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IKEA Case Study, December 31, 2009, Table of Contents, About..., History., .3, Corporate Structure...., Vision and Mission, The IKEA Concept..., .5, IKEA Range, IKEA Store..., Design., Location.., .7, Features, 7, Products., .8, Product names, .8, Catalogue, 6°, Loyalty Programme., 9., Marketing..., 10, Brand Management.., 10, The IKEA marketing mix., 11, Manufacturing., 11, Distribution ..., 11, Social and Environmental Initiatives.., 13, Charitable Giving..., 13, Social Initiatives, 13, Environmental Impact.., .14, Facts and Figures..., 15, 2|
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IKEA Case Study, December 31, 2009, About, 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 Dutch-, registered 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., History, 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. The name IKEA comes from the initials of, Ingvar Kamprad, I and K, plus the first letters of Elmtaryd and Agunnaryd, which are the names of the, farm and village where he grew up., IKEA time line, 1920s, The founder of IKEA, Ingvar Kamprad, is bom., IKEA is founded by Ingvar Kamprad aged 17 in a small farming village in Sweden., The name IKEA was formed from the founder's initials (I.K.) plus the first letters of, Elmtaryd and Agunnaryd, the farm and villoge where he grew up. Originally IKEA, sold everything from pens and wallets to picture frames, watches and even, ladies stockings!, (1940s, Production of the first IKEA catalogue in 1951 and the first IKEA advertisements, appear in local newspapers. Ingvar distributed his products via the county milk van,, which delivered them to the nearby train station. Introduction of flat packaging., In the late 1950s Ingvar decided to stop selling everything except furniture items-, IKEA as we know it today was bom! The first IKEA store opened in Almhult, Sweden., 1950s, 1960s, First IKEA stores opened outside Sweden in Norway and Denmark., (1970s), IKEA undergoes rapid expansion in the 1970s. First store opened outside, Scandinavia in Switzerland. More followed in subsequent years in Germany,, Australia, Canada, Austria and the Netherlands., 1980s, USA and UK opened first stores. In 1987, IKEA won the Excellent Swedish Design prize., (1990s), Stores opened in Hungary, Poland, Czech Republic, United Arab Emirates, Spain, and China. IKEA introduced its range for children., (2000s, Stores opened in Russia and Japan., By reducing use of other transport methods such as large trucks, IKEA has lowered, its carbon dioxide emissions., 3
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IKEA Case Study, December 31, 2009, Corporate Structure, Despite its Swedish roots, IKEA is owned and operated by a complicated array of not-for-profit and, for-profit corporations. The IKEA corporate structure is divided into two main parts: operations and, franchising. Most of IKEA's operations, including the management of the majority of its stores, the, design and manufacture of its furniture, and purchasing and supply functions are overseen by INGKA, Holding, a private, for-profit Dutch company. Of the IKEA stores in 36 countries, 235 are run by the, INGKA Holding. The remaining 30 stores are run by franchisees outside of the INGKA Holding., INGKA Holding is not an independent company, but is wholly owned by the Stichting Ingka, Foundation, which Kamprad established in 1982 in the Netherlands as a tax-exempt, not-for-profit, foundation. The Ingka Foundation is controlled by a five-member executive committee that is chaired, by Kamprad and includes his wife and attorney., While most IKEA stores operate under the direct purview of Ingka Holding and the Ingka Foundation,, the IKEA trademark and concept is owned by an entirely separate Dutch company, Inter IKEA, Systems. Every IKEA store, including those run by Ingka Holding, pays a franchise fee of 3% of the, revenue to Inter IKEA Systems. The ownership of Inter IKEA Systems is exceedingly complicated, and, ultimately, uncertain. Inter IKEA Systems is owned by Inter IKEA Holding, a company registered, in Luxembourg. Inter IKEA Holding, in turn, belongs to an identically named company in the, Netherlands Antilles that is run by a trust company based in Curaçao. The owners of this trust, company are unknown (IKEA refuses to identify them) but are assumed to be members of the, Kamprad family., In Australia, IKEA is operated by two companies. Stores located on the East Coast including, Queensland, New South Wales, and Victoria are owned by INGKA Holding. Stores elsewhere in the, country including South Australia and Western Australia are owned by Cebas Pty Ltd. Like, elsewhere, all stores are operated under a franchise agreement with Inter IKEA Systems., Vision and Mission, The IKEA vision, business idea and market positioning statement provide a framework for all IKEA, marketing communication worldwide., The IKEA vision is "To create a better everyday life for the many, people." To meet this vision IKEA provides many well-designed,, functional products for the home. It prices its products low so that as, many people as possible can afford to buy them., However, in creating low prices IKEA is not willing to sacrifice its, principles. 'Low price but not at any price' is what IKEA says. This, means it wants its business to be sustainable. IKEA supplies goods, and services to individuals in a way that has an overall beneficial effect, on people and the environment. Customers all over the world have, responded positively to IKEA's approach., The 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.", The market positioning statement is "Your partner in better living. We do our part, you do yours., Together we save money.", 4
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IKEA Case Study, December 31, 2009, The IKEA Concept, The IKEA Concept is based on offering 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. Rather than, selling expensive home furnishings that only a few can buy, the IKEA Concept makes it possible to, serve the many by providing low-priced products that contribute to helping more people live a better, life at home. The IKEA Concept guides the way IKEA products are designed, manufactured,, transported, sold and assembled. All of these factors contribute to transforming the IKEA Concept into, a reality., IKEA Range, Fundamental activities such as eating, sleeping, storing items, socialising and so on create a demand, for furniture and practical products that solve essential human needs. The IKEA product range meets, these needs by offering 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. The IKEA range includes products, for every part of the home., Low Price, Function, Design, Uniquely IKEA, 1. Design- While most retailers use design to justify a higher price, IKEA designers work in, exactly the opposite way. Instead they use design to secure the lowest possible price. IKEA, designers design every IKEA product starting with a functional need and a price. Then they, use their vast knowledge of innovative, low-cost manufacturing processes to create functional, products, often co-ordinated in style. Then large volumes are purchased to push prices down, even further. Most IKEA products are also designed to be transported in flat packs and, assembled at the customer's home. This lowers the price by minimising transportation and, storage costs. In this way, the IKEA Concept uses design to ensure that IKEA products can, be purchased and enjoyed by as many people as possible., 2. Function- The many people have many needs. They live with kids. They need more storage., They have to make the most out of a small space. So IKEA designers are always seeking, new ways to improve people's lives - without emptying their wallets. But how can good design, and function be combined with good quality, all at a low price? It starts with focusing on, what's important. Will an expensive finish on the back of a shelf or under a table-top improve, the function? Absolutely not. So IKEA designers do not do it, because a product is of no use, to the customer if it is not affordable., 3. Low Price- Low price is a prerequisite for the IKEA Concept to realise the IKEA vision - "to, create a better everyday life for the many people". As the IKEA Concept aims to serve "the, many people", the IKEA product range needs extremely low price levels. IKEA designers do, their part to keep prices low by using production capabilities from other areas in unique and, previously unimagined ways - like having a shirt factory produce furniture upholstery. Or using, leftover materials from the production of one product to create an entirely new one. IKEA, customers also contribute to keeping prices low. They select and pick up the products, themselves, transport them home and then assemble them themselves. And they can enjoy, them already later that day., 5
