COMPETEIVE EDGE :
IKEA has tagged Australia as one of the most expensive places to do business and is doubling its store network while slashing prices to remain competitive. The Swedish furniture has purchased two lands, one in north Melbourne and second in north west Sydney to further its ambition of more than doubling its number of
Australian store to eleven. A new distribution center is on the drawing board and Ikea is close to securing a new patch of development land in Brisbane.
Australia represents a natural market for the retailer with its young population profile and the solid home solid home construction sector, as the cost of doing business is at mountain heights in Australia their strategy to improve competitive edge and spread costs, Ikea is doubling its Australian stores base from five on the east cost to at least a four in Sydney, four in Melbourne and three in Canberra.
Ikea is cutting prices on 900 products by fifty percent , and last year reduced prices on 2500 items from its
900 product range. Ikea initially made some mistakes when it came to Australia about 30 years ago. Since
Australia market is tough, IKEA amended its marketing strategies to fit the market.
PORTER’S GENERIC STRATEGIES :
Ikea uses the Cost Focus and cost leadership in Porter’s Diagram. They combine good quality and good function with low prices.
Ikea provide customers with “affordable solutions for better living” through use of the focused cost leadership strategy. The company offers home furnishings that combine good design, function, and quality with low prices. Ikea does this by offering low-cost, modular furniture (assembled by customers), using self-service as an alternative to having sales associates follow and pressure customers to buy. Ikea displays its products in room-like settings so that customer can view different combinations of furniture, eliminating the need for assistance from sales associates or decorators to visualize the setting and reducing employee costs. Customers also pick up their own purchases to reduce the company's costs. Finally, stores address the needs of shoppers through extended hours and in-store childcare) while they shop.
Ikea emphasis several activities to keep its cost low, typically competitor furniture shops display assortment of single items in separate rooms, In contrast Ikea can view different furniture combinations in a single setting eliminating the need for professional decors or sales men to help the customer on how a room would look giving room to a few personal helping them minimize costs in Australia.
The ikea stores are the key element of its strategy. Smaller downtown stores are not in line with cost leadership strategy.
Ikea has managed to sell maintain their average basket and a lot comes back to the fact that they are competitive and are viewed as a very good value for money.
Marketing can sometimes be a zero-sum game. Many businesses spend thousands of dollars marketing their products or services and still don’t see the boost in sales that they’re looking for.
Reason behind a failed marketing effort is that the wrong marketing strategy is being used.
IKEA always focuses on balancing cost effective labor with its product quality standards. To save money on labor and production, ikea has been looking for opportunities to build supplier relationships.
Ikea also made it so all furniture were designed to ship disassembled all of the products were transported flat, this flat packaging was a huge success strategy that helped and made it easier for the customers. MARKETING STRATEGIES USED BY IKEA IN TAREGETING PEOPLE :
timings : A striking feature of Ikea store are their long hours of operation, some which are open for 24 hours a day with restocking and maintenance being carried out throughout the night. Some