Sample Essay on Marketing Strategies of IKEA

For an enterprise to achieve success, it needs to consider its major strengths and work towards making them count. It also needs to consider the weaknesses that it has that act as a block to the compass success. The threats and opportunities in the business should also be considered to ensure that the business takes maximum advantage of the available opportunities in the market. The threats that face a business should also be taken into consideration. Factors such as the economic situation in a nation, the level of competition and varying customer tastes determine opportunities and threats of a company. It is, therefore, vital for an enterprise to carry out both the internal and external analysis so as to realize its objectives. Once the analysis is carried out, it is important to put in place the most appropriate strategies to overcome the weaknesses and threats as well as take advantage of opportunities and strengths. This paper discusses the promotional and product strategies that IKEA can use to realize maximum profitability while achieving the needed level of customer satisfaction.

IKEA is a company involved in the manufacture of home furnishings across a wide region. In most cases, companies lower the quality of their products so as to offer them at low market prices. However, the company is driven by the desire to offer quality products to the people at the minimum cost. To achieve this, the company has established good and long-term relationship with its suppliers thus optimizing its value chain. The company’s growth over the years can be attributed to the fact that it ploughs back its profit. The company also considers the changing preferences of the customers by making sure that it develops its products with time to suit the customer needs. With more than 300 stores in 27 countries, the organization has a wide range of products amounting to about 9,500 (Badier & Rousset, 2007). The enterprise also has a large number of employees totaling to about 147,000 in 2014 and more than 1,000 suppliers of home furnishings. The primary target market of the company is young professionals and young families.

In the market, the company attracts its customers by making the products more convenient in terms of purchasing. The company allows the customers to shop for their products through the internet. The purchase is thus very convenient since it saves time that would otherwise be spent by the customers to go the stores. The products are also relatively cheap because of the low labor costs involved (Schirone, 2012). Due to the online sales, the company cuts a considerable amount of money that it would otherwise use in employing salespersons. The products are also easy to move because of the parts and components that are easy to fix. The company has outlets even in the countryside thus favoring the market in the regions.

As Maslow indicated, the needs and wants of human beings are satisfied along with levels such that for one to desire for a need that is at the next level, they must have the current level satisfied. IKEA deals with people as the target market thus it must consider their satisfaction of the needs. The products and promotional strategies by the company must be done after considering the level of satisfaction that the consumers are at so that they are motivated to purchase. The first level of needs as suggested by Maslow is the satisfaction of physiological needs. This applies to the company through pricing so that they ensure that the consumers can afford their products.

The low cost of production in terms of labor makes it possible for the company to cut the cost of the end products thus satisfying the physiological needs of the customers. The cost of promotion also affects the success of the products of the company. High promotional costs are passed onto the consumers through high prices, but the company uses cheap promotional strategies so as to keep the costs of the products low. The second level of need is the satisfaction of safety needs, and the company achieves this by selling high-quality products at fair prices. The third aim is the satisfaction of social needs, which is achieved through meeting the specifications of the target market. The company targets the young generation thus its design is influenced by the needs of the group (Valentin, 2001).

The esteem needs are satisfied by ensuring that the design of the products gives a feeling of high social class to the consumers. The means that the company uses to promote the products are also vital to its success. The company should, therefore, use the modern methods of promotion that have an impression of high class such as the use of the internet as opposed to newspapers. The last level of the needs is called self-actualization, and the company achieves this by making the customers feel that they make the furniture themselves as they fix the pieces.

The use of catalogue in advertising the company’s products helps attract the young generation thus making it achieve its marketing objectives. The interior design of the store is such that it excites the customers who are mostly young people. This is a marketing strategy, and it works to the advantage of the company. The customers are allowed to experiment and explore the items in the stores thus, they find them more appealing.

Segmentation grid




high low

DIY habit







The company has to understand the behavior of the customers so as to define the most suitable way to promote the products and affect product development if the need arises. The grid is based on the level of income and the do-it-yourself attitude by the consumers. After creating the grid, the company is able to identify the product development and promotional strategies that they can use. The low-income customers with a high DIY habit are a good target market because the goods are fairly priced. Their interest in the DIY makes IKEA products the best (Hewett, 2009). The low-income and low DIY habit group is the smallest because their lack of interest in the DIY makes them view the products as too expensive. The other group is the high-income population that has low DIY habit. This is not a large target market for the company, as it prefers more classy furniture. The high income and high DIY habit consumers who are not good market for the company because they may go for quality that is not offered by IKEA.

Customer relationships



Short-term customer


Long-term customer





consumers who have high interest on DIY and medium or high level of income



True friends

consumers who have DIY habit and medium or low level of income




consumers who do not have interest on DIY and high level of income




consumers who have less interest on DIY and medium or high level of income

The analysis of customer relationship groups is also important in determining the product development and promotional strategies that an enterprise can use to effectively meet its goals. Some of the customers bring about high profitability to the company, but they are short term (Turnbull & Wilson, 2009). These are mostly the customers with a high DIY habit but with a low-income level. The products suit them thus the company does not need to develop them further. The promotion of these products may be through catalogues or the internet so as to target the market (Dyson, 2004). The other group of customers is highly profitable to the business, and their benefit is long-term. These customers have a high DIY habit, and they have medium income thus may not leave the company. This company needs to consider this group when developing the products.

The group is beneficial to the company since it does not consume a lot of money in the promotion of the products (Liljande, Veronica, and Tore, 1995). The low profitability and short-term customers have high income, and they do not have any interests in DIY habit (Storbacka, Strandvik & Grönroos, 1994). Therefore, the group makes a very small percentage of the customers and may be ignored when making product development decisions and promotional decisions. The products would only appeal to them if they are highly priced and this would make the company lose the largest share of customers who have low income. The last group of is the low profitability but long-term customers. The customers’ input to the company is not as much, but they are important to the organization’s decisions.

SWOT analysis


The company’s SWOT analysis is also a major contributor to the success of the product and promotional strategies (Jackson, Joshi & Erhardt, 2003). IKEA is a brand that is known worldwide since it has been in operation for many years in different regions. This reduces the promotional costs since the most of the target market know the company. Its clear vision of impacting people’s lives in many ways drives the plans of the company towards customer satisfaction. The Company also has a positive image for the company due to the high quality of the products that are affordable. This helps it attract more customers even without the need to invest heavily in advertising.


The operation of the business is very complex due to its global presence. Managing many business units is a challenge due to varying customer needs. The company also loses some of the sales due to the low cost, but it has to retain the low costs, which may not be profitable for the business. The nature of the products may also pose a challenge to the company in the effort to meet the ever-rising customer needs.


The rising demand for low-priced products is an opportunity that the business can exploit to its advantage. The majority of the young people who the company targets do not have a high level of disposable income. Some have loans on houses, and others have jobs that are not well-paying thus making high-cost products very expensive to them.


The changing social trends are a main challenge for the company because it affects the way consumers behave. The tastes of the consumers may change drastically thus affecting the rate at which the company has to develop new products. The promotional strategies are also affected by social trends (Hennig-Thurau et. al, 2010). The market forces of demand and supply also play a part in threats faced by the business where high supply lowers the market prices. The economic factors are also an important consideration of the company’s threats. A shortage of the income of the target market affects the demand of the company.


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