Challenges Faced by IKEA

Challenges Faced by IKEAIKEA is a residence furnishing store that squander been franchise store. IKEA was first of all opened in Sweden, the owner and franchiser of IKEA is from Netherlands and store in almost in 31 countries. Their business concept is We shall offer a wide range of intimately-designed, subroutineable home furnishing products at bells so low that as many people as possible will be able to afford them. This source is fitting from IKEA provides catalogue and visiting store for customer so its very easy for customer to choose the furniture and pick it up from the self warehouse.Today customization and hot product in securities industry is very important due to customer demanding for more(prenominal) and consumer market is changing faster. (Cox and Alam 1998) IKEA has strong ideas in customizing its product to suit the tastes of local markets because IKEA does all the analysis before venture to other earth markets. (Cox and Alam 1998). Initially IKEA was no n interested in customizing their product provided went enter us market IKEA faces customer indifferences so eventually IKEA decided to customize their product. The reason why today we are discussing well-nigh IKEA is because for the first time in history an mundane furnishing retail shop receive been franchise all over the world and be make very famous among everyone. (Cox and Alam 1998). Due to that we are going to analysis closely IKEAs product and promotion to know their secret of success. The typical IKEA customer is young and low to middle income family and in another word empennage give tongue to as that is IKEA target customer.Marketing mix is has 4 ps place (distri exception), promotion, price and product, trio extended marketing mix are people, process and physical evidence. fit to Philip Kotler (2006) marketing mix a modern marketing system. This concept helps marketers to market the product more systematically. (Armstrong and Kotler 2006). Product scheme begins from marketing mix. (Armstrong and Kotler 2006). Product is steady-goings that a fraternity wants to sell. (Armstrong and Kotler 2006) IKEA produce almost everything that people need for a home. (Armstrong and Kotler 2006).HISTORY OF IKEAThe year IKEA was established in 1943 by Ingvar kamprad to sell, pens, wallets and so on. In year 1958, IKEA grew and was introduced as a leader of Swedish Furniture and started to produce local furniture by local manufacturers. Later creating furniture for flat packs and self-assembly to reduce storage space. IKEA slowly expand their business by possibility up kitchenware and restaurant. The largest furniture IKEA display was in Scandinavia and the first store to be open was in Almhult, Sweden. From in that respect IKEA develeoped by opening more stores in other countries such as Germany, Nor focusing and so forth. The advantages of IKEA selling the product in other countries less-expensive so customer will afford to sully the product accordin g to the surface area they are located. There are 279 IKEA stores all over the world and IKEA is store in 36 countries. In 279 stores, IKEA group owns 247 stores in 24 countries and the rest is managed by franchise in 16 countries. In Asia IKEA groups besides two stores they are located at Japan and China. The first country that IKEA considered to enter was Japan. Because of differences in mentality, culture, lifestyle, behavior and so on, IKEA faceed failure in Japan. In 1986 IKEA needed to shut down their store in Japan because of failure, they re-entered the market over again after two years and opened 3 stores in Japan. The second country that IKEA decided to enter in Asia was China. Almost 6 stores had been opened in China and IKEA decided to open more in the future. IKEA provides abundant resources, cheap labor and invest in China market because to comfort for its investment. Due to bureaucratism system there are some challenges IKEA faces, high tax and so on. IKEA also we es an enterprise myth and become biggest furniture retail in world. thus far though Japan and china located in Asia but Japan have unique characteristics. Since Japan needs an adaptation IKEA entered twice in Nipponese market in order to establish their market.CORE OBJECTIVES, GOALS AND VISION OF IKEAIKEAs main objective is to invest and expand their business while maximize profit in return. IKEA also ensure that catalogue is distribute to the targeted people, so that they can become IKEA customer in terms of demographic attributes and they might travel to the store.The IKEAs vision is to create everyday life for many people everyday life for the many people. IKEAs goal is to produce or offer a wide range of well designed product, functional home furnishing product, interior and so on in a low price so many people will be afford to buy their products. On top of that IKEA trying level best to build up a good kindred with the customer and come up with funny strategy to attract cust omer. Basically IKEAs concept is to sell good product in a low price.Challenges faced by IKEA in transnational environmentFurniture from Sweden is sold in the USAis relatively higher even though the price of Sweden drop every year so IKEA is determination a solution for it, shipping from Europe to other country takes around 1 to 2 months and shipping woo is expensive. Countries like Japan IKEA have to customize the product and packaging according to their taste because previously when IKEA come up with standardization IKEA fails so to overcome this they now maintaining standardization, economy concern by locomote living costs and depleting disposable income its a treat on performance of the IKEA business in u.k and u.s.a market specifically. By expand their business abroad IKEA has growing competition for international business and lot of competitor so IKEA had customize and standardize their product to attract the customer but the same IKEA also have to learnt other country ma rket in order to compete wit them. IKEA business is successful in Europe, but it has met lots of challenges in the Chinese market. after(prenominal) 8 years entering into Chinese market, it has opened only 4 shops, and the sales portion in the Chinese market is less than 10% of its outlets. IKEA has been encountered in lot of problems when entering into the market especially developing countries.ProductThe product is anything that satisfies our want or need and product that can be marketed is including physical goods, operate and so on. (Philip Kotler). The product decision also included aspects such as delivery arrangement financing warehousing and things that useful for people. (Philip Kotler) According to IKEA management they did not did any differentiations in their product ranges and expression they conduct when going international especially on French and Chinese market. (E. Lewis cyan Communications) .Product in Swedish and France, there is no major differences between p roducts. (E. Lewis Cyan Communications)In a research the author found out that all of those products were same for lesson kitchen and dining room, living room, bedroom, the house organization, decoration, lighting, and so forth. Comparing catalogues in different countries the catalogues was almost same and only two dissimilarities was found isThe French catalogue offers cupboards is much more variety of size than Swedish catalogue. (E. Lewis Cyan Communications)The French catalogue presents wider range of available to purchase mattresses. (E. Lewis Cyan Communications)The Chinese catalogues have been divided into 5 categories in order to emergence purchase and increase number of localize product in Chinese market. (Bjrk, 2000, Lewis, 2005) It is it is obvious that localized product is more in Chinese market for example kitchen wares as chopsticks, Chinese textile and so on. (E. Lewis Cyan Communications) Product range is wider in china compare to Sweden and France, during any fe stival or special make IKEA introduce new product in china. (Thrane Carlsen, 2005) IKEA keeps flat packaging strategy and democratic design (function + design + low price = democratic design) strategy on market every market. (E. Lewis Cyan Communications) The product line of IKEA has been considered in every situation as the IKEA identify and also the product concept is given IOS which center IKEA of Sweden. (E. Lewis Cyan Communications). All the product of IKEA which have been selling all over the world is conformed to the European Union (eu) and national norms in order to maintain the step standard. (E. Lewis Cyan Communications) IKEA with Skanska offer not only product but apartment and furnished by IKEA products. (E. Lewis Cyan Communications). IKEA sells most the product with the same standards because management and converse models wants to expand the same image of Sweden to worldwide. (E. Lewis Cyan Communications). IKEA has to introduce much more localized products into the Chinese market and reduce the price because its relatively higher than municipal furniture products in China. (E. Lewis Cyan Communications) .Due to Chinese market are relatively low cultural content and much more dimensions so more localized products are introduced to the Chinese market. (E. Lewis Cyan Communications) When IKEA sells product to the French market, they essential be very careful because French people has high taste of art, and take knockout consideration of product design, color shade and so on. (E. Lewis Cyan Communications). IKEA until today could maintain their product standard because they manufacture and produce their own product. (E. Lewis Cyan Communications) IKEA only picks good timber in order to produce furniture and pick the best raw material to produce product and also can say as this is the secret of IKEA product. (E. Lewis Cyan Communications)PROMOTIONThe function of promotion is to attract customer behavior in order to close the deal or sale. ( Neil H.Bordens).The way to promote is trough advertisement, sales promotion, public promotion and etc. (Neil H.Bordens).IKEA does not spend that much in promotion but yet they try to use all the time different communication forms to advertise and promote their furniture and so on. (E. Lewis Cyan Communications). Apart from that maybe can find media advertising via telly and internet, IKEA catalogue advertisement, like IKEA bedroom-car riding all over USA or big square and so on. (E. Lewis Cyan Communications). The brand IKEA is kept on three markets as every product is sold under IKEA brand, the registered trademark at the world dimension. (E. Lewis Cyan Communications). This brand appears in every product and packaging. (E. Lewis Cyan Communications). In china IKEA first time used media to make promotion by playing 8-minute TV show. (Thrane Carlsen, 2005). All IKEA products could be viewed in catalog or website but must purchase in the store, for Chinese customer furniture are dir ectly delivered to home for free. (Thrane Carlsen, 2005) Basically IKEA come with this catalogue and so on is for family-orientation and IKEAs constitution of comfortable home. (E. Lewis Cyan Communications). IKEA have come up with different design of catalogue in different country according to their lifestyle and environment and so on. (E. Lewis Cyan Communications).IKEA has completely different way of communicate with its customer. (E. Lewis Cyan Communications).IKEA Mostly advertises in website and present not only furniture but also interest group latest design of computer science that they have used to attract the customer. (E. Lewis Cyan Communications).IKEA has undertaken a few adaptations in its product design and sales promotions with different focus according to the feature of target market. (E. Lewis Cyan Communications). IKEA give a feeling that IKEAs is very close to the customer, because they have trained the staff in that way to maintain a very good relationship wit h the customer. (E. Lewis Cyan Communications). By doing this IKEA thinks that is one of the effective ways of marketing and to promote their product to customer. (E. Lewis Cyan Communications). tollPrice means the pricing strategy that be used for a product or service. (E. Lewis Cyan Communications). The pricing decision should be taken into account statement profit margin and probable pricing response of competitor in order to compete with them. (E. Lewis Cyan Communications) The pricing is not only list price but also include discounts, financing and others. Price is one of the most important issues in the process of coming up with ideas, distributing and manufacturing products, designing and so forth. (E. Lewis Cyan Communications). All the company keeps its strategy of prices by offering wide range of products with stylish design, good quality with reasonable price so people can afford to buy it.usuniers argument is about the culture influence on pricing is a bit weak. (E. Lew is Cyan Communications).IKEAs pricing policy is cost orientated as well as customer value oriented but its not necessarily culture based. (E. Lewis Cyan Communications).Despite, china situation is not constant due to economical conditions but they seem to be better and better. (Bjrk, 2000, Lewis, 2005).IKEA try to maintain the prices all over its shop and mostly succeed but not always those following are IKEAs objective for providing furniture in a lower price in different markets (Bjrk, 2000, Lewis, 2005)Learn different elements of the production cost for example color of mugs. (Bjrk, 2000, Lewis, 2005)Find cheap techniques of production or cheaper manufacturers for example in China. (Bjrk, 2000, Lewis, 2005)Rduce additional cost in the production, the transport and the management, for example to pack products in flat packages. (Bjrk, 2000, Lewis, 2005).Long-term orientation is one of the core Chinese cultures people are very concern about the quality and price, so IKEA have to c ome up with reasonable price in Chinese market. (Bjrk, 2000, Lewis, 2005) However price is not a problem in Europe, as IKEAs product is always of good quality and lower price, so IKEA focus more on sales promotion to gain the market share in Europe. (E. Lewis Cyan Communications).IKEA designers, manufactures and purchasers still spending most of their days to find a solution to low the price of IKEA product and they wants customer to buy high value product in a cheap price. (E. Lewis Cyan Communications).CONCLUSIONIKEA have franchise their market and also was successful in overseas. In fact IKEA have failed initially before they make it in Japan especially. IKEA have to come up with more strategy and try to venture in more business. They also should open up more IKEAs in overseas and maximize the promotion in order to reach the target customer. Before open up a business IKEA should analysis the country market whether adaption or standardization to be applied in the particular count ry so that the company will never face failure. From the analysis, it shows that IKEA has strong relationship of network structure, large number and customer in worldwide to internationalize. Actually in a market survey on target customer everyone says that no any command on IKEAs product because their quality of product is very good and worth of buying it and also last for many years. IKEA products are bear on in abroad market because of cultural factors and political factors. For example Japan people doesnt like international product and got to customize the product. Political factors are stirred like there is some barriers in some countries that standardization packaging is not allowed and they have change the packagings due to this IKEA have to spend allowed.RECOMMENDATIONIKEA have to always pre-planned and alert with market situation and move forward in order to ovoid unnecessary cost. They have to come with a strong strategy so that other competitor can beat up their market. IKEA is very confident that their quality of product is very good and competitors cannot compete with but IKEA but mustnt be like that because nowadays cant predict or underestimate about competitor. IKEA always must be ready to face consequence or either successful. IKEA also should promote more their product and organize lot of event in order to make the brand more popular among people. IKEA must give lot of sponsor of charity, sports and all in order to attract customer. The best ways in distribute flyers, article and so on about IKEA products and how good quality products they are using for example.