKEA System
3.13.4 Secondary Stakeholders
- Store Managers
- Investors
- Suppliers
- Partners
- Desginers
- Customers
- Regulators
3.14 Competitor Analysis
In Malaysia, there is no other all-rounder furniture company like IKEA. IKEA sells flat-pack furnitures, have its very own restaurant, a showroom where everybody can touch and feel the products, home planning and storage system, children’s playground, services for disable people and the company itself invests on social initiatives for environment and the children. However, Malaysia does have a lot of other furniture companies that sells with cheaper prices and have different furniture style than IKEA. These are the competitors that are quite similar to IKEA in Malaysia:
3.15 SWOT Analysis
