IKEA is the global leader in the sale of furniture as recently as in the 21st century and deals in home furnishings through over 300 retail stores across the globe. It was founded in 1943 in Sweden by Ingvar Kamprad when he was only 17 years old by beginning to form the company’s name which is an acronym made of his initials, Elmtaryd’s initials (the farm that belonged to his family), and Agunnaryd’s initials (the village he came from).
Stepping into an IKEA store, one feels surrounded by homages to Sweden owing so IKEA’s Swedish heritage.
For starters, the logo itself is made of the colors of the Swedish flag – blue and yellow, the in-house restaurant serves several Swedish delicacies including meatballs and cinnamon buns and most of the furniture sports Nordic names – Söderhamn, Hauga, and Metod. Beds are named after areas in Norway, sofas take the names of Swedish towns, rugs taken from Denmark or Sweden-based places while curtains and fabrics almost always have female names.
The company’s USP revolves around goods priced on the lower end of the scale and packaged, whenever possible, in “flat-pack” form which is compact and convenient for assembly in the customers’ houses. The store carries close to 12000 products under the banner of home furnishings and accessories which are termed as its core range.
“Maintaining a strong IKEA culture is one of the most crucial factors behind the continued success of the IKEA Concept” ~ Ingvar Kamprad, IKEA founder.
The culture in IKEA imitates that of Sweden where people are down-to-earth, hard-working, and immensely helpful to one another.
They strongly believe that each person is capable of offering something valuable to the company and have incorporated values while keeping that in mind. IKEA’s values are:
Since IKEA had great ambition and vision to spread its wings in the furniture business, operating in a limited Swedish market did not offer many growth opportunities. During the initial stages when IKEA had just started manufacturing furniture at incredibly low costs, its rivals were anything but happy and they put a stop to any local suppliers providing raw materials to the store and even restricted the company’s entry into the furniture-industry exhibitions. IKEA took up the design of its furniture and availed the services of foreign contractors in Denmark and Poland and established its manufacturing unit called Swedwood, a subsidiary acting as a safety net.
One of IKEA’s key features was, and still is, its ‘assemble-it-yourself’ strategy. The company is well known for it and has gained popularity off the back of that strategy. But when it came to India, it offered a service for on-site assembly because they found that India had never witnessed a self-assembling strategy. Its expansion into the United States required an alteration in the size of its fitted sheets since mattress sizes differed from what IKEA was used to. In China, they had to set up sections with balcony showrooms as those are very popular in residential living.
Currently, IKEA has a whopping 313 self-owned stores set up in 38 countries and territories while there are 37 more outlets outside the IKEA Group in the form of franchisees in 17 countries and territories. In the next few years, IKEA stores and e-commerce platforms are set to launch in Macau, Puerto Rico, Chile, Colombia, Peru, Mexico, Estonia, Ukraine, New Zealand, Slovenia, Vietnam, and the Philippines.
The Iceberg Model uses an iceberg as a metaphor to explain segmentation tactics used by brands. They perform segmentation using demographic differentiation which is only the tip of the iceberg. Demographic segmentation is no use. Businesses make money when people do things, not when they are things. The rest of the iceberg signifies consumer motivation – why people do what they do. Motivations are the internal drivers that push people to resolve a problem or reduce a need. The greater the perception that you do not have what you want, the stronger the motivation to satisfy that need.
“Who is the core consumer segment my brand is positioned for?”- The result should be based on the Iceberg Model including the usage and purchase behavior, psychographics, motivations, and demographics.
This should be a short statement, which covers all the elements taught along the course: the target, frame of reference, difference points, and reasons to believe. The map should start with the definition of the category as well as placing your competitors.
Define the consumer insight, the market category your business belongs to point to different brand values and the brand personality.