Ikea Case Study

IKEA - case study

Word length : 1250

Introduction

IKEA is one of the fastest growing furniture manufacturing regions in the world. It has operated 154 stores in 22 countries and services 286 million customers a year. As one of the most important reasons, IKEA has many capabilities in order to maximize customer value. Therefore, it is an indispensable part of IKEA's business to ensure that value is all delivered to each customer by changing the companyЎЇs behaviors.

Analysis

Customer value and satisfaction are important ingredients in the marketerЎЇs formula for success. Consumers buy from the firm that they believe offers the highest customer delivered value ЁC the difference between total customer value and total customer cost:

Total customer value (product, service, personnel, and image values)

Total customer cost (monetary, time, energy, and psychic costs)

minus

Customer delivered value (Ў®profitЎЇ to the consumer)

equals

The distinctive capabilities are demonstrated by IKEA to develop customer value mainly from the following aspects: Brand Publicizing, Corporation Culture, Product Value, Supply Chain Efficiency, DIY, Customer Service.

Brand Publicizing: Firstly, this company uses advertising and room-magazine to develop his name, which makes people familiar with this brand and this companyЎЇs product information, such as the price, the cost and the design; Secondly, on their website customers are given the understanding of IKEA concept, also some information about IKEAЎЇs future products, such as the function. IKEA brand has built a close relationship with his consumers, and this connection not only makes people know which position the company is going to, but also makes the company know what the consumers really want in order to accommodate the consumer trend.

Corporation Culture: A culture is the values and practices shared by the members of the group. Corporation culture, therefore, is the shared values and practices of the company's employees. A successful region is based on its corporation culture as well as its distinctive operation. IKEA retains all the positive factors and has developed it into his own culture. Such as, the cost-cutting sensibility and waste averting help to develop the customer value and make people feel that when they choose IKEA, they have made a perfect decision.

Product Value: Michael Porter proposed the value chain as the main tool for identifying ways to create more customer value. Every firm consists of a collection of activities performed to design, produce, market, deliver and support the firmЎЇs products. Product plays a crucial role in the 4pЎЇs theory. To some extent, the customer value can be delivered by the product value directly. IKEA is offering the best product value from all the aspects: customer demand, type, price, cost and so on. Its business idea is "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."

1.The design and the price of every new product are all based on the market research. IKEA learns about the customerЎЇs needs and preferences between different people by the following ways: home visits, surveys, and focus groups. It provides the products with three basic price ranges and four basic styles to meet the different demands.

2.Low Price: IKEA tries to make the price affordable for the most people based on the precondition of good quality. So they just use lower-quality materials on the surfaces that are low stress and less visible to the consumer, which is just suit to the mentality of customers, because they have seen the furniture as an changeable decoration, and have transferred their focus from the stability to the design. Another factor leading to low price is the low cost in transport, IKEA calls for its consumers to assemble their purchases on their own, As the website: picking up your purchases is an important part of IKEAЎЇs approach to customer involvement. Specifically, if you can do simple things like pick up your purchases and assemble them at home, we will keep price low.

3.Good Design: Though the product of IKEA has a low price, the design process is not ignored, contrarily there is an impetuous competition to select the best design one.

Supply Chain Efficiency: An account of Ikea's quest to find technology