Ikea Case

Questions for IKEA case.

1. What factors account for the success of IKEA? In my opinion the main factors for the success of IKEA are: - Unique combination of form, function and affordability (low price furniture that does not look cheap). - Appealing shopping experience (decorated model amenities, a bright and inviting atmosphere, childcare centers, and restaurants serving delicacies). - Listen the market needs and adapt accordingly (e.g. addressing the identified issues within the American market to meet their actual needs, by adjusting their product lineup and merchandising) - Campaigns designed to change American minds, oriented to a more commitment-free approach to furniture.

2. Why is IKEA targeting the American (US) market? American US market was an appealing market. In 2002 the furniture retailing accounted for $67 billion in sales. Besides, the market was highly fragmented, top 10 furniture retailer were just responsible of a small portion of the whole market share (14% in 2002), offering a good opportunity to build up a niche for IKEA's value proposition.

3. Do IKEA's "core capabilities" extend into the American market? Yes. Its core capabilities to design, manufacture and ship furniture at low cost have been successfully replicated in the American market, as it has been done in other markets as well.

4. Do IKEA's global 'value proposition" fit the American furniture shopper market? Yes. The perceived benefits of customers (high-quality design, functional and simple, with a great shopping experience, including restaurants and playgrounds) and the perceived costs of customers (self-service and flat packaging to reduce costs) create a value that fits a growing niche of the American furniture shopper market.

This value proposition has been undoubtedly supported by their marketing strategy, selling the idea that furniture is disposable and should be replaced to match our different stages and life-styles during one's lifetime.

5. What do you think of the company's product strategy and product range? Do you agree with the matrix approach described in Figure B of the case? I think it was a smart idea to define a fixed amount of styles to delimit customer's choice. As a shopper, one can be overwhelmed by the amount of styles and sub styles being offered, and thus jeopardizing the shopping experience.

The matrix approach in my