IKEA in China

GROUP 2:M. Anton Eka Sakti

Metta YunitaMohamad Taufan Nugroho

Muh. Ali Umar IsmailNiken Ayu Mardliyah

Ulf Johansson, Åsa Thelander (2009), “A Standardised Approach to the World? IKEA in China”, International Journal of Quality and Services, Vol. 1 Iss:2 pp. 199-219

Introduction

IKEA marketing strategy in China

Standardization vs Adaptation

Anders Dahlvig (2004), the CEO of IKEA, had once said, "Whether we are in China, Russia, Manhattan, or London, people buy the same things. We don't adapt to local markets"

Globalization

Standardisation and adaptation• […]the offering of identical product lines at

identical prices through identical distribution systems, supported by identical promotional programs in several different countries (Buzzel, 1968, p.103)

Marketing strategies 4Ps (product, price, place, promotion)

Levitt, 1983 driving forces of globalization :1. Technology2. Converging consumer demand

De Mooij, 2004 : that consumer behaviour is diverging rather than converging and that companies adapt their marketing strategies to national tastes and preferences.

International Retailer Marketing Strategies

Standardisation of Global Retailer

Salmon and Tordjman, 1989 articleIKEA have centralized management but adjusted marketing (in dimensions like assortment, pricing and promotion

Conceptualization marketing activities by retailers Marketing mix – 4Ps; Aspects : 1. Merchandise (attractive assortment of products,

pricing2. Location (establishing outlets&store) , 3. Store formats&(general set up of store;ie levels,

placing departments;layout), 4. Advertising (print/outdoor;media&content

message for promotion, 5. Selling environtment&service of the store (overall

design of store, service personnel)

Conceptual Framework

IKEA’s General Marketing Strategy

IKEA’s business mission:IKEA offers wide range of well designed, functional home furnising products at prices so low that as many people as possible can afford them

IKEA guiding principle is to work in the same way in every country within which it operates

To keep price low and attractive

To create the same image everywhere

Target: Many People (age, sex, social class or income)Advertising

IKEA Familiy

The Catalog

The Store

Product and Product RangeMerchandise supposes to be the same all over the worldProduct brands are same everywherePrice is relative and compared to the market in the country

Store format are standardizedLayout of the store & different department are the sameSelling environment is designed to encourage interaction with cust

Service level – staffing also to be the same around the world

Core of the marketing strategy instrument of IKEAStandardized layout with same product and same overall informationAdvertising is produced in house while some is produced locally

Adjust message and offers to fit local states and local competition

Act as IKEA loyalty programme

Consist of loyalty card, a magazine with several issues, and spesial assortement of product in the store

Local

Global

IKEA in China

• Entered China in 1998.• Standardization & adaptation applied because China is fairly

different with other countries where IKEA is running.

• Females• 25-35• “Little Emperor

Generation”• Well educated• Live in big cities

• Higher-middle income people

• Fairly exclusive western retailer which also provide home designing.

• It’s store for the higher-middle class.

SEGMENTING TARGETING POSITIONING

Merchandise

• Everything sold in IKEA China is under private brand IKEA.

• All products have Swedish name.• Some products are initiated in China,

such as chopsticks, wok with lid, and cleaver.

• Product price is lower (some said half of the products are made in China)

• IKEA’s products are subject to copying. Thus, IKEA have to provide something more than just affordable furniture. Thus IKEA also provide home decorating service which is hard to copy.

• IKEA positioned itself as company with unique competence in relation to interior design.

Location & Store Format

• China consumers do not have access to private cars as European and USA consumers do.

• IKEA stores are located in city centre.

• Customize store format at IKEA Beijing store.

Advertising & Promotion

• Catalogue is only distributed in the store and in some of the primary market areas.

• Rely on smaller brochures.• Using Chinese “Twist” theme

campaign and softer line.• Public Relation (PR) activity.

Selling Environment & Service Levels

• In China, IKEA tries to implement a staff strategy that makes everybody co-workers rather than traditional employees.

• What IKEA tries to do is to build the room settings not like in the USA, not like in the UK or Sweden but in a way that feels relevant to Chinese customers, with sizes of rooms and kitchens that are realistic by Chinese standards.

• The aim is to make the store in Shanghai look very different from the one in Malmo¨ by using the set-up of the rooms.

Selling Environment & Service Levels

There are limits to how far a business can go in standardization. It may also show that a high level of standardization is possible on markets similar to the domestic one but in markets with different conditions, even standardized concepts must be changed in order to be attractive.

The IKEA concept is a standardized one but the strategies and the marketing activities to realize the standardized concept may indeed have to be adjusted to local marketing conditions.

Conclusion

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