Ikea Case Study

1695 words - 7 pages

IKEA offers a wide range of home furnishing product items of good design and function at prices so Low that the majority of people can afford them. Originally targeting the young buyers, who often looking to furnish their first apartments. 1953 in Almhult sales of IKEA were mail order business with 40-80 times larger turnover of the average furniture. (95.23% of the SKr 16.8 million turnovers were from mail-order business). In 1965 Kamprad opened new outlet in Stockholm on the outskirt of the city with self service concept facilitated by wide distribution of informative catalogs and the use of explanatory tickets on display merchandise, the knock down kits that allowed stocks of all displayed items to be kept in store warehouses in flat boxes with large parking lots that brought the cash and carry concept to furniture retailing. IKEA is a leader of low price furniture. 1970s, growth in the Swedish furniture market was stagnating. IKEA was expanded internationally.Continental Europe1973 Economic downturn, Kampard saw this as opportunity to expand IKEA to the German speaking country with Switzerland being the first target. This is the perfect opportunity because during recession consumer really appreciated our value for money approach.Profile of IKEA Customers (Stockholm, 1975)Consumer attitude to IKEA Positive Negative NeitherDesign 51% 10% 39%Price 73% 4% 23%Quality 27% 29% 44%Distance 56% 29% 1%Based on this chart stated that IKEA product quality is not up to satisfaction. 29% of the customer said that the quality is negative and only 27% says the furniture quality in IKEA is positive but more of them maybe unsure about IKEA's quality. It is obvious IKEA furniture quality has to be changed for long run investment. In long run customers might realize the low quality of IKEA furniture therefore IKEA future in long run is uncertain. Quality production should be altered before expanding internationally. Kampard ignored this problem before expanding IKEA in Switzerland. Switzerland furniture was traditional design and very sturdy construction. Because of this IKEA promoted itself as 'those impossible Swedes with strange ideas' promising inexpensive prices, immediate delivery and quality image of Swedish Furniture Institute's Mobelfakta seal. German retailer complained that about IKEA quality and legal proceeding against IKEA for deceiving customers and court supported German retailers and curtailed IKEA activities. IKEA should take serious action on its product quality, as it is important criteria for store choice. 90% of Stockholm customer says the quality of the product is an important criterion for store choice. IKEA facing problem with imitators not only in continental Europe market but in a lot of the countries as well. In code law countries, such as France and Italy, priority of registration ensures protection. In common law countries, such as UK and USA, protection is established by priority use.IKEA management problemsIngvar Kamprad the...

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