Brand Obsession: IKEA

As many of you know, I am now in graduate school working toward a Master of Science in marketing degree. As a part of furthering my knowledge in the world of marketing and strategy, I am going to start incorporating marketing/business related thoughts, tidbits, and articles into this blog. I think it will help me think critically and better flesh out my thoughts and ideas about what is going on in the business world today.

First up:

Harvard Business Review (HBR) case study: "IKEA Invades America"

-I recently read this case for a marketing strategy course that I'm taking this semester. Written in 2004, it provides a unique snapshot of IKEA during a very important and pivotal time in the company. During this time, IKEA was still fairly new to the United States but looking to grow rapidly if the market accepted the unique IKEA product style.

Here are a few things that I gathered while reading the case:

• IKEA has always been known for their simplistic design of furniture. What I didn't realize before reading the case was that this mindset of simplicity permeates throughout the company, from idea conception through design and all the way to delivery to the end consumer. IKEA has developed a product/price matrix that is used during development of all products. The product must fit into one of four styles: Scandinavian (sleek wood), Modern (minimalist), Country (neo-traditional), and Young Swede (bare bones). Additionally, it needs to be categorized into a low, medium, or high price point. If what IKEA comes up with can't be sold 30-50% lower than the price benchmark in that category amongst IKEA competitors, then in most cases, the product development stops there. It is a very streamlined and efficient way to organize the product development process while making sure that new product additions enhance the overall company portfolio.
• When the case was written in 2004, there was only 1 store in the Asian market. Since then, the number of stores in China and Japan have exploded and the Asian market seems pretty saturated with the number of IKEA stores currently operating. I spoke with a friend, Candace, in class about IKEA in the Asian market as she grew up in China and is very familiar with the culture (Candace is an American, just so we're clear ;). She mentioned that in China, going to IKEA is something fun to do with your friends. It is not the same grand purchasing adventure that Americans have when they travel to an IKEA. Candace said IKEA, while boasting of quality furniture at affordable pricing, is still priced too high for most Chinese to buy from on a regular basis. Sure, people will buy the small household, trinkety items, but the large pieces of furniture are a much harder sell over there. She thinks there is still work to be done in that aspect of better meeting the Chinese market expectations of the brand.

(The map shown above is from 2007, but it's the most recent one that I could find. 

It shows a more updated total of stores in various countries all around the world.)

• When looking at the map for other untapped markets that IKEA could pursue, there was one country that stood out for its dense population, fast product adoption rate, and increased willingness to accept Western-influenced products. INDIA. It's so obvious! Why hasn't IKEA entered the Indian market place yet?! Now I'm sure there are all kinds of red tape and government interference that I know nothing about, but taking all of that aside for a moment and looking at the situation with a purist viewpoint, it seems like a prime market for IKEA. So what do I do when faced with a question that makes no sense to me? I google it. Obviously. And what do you know?! A recent Forbes article that mentions how IKEA just struck a deal to invest $1.9 billion to build 25 stores in India over the next decade or so. The first won't open for another three years but the groundwork has been laid. IKEA will have to tailor its stores to meet Indian government guidelines, such as IKEA won't be allowed to have their signature cafes inside the stores because it violates the FDI policy on food retailing. IKEA has always been fairly rigid it will not change its brand to fit into new markets. If the customers within the new market do not accept the Scandinavian influenced company, design, food, and overall experience, then IKEA views it is not a good market for the company. For IKEA to agree to not include its signature cafes in the new set of stores in India is, I think, a very big move for the company and says a lot about the lengths they are willing to go to get a foothold in the Indian market. Only time will tell how this will all play out for IKEA and what other concessions the company may have to end up making to tailor to the Indian market. This will be interesting to watch over the coming years to see just how true to the brand IKEA remains.
• A last little thought on the subject of potential country expansion for IKEA --Latin America & South America-- Why hasn't IKEA gone there yet? Certain large cities in not unlike Rio de Janiero, Santiago, Buenos Aires, and Lima certainly have a diverse enough population to garner an IKEA following. These cities are just teeming with young people who are modern, minimalists, and who need organization for small living spaces. I believe that the majority of the Latin/Hispanic population has been left out of IKEA's markets (with the exception of Spain and Portugal where IKEA has numerous stores). Is there a reason behind this exclusion? Are there characteristics about the Latin consumer that deter them from IKEA-style products? These are questions that I don't have the knowledge to answer but are worth a look for IKEA if they want to reach a virtually untapped market.

My own personal thoughts on IKEA

I LOVE THIS STORE. Yes, that was in all-caps. I LOVE IT. I mean, I'm a girl and I love shopping, so there's that. But IKEA is so much more than just shopping. It's an interactive, enthralling experience that can't really be compared to any other store in the market today. The ability to visualize each individual room, the ideas that are generated from seeing items placed together that wouldn't ordinarly be, the sleek, modern style that mirrors where I'm at in my life right now, the affordable changeability of patterns, colors, and styles in the furniture industry (an industry primarily known for its product longevity and hefty expense on one's finances). ...I could go on and on. I love this store. Assembling the products is kind of a hassle, I admit (although it helps having a solid man in your life who you ever so lovingly ask for his assistance ;) but the reward from knowing you made those 5 slabs of wood into an desk or bookcase or whatever, that's powerful. Is it lame to say to IKEA empowers people? I believe it does to an extent. IKEA empowers people to think creatively when designing a room. IKEA empowers people to think differently about furniture and what it means to our lives. IKEA empowers people to be their own masters of creation, from picking to loading to assembling. IKEA is a powerful company that has developed a strong group of loyal followers, myself included (obviously!) that has ample room to grow, should the company desire that expansion.

(oh, and here is a little snapshot into one of my most recent IKEA hauls with 

my sister at the IKEA in Frisco, TX. Did I mention I love IKEA?..)