ikea market research case study

Deconstructing The Global Furniture Giant – Absolute Business Model of Ikea Explained

By Aditya Shastri

Quick Read   Explore the IKEA business model in this comprehensive case study. Understand how IKEA’s innovative approach to affordable, stylish furniture drives its global success and market leadership.

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Imagine treasure hunts where the prize is your dream living room – that’s IKEA. Their stores inspire with room layouts showcasing furniture’s potential. The secret? Flat-pack designs that disassemble for easy transport, saving on storage and letting you be your own furniture-building hero.

Efficiency is key. IKEA sources materials globally in bulk to keep costs low. Plus, their multi-use designs appeal to a wider audience. Those checkout impulse buys (hello, cinnamon buns!) add up too!

Sustainability matters at IKEA. They use recycled materials and promote energy-efficient appliances. They also prioritise good working conditions. This approach is a core part of IKEA’s business model, focusing on affordability and sustainability.

Want to dive deeper in this IKEA’s business model case study, just like we did in the SWOT analysis of Wikipedia ? Let’s begin our journey of understanding IKEA from its inception.

Source: Google

Starting small in 1943 with a young Ingvar Kamprad at the helm, IKEA began by selling affordable household items like pens and wallets. Their mission? To make well-designed furniture accessible to everyone.

They hit a home run with flat-pack furniture in the 1960s, making it easier to transport and assemble these stylish pieces yourself. Today, IKEA is a global giant with over 450 stores, keeping Ingvar’s dream alive by offering good design and functionality at low prices.

They’re also champions of sustainability and keeping their environmental impact low. Even though they started in Sweden, IKEA has become a multinational brand, bringing their signature style and affordability to countries around the world. Their stores are known for their unique layout, complete with room displays that inspire customers to create their dream living spaces.

The success of IKEA’s business model lies in this combination of affordability, sustainability, and innovative design. So next time you’re looking for stylish furniture that’s easy on the wallet and the planet, consider a trip to IKEA.

IKEA Case Study: What’s New With IKEA?

Examining IKEA’s business model reveals numerous innovative strategies and developments aimed at maintaining their market leadership. Here’s what was buzzing around IKEA recently:

• New sustainable materials: IKEA is introducing new sustainable materials into its products, such as recycled plastic, bamboo, and cork.
• More affordable options: IKEA is committed to making its products more affordable for everyone, and is introducing new affordable product lines in 2023.
• More online and omnichannel shopping options: IKEA is expanding its online and omnichannel shopping options, making it easier for customers to shop for IKEA products however they want.
• New product collaborations: IKEA is partnering with new designers and brands to create new and innovative products.
• New focus on home improvement: IKEA is expanding its focus on home improvement, and is introducing new products and services to help customers make their homes more stylish and functional.
• New focus on sustainability: IKEA is committed to sustainability, and is working to reduce its environmental impact and operate more sustainably.
• New stores: IKEA is opening new stores in new markets around the world.
• New digital services: IKEA is developing new digital services to make it easier for customers to shop for and use IKEA products.
• New focus on customer experience: IKEA is focused on improving the customer experience, both in stores and online.
• New focus on inclusion and diversity: IKEA is committed to creating a more inclusive and diverse environment for its customers and employees.
• New focus on social responsibility: IKEA is committed to making a positive social impact, and is working to support its communities and employees.

Understanding IKEA’s business model is essential to appreciating how these initiatives align with their mission of affordability, sustainability, and innovation.

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Let’s now understand the target audience of IKEA better with the help of a buyer persona.

IKEA Case Study:Buyer Persona of IKEA

A buyer persona generally refers to the detailed information of an ideal customer of a company. When it comes to IKEA, people from India use it the most. This buyer persona will help you understand the attributes of a regular IKEA user.

Buyer’s Persona

Minneapolis, Minnesota

Profession:

Interior Designer

• Affordable Home Furnishings
• DIY and Creativity
• Sustainability
• Functional Design

Interest & Hobbies

• Interior Design

Pain Points

• Assembly Challenges
• Limited Customization
• Store Crowds
• Product Availability

Social Media Presence

From the table above we can conclude that an ideal IKEA User is motivated by affordable home furnishings, DIY creativity, sustainability, and functional design, with interests in interior design, gardening, reading, and cooking.

Buyer personas are a powerful tool used by countless companies to refine their marketing strategies. Explore our library of digital marketing case studies to see how various companies leverage buyer personas. You’ll discover the wide range of buyer personas employed across different industries, providing valuable insights you can apply to your own marketing efforts.

The marketing strategy of UNIQLO is a fabulous example of this. Their approach is sure to spark your interest – and perhaps even inspire your own marketing tactics.

Business Model of IKEA

Ikea case study: market share & market analysis.

IKEA holds a dominant position in the global home furnishings market, with an estimated market share of around 12% in 2023 (source: Statista). The business model of IKEA leverages its extensive supply chain, economies of scale, and efficient logistics to maintain competitive pricing. Market analysis reveals a growing demand for affordable and sustainable home furnishings, trends that IKEA continues to meet with its product offerings. The company’s ability to adapt to changing consumer preferences and invest in digital transformation ensures its continued market leadership.

IKEA Case Study: Product Offerings

IKEA’s product offerings include a wide range of home furnishings and accessories, from furniture and kitchenware to textiles and lighting. The brand is known for its flat-pack furniture, which reduces shipping costs and allows customers to easily transport and assemble products. This business model of IKEA focuses on offering services like home delivery, assembly, and interior design consultations. The introduction of smart home products and sustainable materials reflects IKEA’s commitment to innovation and environmental responsibility.

IKEA Business Model: Target Audience

Source: ikea.com

Young adults, families, and urban dwellers who prioritise affordability, style, and functionality in their home furnishings form the core customer base of IKEA’s business model. These customers are typically budget-conscious but still value good design and quality.

IKEA offers a wide variety of furniture catering to diverse tastes and lifestyles. This includes modern minimalist pieces, traditional styles, and rustic options. IKEA furniture allows for customisation and multi-use, making it appealing to a wider range of needs.

Demographic segmentation is a key pillar of the business model of IKEA. This allows them to tailor their marketing and product offerings to specific customer groups. One important segment IKEA targets is young, cost-conscious individuals like students or young professionals. These customers, typically with incomes between $15,000 and $50,000, are likely furnishing their first apartments or homes and prioritise affordability.

In essence, IKEA uses demographic segmentation to understand their diverse customer base and tailors its offerings accordingly. This allows them to attract a broad audience seeking stylish and functional furniture at accessible prices.

IKEA Business Model: Funding & Investors

IKEA is a privately held company, primarily owned by the Stichting INGKA Foundation, which was established by Ingvar Kamprad. The company has not required external funding rounds due to its strong financial performance and reinvestment strategy. IKEA’s revenue model is reinvested into the business for expansion, innovation, and sustainability initiatives. This self-sustaining financial model supports IKEA’s long-term growth and stability.

IKEA Business Model: Revenue Model

The IKEA revenue model is based on direct sales of home furnishings and accessories through its retail stores, online platform, and catalogues. In 2022, IKEA reported revenue of €44.6 billion (source: Inter IKEA Group). The company’s affordable pricing strategy, combined with its high-volume sales, ensures substantial revenue. Additional revenue streams include food sales in IKEA restaurants and service fees for home delivery and assembly. The diversified revenue model of IKEA ensures financial resilience and growth.

Business Model Of IKEA: Marketing Strategy

IKEA’s marketing strategy focuses on affordability, sustainability, and customer experience. The brand uses a mix of traditional advertising, digital marketing, and experiential marketing to reach its audience. IKEA’s iconic catalogues, engaging social media campaigns, and in-store experiences create strong brand loyalty. The company also leverages data analytics to personalise marketing efforts and improve customer engagement. Collaborations with designers and influencers enhance IKEA’s appeal and visibility.

Many companies, like IKEA, recognise the power of digital marketing to promote their brand and generate profits. It’s clear that digital marketing is shaping the future of marketing. Understanding its importance, YouTube, a major digital platform, emphasises the value of learning digital marketing skills.

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Business Model Of IKEA: Value Proposition

IKEA’s value proposition lies in offering well-designed, functional, and affordable home furnishings. The brand’s commitment to sustainability and innovation further enhances its appeal. IKEA’s flat-pack furniture and efficient supply chain reduce costs, which are passed on to customers. The IKEA shopping experience, from inspirational store layouts to comprehensive services, ensures high customer satisfaction. The value proposition of IKEA ensures a loyal customer base and strong market presence.

It refers to a competitive solution a company uses to make its products to gain a larger market space.

• DIY system Flatpack: This system is suitable for the present building size required anywhere.
• Using renewable energy sources: It helps to maintain an environmental/commercial balance.

Business Model OF IKEA:Operational Model

IKEA’s business plan includes an operational model which integrates a global supply chain, economies of scale, and efficient logistics. The company sources products from over 1,800 suppliers in more than 50 countries, ensuring quality and cost-effectiveness. IKEA’s flat-pack design reduces transportation and storage costs, enhancing operational efficiency. The company’s investment in digital transformation, including online sales and smart home solutions, ensures seamless operations and customer convenience.

IKEA Case Study: Strategic Alliances & Partnerships

IKEA forms strategic alliances with suppliers, designers, and technology partners to enhance its product offerings and operations. Partnerships with sustainable material suppliers support IKEA’s environmental goals. Collaborations with designers and brands, such as the Virgil Abloh collection, bring unique and limited-edition products to customers. Alliances with technology firms enable IKEA’s business to innovate in areas like smart home solutions and e-commerce.

IKEA Case Study:Technological Innovations

IKEA invests heavily in technology to enhance its products and customer experience. The company uses digital tools like the IKEA Place app for augmented reality furniture placement and the IKEA Home Planner for room design. Innovations in sustainable materials, such as recycled and renewable resources, reflect IKEA’s commitment to environmental responsibility. IKEA’s business plan is to focus on technological advancements ensuring continuous improvement and market differentiation.

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IKEA Business Model: Corporate Social Responsibility (CSR)

IKEA’s CSR initiatives focus on sustainability, community support, and social responsibility. IKEA’s business plan aims to become climate positive by 2030, reducing more greenhouse gas emissions than its value chain emits. IKEA promotes sustainable living through products like solar panels and energy-efficient lighting. Community initiatives include supporting refugees and providing disaster relief. The IKEA Foundation, funded by Stichting INGKA Foundation, supports global humanitarian projects and environmental initiatives.

Business Model of IKEA: Failed Campaigns of IKEA

IKEA more than often grabs attention with its unique marketing. But, there have been a few times when the campaign failed to connect with the audiences and gained backlash.

Here are a few examples of failed campaigns of IKEA:

• IKEA’s ‘Book of Love’ catalogue: In 2012, IKEA released a catalogue for Saudi Arabia that featured photos of women without headscarves. This caused a lot of controversy in the conservative country, and IKEA was forced to apologise and withdraw the catalogue.
• IKEA’s ‘This is How the Many Live’ campaign: In 2013, IKEA launched a campaign in the UK that featured photos of real people’s homes. The campaign was intended to be relatable, but many people found the photos to be depressing and unrealistic.
• IKEA’s ‘The Wonderful Everyday’ campaign: In 2016, IKEA launched a campaign that featured families from different backgrounds living together in harmony. The campaign was intended to be inclusive, but some people found it to be unrealistic and even offensive.
• IKEA’s ‘How to Live Small’ campaign: In 2019, IKEA launched a campaign that featured people living in small spaces. The campaign was intended to be aspirational, but some people found it to be insensitive to the challenges of living in poverty.
• IKEA’s ‘Life is Not an IKEA Catalog’ campaign: In 2020, IKEA launched a campaign that featured furniture being peed and vomited on. The campaign was intended to be humorous and relatable, but many people found it to be gross and distasteful.

IKEA Business Model: Brand’s Top Competitors Analysis

Just like other businesses, IKEA also has its fair share of competitors. While there are so many out there here are some of top competitors of IKEA

• Wayfair: Competes with IKEA in online home furnishings, offering a wide range of furniture and decor with a strong focus on e-commerce.
• Home Depot: Provides a broad selection of home improvement products and services, attracting DIY enthusiasts and professionals.
• Ashley Furniture: Known for its affordable and stylish furniture, competing with IKEA on price and design.
• West Elm: A subsidiary of Williams-Sonoma, offers modern and contemporary furniture, appealing to design-conscious consumers.
• Amazon: Competes in home furnishings through its vast marketplace, offering a wide range of products and convenient delivery options.

The IKEA business model exemplifies innovation, efficiency, and sustainability in the home furnishings industry. Its diverse product offerings, strategic partnerships, and technological advancements ensure sustained growth and market leadership. As IKEA continues to evolve, it remains a transformative force in global home furnishing.

As we wrap up our analysis of the impressive business model of IKEA it’s clear that staying up-to-date with the latest trends and techniques is key to success in the digital marketing world.

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FAQs About Business Model of IKEA

IKEA's business model focuses on providing affordable, well-designed home furnishings through a global supply chain and efficient logistics.

IKEA makes money through direct sales of home furnishings, accessories, food sales in its restaurants, and service fees for home delivery and assembly.

IKEA’s main products include furniture, kitchenware, textiles, lighting, and accessories for home furnishing.

IKEA’s top competitors include Wayfair, Home Depot, Ashley Furniture, West Elm, and Amazon.

IKEA uses technology for augmented reality furniture placement, room design planning, and innovations in sustainable materials.

IKEA's target audience includes young adults, families, and urban dwellers seeking affordable, stylish, and functional home furnishings.

IKEA holds approximately 12% of the global home furnishings market.

IKEA’s CSR initiatives focus on sustainability, climate positivity by 2030, supporting refugees, and global humanitarian projects.

IKEA’s value proposition is offering well-designed, functional, and affordable home furnishings with a commitment to sustainability and innovation.

IKEA markets its products through traditional advertising, digital marketing, iconic catalogues, social media campaigns, and in-store experiences.

Author's Note: My name is Aditya Shastri and I have written this case study with the help of my students from IIDE's online digital marketing courses in India . Practical assignments, case studies & simulations helped the students from this course present this analysis. Building on this practical approach, we are now introducing a new dimension for our online digital marketing course learners - the Campus Immersion Experience. If you found this case study helpful, please feel free to leave a comment below.

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Aditya Shastri

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs...... [Read full bio]

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IKEA Global Marketing Strategy 2024: A Case Study

Since its founding as a mail-order business in the late 1940s in Sweden, IKEA has grown to become a global retail giant with 422 stores in over 50 markets. However, the company faced challenges in 2017 with the passing of its founder and the rise of online shopping. To navigate these obstacles and continue its success, IKEA implemented a strategic global marketing strategy that focused on consistency, localization, and innovation.

IKEA’s Target Audience

IKEA caters to a diverse range of customer segments, including bachelors, newly married couples, families with young children, retirees, students, and professionals. Recognizing that each segment has unique needs and preferences, IKEA employs mono-segment and adaptive positioning strategies to effectively address their target audience .

IKEA Marketing Channels

IKEA utilizes a variety of marketing channels to reach its customers. These channels include online marketing through its website and mobile application, social media marketing, commercials, print ads, and physical stores. By leveraging these channels, IKEA ensures a comprehensive and integrated marketing approach that reaches customers across multiple touchpoints.

IKEA Marketing Strategy

A key focus of IKEA’s marketing strategy is affordability and sustainability. The company offers competitive prices and sustainable products to cater to eco-conscious consumers. Additionally, IKEA creates a consistent brand theme that showcases its cultural heritage, emphasizing affordability, sustainability, and a positive customer experience.

IKEA’s Store Decor for Inspiration

One of IKEA’s unique marketing strategies is its store decor. IKEA designs its stores to inspire customers, showcasing imaginative room setups and offering a wide range of furniture and accessories. This in-store experience creates a lasting impression and encourages customers to envision their own spaces with IKEA products.

Website and Mobile Application Marketing

In the digital age, IKEA understands the importance of optimizing the user experience on its website and mobile application. By prioritizing seamless browsing and shopping journeys, IKEA ensures that customers can easily find and purchase their desired products online.

Key Takeaways:

• IKEA targets a diverse range of customer segments, employing mono-segment and adaptive positioning strategies.
• The company utilizes various marketing channels, including online marketing, social media, commercials, print ads, and physical stores.
• Affordability and sustainability are key focuses of IKEA’s marketing strategy.
• IKEA’s store decor creates an inspiring and immersive shopping experience .
• The company prioritizes optimizing the user experience on its website and mobile application.

Through the implementation of its global marketing strategy, IKEA has successfully expanded its brand presence worldwide and established itself as an industry leader. Its emphasis on affordability, sustainability, and customer experience has earned it recognition and accolades, such as being ranked 62nd on Fortune’s ‘100 Best Companies to Work For’ list in January 2005. With its innovative marketing initiatives and dedication to employee welfare, IKEA continues to thrive in the ever-evolving retail landscape.

As Pernille Spiers-Lopez, IKEA’s President, expressed, “We are delighted to be acknowledged as one of the best companies to work for. Our success is a result of the dedication and passion of our employees, who play a crucial role in driving our global marketing strategy and ensuring customer satisfaction.”

IKEA’s global success can be attributed to its ability to effectively target and cater to a diverse range of customer segments. The company recognizes that every individual has unique lifestyle preferences and needs when it comes to furnishing their homes. As a result, IKEA’s target audience comprises a wide range of individuals, including bachelors, families with young children, newly married couples, retirees, professionals, and many others.

By analyzing the market and customer preferences, IKEA has developed a comprehensive understanding of its target audience’s demographics, values, and buying behavior. The company follows a mono-segment positioning strategy, focusing on a single customer segment that places a high value on cost-consciousness and value for money.

Cost-conscious consumers play a significant role in IKEA’s target audience. These individuals are looking for affordable yet stylish furniture and home decor solutions that do not compromise on quality. IKEA’s pricing strategy enables the company to offer a wide range of affordable products, making it accessible to a broad customer base.

In addition to cost-conscious consumers, IKEA also appeals to families. With its focus on providing functional and practical furniture, IKEA’s offerings are designed to meet the needs of families with children. From storage solutions to kid-friendly designs, IKEA understands the challenges families face and offers solutions that are both practical and aesthetically pleasing.

Professionals and retirees are also part of IKEA’s target audience. Professionals seeking stylish and modern furniture for their homes can find a wide variety of options at IKEA. Likewise, retirees who are downsizing or looking for functional and durable furniture appreciate IKEA’s range of products that fit their needs.

Overall, IKEA’s target audience is as diverse as the products it offers. By understanding the specific requirements and preferences of different customer segments, IKEA ensures that its products and marketing initiatives resonate with its target audience and meet their expectations.

IKEA employs a comprehensive range of marketing channels to connect with its target audience and promote its products and brand. These channels include:

The IKEA website serves as a central hub for customers to explore the vast range of furniture and home accessories. It provides detailed product information, inspiration, and allows customers to make purchases online. With a user-friendly interface and intuitive navigation, the website offers a convenient and seamless shopping experience.

Mobile Application

Recognizing the growing prevalence of mobile usage, IKEA has developed a mobile application that offers enhanced accessibility and convenience. The mobile app allows users to browse products, view augmented reality (AR) visuals through the IKEA Place feature, create shopping lists, and even virtually design their rooms using the Room Planner tool.

Social Media

IKEA effectively utilizes various social media platforms such as Facebook, Instagram, Twitter, and YouTube to engage with its target audience. Through creative and visually appealing content, IKEA showcases its products, shares design ideas, and fosters a community of home enthusiasts. Social media campaigns and interactive content encourage customer participation and build brand loyalty.

Commercials

IKEA strategically employs commercials on television and online platforms to reach a wider audience. These commercials highlight the brand’s unique value proposition, showcase its product range, and emphasize the emotional aspects of creating a comfortable and beautiful home.

Print ads in magazines, newspapers, and other publications serve as an effective channel for IKEA to showcase its products and disseminate promotional offers. By targeting specific demographics through carefully chosen publications, IKEA maximizes the impact of its print advertisements.

Perhaps the most iconic and tangible marketing channel for IKEA is its physical stores. These stores are meticulously designed to provide customers with an immersive and inspiring shopping experience. Customers can explore beautifully designed showrooms, test and try out products, and seek advice from knowledgeable staff. The physical stores remain an integral part of IKEA’s marketing strategy, facilitating brand engagement and driving sales.

Through a strategic combination of online and offline marketing channels, IKEA ensures that it reaches its target audience effectively, offers a seamless shopping experience, and maintains a strong brand presence.

IKEA’s marketing strategy revolves around its creative and consistent brand theme, blending affordability and sustainability to attract a wide range of customers. With operations in over 50 countries and generating $42 billion in annual revenue, IKEA has established its position as a leading furniture retailer worldwide.

One of the key elements of IKEA’s marketing strategy is its focus on affordability. Recognizing the significance of pricing affordability, especially in emerging markets like India, IKEA tailors its offerings to provide value for money. In India, for example, they introduced smaller-sized furniture pieces to cater to compact living spaces.

Another important aspect of IKEA’s marketing approach is sustainability. With a commitment to environmental responsibility, IKEA implements sustainable practices in their operations, including efficient packaging, low transportation costs, and standardized product lines.

Furthermore, IKEA leverages sponsorship and influencer marketing to enhance its brand visibility. Collaborating with influencers and partnering with events and organizations, IKEA successfully expands its reach and engages with its target audience.

IKEA’s in-store experience also plays a vital role in their marketing strategy. The carefully crafted store decor, inspired by the unique Scandinavian design heritage, not only showcases IKEA’s products but also inspires customers with different interior design ideas. Additionally, the IKEA restaurants provide a wide variety of vegetarian and vegan options, contributing to the overall shopping experience.

Complementing their offline efforts, IKEA invests in various marketing channels such as commercials, print ads, social media, and their website. By creating engaging content and leveraging technology such as augmented reality (AR) apps, IKEA enhances the customer experience and ensures a seamless shopping journey.

IKEA’s global expansion is facilitated through its franchising model, ensuring operational control and standardization while requiring franchisees to pay back a percentage of revenue. Moreover, INGKA Holding oversees the majority of IKEA stores’ operations, management, furniture design, and manufacturing, resulting in a high level of centralization.

Competitors find it challenging to replicate IKEA’s strategy due to factors such as volume, global sourcing capabilities, and its unique Scandinavian design heritage. Suggestions for future success include modernizing customer catalogs with interactive tablets to provide personalized shopping experiences.

IKEA’s commitment to providing a memorable in-store experience goes beyond its product range. The store decor itself is carefully designed to captivate and inspire customers, creating a welcoming atmosphere that encourages exploration and creativity.

One key aspect of IKEA’s store decor is its lighting systems. Effective lighting is strategically used to highlight products and create an inviting ambiance. By illuminating different areas of the store, IKEA ensures that customers can easily navigate and discover their desired pieces. The clever use of lighting also adds a touch of warmth and sophistication to the overall shopping experience.

Another distinctive feature of IKEA’s store decor is the use of mock room setups. These fully furnished rooms showcase how IKEA’s products can integrate seamlessly into various living spaces. By presenting a complete picture, IKEA helps customers visualize their own homes with its furniture and accessories. Customers can explore and interact with the mock setups, experiencing the quality, functionality, and design firsthand.

IKEA’s store decor aims to provide inspiration, guiding customers in creating their ideal living environments. The artful arrangement of room displays demonstrates how different pieces can be combined and styled to create a harmonious and personal atmosphere. Whether it’s a cozy bedroom or a functional workspace, IKEA’s store decor sparks creativity and encourages customers to reimagine their own homes.

With its store decor, IKEA creates an immersive and enjoyable in-store experience. It’s not just about browsing and purchasing; it’s about being inspired and exploring the possibilities. From the moment customers step into an IKEA store, they are greeted with an environment designed to ignite their imagination and make their shopping experience memorable.

Throughout the store, customers can find ample seating areas where they can take a break, reflect on their choices, or simply relax. The inviting ambiance and comfortable seating create a welcoming atmosphere, allowing customers to fully immerse themselves in the IKEA experience.

And of course, the famous IKEA cafe adds to the overall store experience. Customers can indulge in a selection of affordable Swedish treats, further highlighting IKEA’s commitment to customer satisfaction beyond furniture sales. Whether it’s grabbing a cup of coffee or enjoying a delicious meal, the IKEA cafe provides a delightful break during the shopping journey.

With its carefully curated store decor, IKEA aims to inspire and empower customers to create their dream homes. By showcasing products in beautifully arranged rooms, utilizing innovative lighting systems, and offering a comfortable and enjoyable shopping environment, IKEA ensures that the in-store experience is as memorable as its iconic furniture designs.

As the world’s largest furniture brand, IKEA understands the importance of providing a seamless online experience to its customers. With over 4.3 billion visitors on its website in 2022, IKEA’s online presence is undeniable and pivotal to its success.

To ensure optimal user experience, IKEA invests in its website and mobile application, focusing on factors such as website speed, intuitive navigation, and responsive design. These aspects contribute to a user-friendly interface that enhances the overall browsing and shopping experience.

One of the key features that sets IKEA apart is its commitment to user interface and user experience (UI/UX) design. By prioritizing UI/UX, IKEA creates a visually appealing and intuitive platform that captivates customers and encourages them to explore further.

IKEA also leverages innovative technologies to engage users and enhance their shopping journey. For instance, the brand offers a 3D modeling app that enables customers to visualize how IKEA products would look in their own homes. This interactive experience not only assists customers in making informed purchasing decisions but also contributes to the brand’s positioning as a leader in user-centric design.

Furthermore, SEO optimization plays a critical role in IKEA’s digital marketing strategy. Understanding that most users do not go beyond the first page of Google search results, IKEA invests in SEO techniques to enhance visibility and organic ranking. This focus on SEO helps attract online visitors and drive conversion rates.

The success of IKEA’s website and mobile application marketing is evident in the brand’s achievements. Despite the challenging market conditions, IKEA’s conversion rate of 1.7% surpasses the industry average of 0.5%. Additionally, with 4.3 billion visitors in 2022 alone, IKEA reiterates its position as a top choice for consumers worldwide.

IKEA’s Social Media Marketing (SMM)

IKEA understands the power of social media in reaching and engaging with their target audience. With a strong presence on platforms such as Facebook, Instagram, Twitter, and YouTube, IKEA leverages these channels to showcase their products, inspire their customers, and foster a sense of community.

Through visually appealing content, IKEA captivates their audience by providing them with design tips, showcasing customer stories, and highlighting their latest product offerings. By sharing relatable and aspirational content, IKEA has successfully created a connection with their followers, nurturing brand loyalty and advocacy.

One of the key elements of IKEA’s social media strategy is their collaboration with influencers in the home decor and lifestyle space. By partnering with these influencers, IKEA is able to tap into their reach and credibility to showcase their products in real-life settings. These influencer collaborations not only provide social proof for IKEA’s products but also generate excitement and interest among their target audience.

Furthermore, IKEA’s social media profiles serve as a gateway to direct communication with their customers. They provide links to their website, allowing users to explore and purchase products directly. This seamless integration between social media and e-commerce enhances the customer experience and drives conversions.

However, IKEA’s social media journey has not been without its challenges. In the past, they experienced a decrease in positive brand preferences among viewers due to a social media campaign that deviated from IKEA’s established brand image. The mismatch between the campaign’s execution and the brand’s personality led to confusion and discontent among their audience.

Feedback from viewers on YouTube highlighted the disconnect between the campaign and IKEA’s target audience, potentially impacting brand perception and social media engagement metrics. Learning from this experience, IKEA recognizes the importance of articulating their brand essence through future social media campaigns and aligning their storytelling approach with the key features of their furniture series.

Efforts to refine their social media strategy also extend to IKEA’s website. Addressing the issue of slow speed, there are recommendations to improve mobile speed by 7.62 seconds and enhance desktop website speed by 2 seconds. By optimizing the website’s performance, IKEA aims to reduce bounce rates and provide a seamless browsing experience for their customers.

Overall, IKEA’s social media marketing plays a crucial role in generating brand awareness, fostering a sense of community, and driving customer engagement. Through their strategic use of platforms like Facebook, Instagram, Twitter, and YouTube, IKEA continues to inspire and connect with their target audience, solidifying their position as a leader in the home decor industry.

Content Marketing

Content marketing is a crucial component of IKEA’s overall marketing strategy. By creating engaging content through various mediums such as commercials, print ads, social media, and their website, IKEA effectively communicates its brand message and connects with its target audience.

One of the key elements of IKEA’s content marketing is storytelling. They craft narratives that resonate with consumers by presenting relatable scenarios and everyday life situations. Through these stories, IKEA showcases how its products can solve common challenges and enhance the home environment. By focusing on real-life experiences, IKEA creates a connection with their audience and positions their products as solutions to their everyday needs.

A great example of IKEA’s successful content marketing is their sponsored miniseries “Easy to Assemble” in 2008. This miniseries generated millions of views and created significant buzz on social media, effectively capturing the attention of their target audience. This success demonstrated the power of storytelling in engaging consumers and building brand awareness.

In 2011, IKEA launched the “Share Space” campaign, which encouraged customers to share their own home designs and ideas, fostering a sense of community and further strengthening the brand’s connection with its customers through user-generated content. This campaign generated thousands of submissions, showcasing how IKEA’s customers play an active role in shaping the brand’s identity.

In recent years, IKEA has also embraced influencer marketing, collaborating with influencers on social media to create authentic content featuring their products. This approach allows them to reach new audiences and leverage the influencers’ credibility to promote their brand. It’s part of their strategy to stay relevant and engage with younger consumers, especially millennials and Gen Z.

To incorporate technology and enhance customer experiences, IKEA launched an app in 2020 that utilizes Augmented Reality (AR) to help customers visualize furniture in their homes. This innovative approach demonstrates IKEA’s commitment to incorporating emerging technologies into their content marketing strategy.

Overall, IKEA’s content marketing efforts revolve around engaging their audience through compelling stories, relatable scenarios, and innovative approaches like AR technology. By creating valuable and inspiring content, IKEA builds brand loyalty and positions itself as a trusted and aspirational brand in the home furnishings industry.

Through these successful content marketing initiatives, IKEA demonstrates the power of storytelling, user-generated content, influencer collaborations, and technology integration in engaging their audience and driving brand awareness.

IKEA’s Global Expansion and Localization

IKEA, with over 50 years of experience in international business expansion, has successfully established its presence in 52 countries worldwide. The company’s global expansion strategy combines standardization and localization to adapt to diverse markets and gain a competitive advantage.

One of the key factors contributing to IKEA’s global success is its ability to create franchise agreements that ensure consistency among its global stores while promoting a modern and managerial culture. This approach allows for efficient operations and a seamless customer experience across different markets.

To cater to local preferences and demands, IKEA strategically develops new supply chains in each market it enters. This enables the company to offer products that resonate with the local customers while maintaining its commitment to affordability and quality. For example, in markets like India, IKEA offers locally sourced mattresses and sofas made from local materials.

IKEA’s localization strategy goes beyond product adaptation. In its expansion into India, the company conducted thousands of home surveys to understand local preferences and cultural practices. This valuable market research informed product modifications, pricing strategies, and even the menu of IKEA’s stores in India.

However, localization also comes with challenges. IKEA has had to navigate different cultural and regulatory environments, such as in Russia where foreign ownership of land regulations require the company to lease, rather than own, its stores.

To address concerns about labor practices, IKEA has strengthened its supply chain management and responsible sourcing practices. The company invests in ensuring fair labor conditions and has taken measures to address past criticisms, such as accusations of forced labor in East Germany.

As IKEA expands into new markets, it invests in local marketing campaigns, forms partnerships with local influencers, and engages with local communities to build brand trust. This approach fosters a sense of familiarity and authenticity, enhancing customer loyalty and brand recognition.

In conclusion, IKEA’s global expansion and localization strategy have been instrumental in its success. By balancing standardization and localization, IKEA adapts to local markets while maintaining its competitive advantage. Through franchise agreements, strategic supply chains, and market research-driven adaptations, IKEA offers quality products at affordable prices worldwide.

The success of IKEA can be attributed to its innovative marketing strategy, which has allowed the company to dominate the furniture industry and grow from a small business in Sweden to a global empire. By offering affordable and functional furniture with clean lines and functionality, IKEA aims to make well-designed furniture accessible to everyone, catering to a wide range of consumers.

Through its strategic initiatives, including store decor, website optimization, social media marketing, and content creation, IKEA has effectively engaged its target audience and built a recognizable brand identity. Sustainability is a key focus for the company, resonating with environmentally-conscious consumers and aligning with the growing demand for eco-friendly practices.

Moreover, IKEA’s approach of allowing customers to assemble their own furniture not only differentiates the brand but also reduces costs. The company invests heavily in market research and customer insights to align its products with customer preferences, ensuring that its offerings are relevant and desirable.

In conclusion, IKEA’s marketing case study showcases the power of strategic initiatives, company culture, and leadership transition. By continuously innovating its marketing strategies, maintaining consistency in messaging and visual identity, and embracing sustainability, IKEA has successfully positioned itself as a market leader in the home furnishings industry, both globally and in new markets such as South Korea and India.

What is IKEA’s global marketing strategy?

Who is ikea’s target audience, what marketing channels does ikea utilize, what is ikea’s marketing strategy, how does ikea create an inspiring in-store experience, how does ikea optimize its website and mobile application, what is ikea’s social media marketing strategy, how does ikea utilize content marketing, how has ikea expanded globally while maintaining localization, what are the key takeaways from ikea’s marketing strategy, related posts:.

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Table of Contents

Ikea target audience, ikea marketing channels, ikea marketing strategy, ikea marketing strategy 2024: a case study.

Founded in 1943, Ikea operates 422 stores in 50+ markets. The favored furniture brand has an impressively wide customer base, with nearly 70% of its stores in Europe. Ikea added 19 stores last year, including its first in India. The Ikea marketing strategy includes some of the most iconic logos, campaigns and companies in recent history.  

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Ikea serves the unique functional needs of each target audience, with special attention to 16-34-year-old adults. It has solutions for:

• Single people not living at home
• Newly married couples
• Families with the youngest child under six
• Older married couples with dependent children
• No children families
• Labor force
• Professionals 

Thus, it uses the following types of product positioning :

• Mono-segment positioning. It appeals to the needs and wants of a single customer segment that is cost-conscious and prefers value for money.
• Adaptive positioning. It believes in periodically repositioning products and services to adapt to changes in customer preferences. Its Swedish furniture chain considers the dynamic nature of customer preferences. For instance, its latest products reflect increasing minimalism on the global scale. 

Ikea utilizes the power of the following marketing channels: 

• Mobile Application
• WebEngage: Email, SMS, and Whatsapp Marketing
• Social Media
• Telecalling
• Commercials

The Ikea marketing strategy contributes majorly to its success because it's original, imaginative, and distinctive while maintaining a transparent value proposition.

A Creative, Consistent Brand Theme

From the Swedish national colors on its buildings to rich meatballs in its store cafeterias, Ikea's marketing strategy reflects its cultural heritage proudly. It infuses all elements of their identity with a sense of self-assuredness that maintains their identity in the market of stiff competition. 

Emphasizing Affordability and Sustainability 

Understanding that a simple tiered strategy won't encourage repeat business, Ikea extends customization, flexibility, and mix-and-match furniture modules. It effectively combines the elements of affordability and sustainability in its marketing strategy to ensure success.

While the furniture options don't pledge a lifelong guarantee, the products are built to last. Even its reusable shopping bags reflect its commitment to sustainability.

Sponsorship and Influencers 

IKEA-sponsored comedic series Easy to Assemble. Its innovative content marketing was way different from a furniture product demo. Incorporating sponsored digital marketing campaigns and social media influencers have boosted the Ikea marketing strategy. 

Ikea’s Easy to Assemble Series

Exceptional In-store Experience

Ikea brilliantly displays products employing the best lighting systems to generate more sales. It strategically arranges best-matched items in mock rooms to encourage impulse purchases and inspire decor. The company also extends excellent customer service to provide a memorable experience and incite customers to come back for more.

Ikea’s Store Decor for Inspiration

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Website and Mobile Application Marketing

Ikea ensures an optimal mobile website's speed, button displays and gesture controls on its website and mobile app to retain and attract individuals to the site. It carefully invests in its UI/UX , enquiry-based chatbot, and regular updates on new offers, discounts, and promotions. 

One of the most successful marketing moves includes downloading its 3D modeling app to envision a dream home. It's one of its most successful marketing moves that allows IKEA to upsell its low-demand items by creating a desire in its customers to revamp the room.

Ikea’s Website With Engaging Content

Ikea's SEO (Search Engine Optimization)

Ikea's marketing strategy aims at enhancing the site's visibility for relevant searches to attract the attention of new and existing customers. It includes the right product-specific keywords and Google advertisements to further augment its organic ranking .  

Ikea Ranking for Bookcases on Google’s First Page

Ikea's SMM (Social Media Marketing)

Ikea's handles are very active on digital marketing platforms like Facebook, Instagram , Twitter, and Youtube . Their digital presence is impressive, with more than 30 Million likes on Facebook, 1 Million followers on Instagram, 5.3k followers on Twitter, and 41.2k subscribers on YouTube.

Ikea’s Instagram Profile

Its Instagram bio links to its website. The website also has links to its various social media posts. Its 'view shop' and 'call' options for product catalog and direct assistance, respectively, are a testament to a well-crafted Ikea marketing strategy.   

Ikea’s Youtube Advertisements 

IKEA also conducts free online workshops that lure lots of enthusiastic customers, resulting in gaining leads.

Ikea’s Online Workshop Ad

Content Marketing

Ikea relies on its content marketing strategy to create a distinguished presence amongst furniture brands. Its commercials, print ads, social media, and website stands out with attention-grabbing content. It combines innovation and humor to present the brand's core values and inspire people. 

Ikea’s Captivating Commercial 

Ikea Marketing Strategy bears testimony to a well-thought and structured marketing venture. Sign-up for our Digital Marketing Specialist and learn more about marketing case studies published by Harvard Business. You will be taught by experts from facebook and Purdue University. Sign-up for the course TODAY!

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How IKEA Evolved Its Strategy While Keeping Its Culture Constant

If you’re leading your team through big changes, this episode is for you.

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The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, the company was at a crossroads. Its beloved founder had died, and the exponential rise of online shopping posed a new challenge.

In this episode, Harvard Business School professors Juan Alcacer and Cynthia Montgomery break down how IKEA developed, selected, and embraced new strategic initiatives, while fortifying its internal culture. They studied how IKEA made big changes for the future and wrote a business case about it.

They explain how the company reworked its franchise agreements to ensure consistency among its global stores. They also discuss how IKEA balanced global growth with localization, developing all-new supply chains.

Key episode topics include: strategy, growth strategy, disruptive innovation, emerging markets, leadership transition, competitive strategy, company culture, succession.

HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.

• Listen to the original HBR Cold Call episode: IKEA Navigates the Future While Staying True to Its Culture (2021)
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HANNAH BATES: Welcome to HBR On Strategy , case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business. The Swedish furniture maker IKEA found huge success producing quality furniture at affordable prices. But in 2017, they were at a crossroads. Their beloved founder had died, and the exponential rise of online shopping posed a new challenge. Today, we bring you a conversation about how to develop, select, and embrace a new strategic initiative – with Harvard Business School professors Juan Alcacer and Cynthia Montgomery. They studied how IKEA made big changes for the future while fortifying its internal culture and its external identity. In this episode, you’ll learn how the company reworked its franchise agreements to create a more managerial and modern culture, and ensure consistency among its global stores. You’ll also learn how they balanced global growth with localization – including new supply chains. This episode originally aired on Cold Call in June 2021. Here it is.

BRIAN KENNY: For some of the world’s most celebrated founders, the entrepreneurial drive kicks off at an early age. Mark Zuckerberg developed Facebook in his Harvard dorm room at the age of 18. Michael Dell made $200,000 upgrading computers in his first year of business, he was 19. Before Jack Dorsey founded Twitter, he created a dispatch routing platform for taxis in his hometown of St. Louis, while he was in middle school. But then there’s Ingvar Kamprad who began selling matches at the age of five to neighbors in his rural Swedish homestead. By the age of seven, he was buying matches in bulk in Stockholm and selling them at a profit back home. Ingvar learned early on that you can sell things at a low price and still make a good profit. A philosophy that fueled the success of his next business venture, IKEA. Today on Cold Call , we welcome professors, Juan Alcacer, and Cynthia Montgomery to discuss their case entitled, “What IKEA Do We Want?” I’m your host, Brian Kenny, and you’re listening to Cold Call on the HBR Presents network. Juan Alcacer’s research focuses on the international strategies of firms in the telecommunications industry and Cynthia Montgomery studies the unique roles leaders play in developing and implementing strategy. They are both members of the Strategy unit at Harvard Business School. And thank you both for joining me today. It’s great to have you on the show.

CYNTHIA MONTGOMERY: Thanks Brian.

JUAN ALCACER: Thank you for having us.

BRIAN KENNY: You’re both here for the first time, so we’ll try and make it painless so we can get you to come back on. I think people are going to love hearing about IKEA and getting an inside view. Most of us have had that experience of being like mice in a maze. When you go into an IKEA store, you are compelled to walk through the whole place. It’s really brilliant, so many of the touches and things that they’ve done. And this case helps to shine a light, I think, on some of those decisions and how they were made. I had no idea how old the company was. So just starting with its history, it’s going to be good to hear about that. Juan, I want you to start, if you could, by telling us what would your cold call be to start this case in the classroom?

JUAN ALCACER: I like to start the case, bringing in the emotions of the students and their relationship with IKEA. So most of our students have had some experience with IKEA. So I’d just start asking how many of you have been in IKEA, and then I’d start asking why? Why did you go to IKEA? And this time telling you all the things that you just mentioned, for instance, walking through the maze, going to eat the meatballs. So they started bringing all these small, decisions that were made through the years, that made IKEA, IKEA.

BRIAN KENNY: Who doesn’t love the meatballs? Cynthia, let me ask you, you’re both in the Strategy unit at Harvard Business School, there’s a lot of strategy underlying this whole case. I’m curious as to what made you decide to look at IKEA and sort of, how does it relate to your scholarship and the things that you think about; the questions you try to answer?

CYNTHIA MONTGOMERY: I’m really interested in the choices firms make about who they will be and why they will matter? The core questions at the identity of a company. In 1976 Kamprad laid out very, very carefully. What IKEA would do, who it would be. He identified its product range. The customers it would serve, the company’s pricing policy, all in a document called, The Testament of a Furniture Dealer. And he described it as, “the essence of our work.” And 45 years later, it was still required reading for all of the IKEA’s employees. It’s probably the most compelling statement of corporate purpose I’ve ever seen.

BRIAN KENNY: Remarkable in a company that’s based on furniture. It was a very, sort of powerful thing. There’s an exhibit in the case that shows the whole Testament. Maybe we can dig a little bit into the history here. I alluded to the fact that it’s been around for a long time. Cynthia, just tell us a little bit about how the company came to be and how it evolved over time.

CYNTHIA MONTGOMERY: IKEA started actually as a mail-order business in Sweden and in the late 1940s Kamprad noticed that despite a lot of demand for furniture, agreements between the furniture manufacturers and retailers were keeping furniture prices real high. He was interested in a different set of customers. And he decided that to attract farmers and working class customers, he needed to be able to offer quality furniture at lower prices.

BRIAN KENNY: What were some of the early challenges that they faced. I’m also curious a little bit about the Swedish culture and how that sort of factors in here. Because there was definitely undertones of that factoring into the way they set this up.

CYNTHIA MONTGOMERY: It’s a virtue to be frugal and to be very careful about how you spend your money. And that made a huge impression, particularly given his background, growing up on a farm for Kamprad, he decided he really wanted to lower the prices of furniture and began to do so. And it turned out that there was a very, very strong response from other furniture manufacturers who basically said that they were going to boycott him. They wouldn’t allow him into their furniture fairs, him personally, as well as his company. And so in turn, what happened was that they also pressured local suppliers not to sell to a IKEA anymore, basically trying to force him out of the market. And what happened was that that actually drove Kamprad to Poland as a source of supply because local firms wouldn’t supply him anymore. And in the process, he discovered that Polish manufacturers could actually make furniture at far, far lower costs than Swedish manufacturers. And that essentially gave IKEA a cost structure that was more like a difference in kind, than a difference in degree. And that proved enormously important to building almost insurmountable competitive advantage for IKEA.

BRIAN KENNY: He was also really keen with innovations early on that things like the restaurant area and the childcare space, what were some of the insights that drove him to make those kinds of decisions?

CYNTHIA MONTGOMERY: One of the things that he decided quite early on is that he wanted to have the stores located out of town. And the reason is because land there was much, much cheaper. So he built these ,as you described earlier, Brian, these gigantic stores on the outskirts of town and they had lots and lots of square footage and lots and lots of merchandise, but you know, it took time to get there. It took time to shop there and what he wanted to do was make it worth it for the customers to make the trip, worth it for them to spend a lot of time in the stores. So he decided to add restaurants and the now famous meatballs, which come in several flavors, actually around the world, and to add childcare centers that would care for young children while the parents shopped. On the low cost front, he was innovative in other ways, he actually borrowed the idea of flat pack from another innovator, but he’s the one that actually brought it to life in such a big way. Then he discovered that if you let the clients go in and pick off the furniture packs themselves, they could even save more money and lower the costs in the store.

BRIAN KENNY: So they have a pretty complicated org structure, when we start to dig into some of the nuance of the case. Juan, could you describe for us, how they’re set up from an org structure standpoint?

JUAN ALCACER: You have to realize that coming from Sweden, which is one of the countries with the highest taxation for corporations in the world. So early on, they decided to find some organization structure and legal structure that would allow them to lower taxes. And that created basically an ownership based on foundations, based in the Netherlands. And they decided, early on, to separate the company into pieces. One is the franchise store, which is basically running the brand and running the management image of the brand. And then the operational part of the company, which is a franchisee. And for many years, those two things were separated. The franchisee was also in charge of manufacturing and so forth. So it was a very strange structure, that was put in place in part by the charisma and the leadership style of Ingvar Kamprad. If I can go back to your question about the Swedish culture. One of the things that, at least for me, is very striking is that when you look at multinationals, there’s a thing called the liability of being a foreigner, which means that when you go to another country, you have some disadvantages. And you try to mitigate that liability of being a foreigner, by pretending to be of that particular country. IKEA went with a totally different approach, they’re totally Swedish. Names of their products are impossible to pronounce. The fact that they have meatballs, they have their Swedish flags all over the place. They embrace the Swedish spirit as a part of the brand. You don’t see many multinationals with that. That makes IKEA what it is today.

BRIAN KENNY: I definitely think that’s part of the appeal here in the US, for sure, is people being exposed to the Swedish culture in a way they never had before. What is the culture of the company like, what’s it like to work there?

JUAN ALCACER: We went to both the Netherlands and to Sweden and we had a great time. It’s a very egalitarian culture. All the VP’s, high-level managers, none of them have an assistant. Only the CEO has an assistant. They don’t have offices, so everybody shares an open space. The whole place is decorated with IKEA furniture, everybody talks to each other by their first name. It’s very collegial, very friendly.

CYNTHIA MONTGOMERY: I would add to that. I think IKEA was incredibly generous to us, in the sense that they shared all kinds of confidential, internal documents and were really willing to talk in a very open and forthright way, about both their strengths and their challenges, which was incredibly refreshing. And as Juan said, that it was very egalitarian, and not surprisingly IKEA was one of the first companies to embrace democratic design. And that spirit was everywhere in the company.

BRIAN KENNY: Cynthia, what would you say are some of the keys to their success over the years?

CYNTHIA MONTGOMERY: I’d say that IKEA basically picked a lane and stuck with it. They had clarified, as I said at the top of the show, very, very carefully about what they wanted to do, who they wanted to be. And what they said is, look, this is what we’re going to be about. We’re going to offer an extensive range of practical, well-designed furnishings at low prices. And we’re going to serve the many, not the few. And the many are those with limited financial resources. When you have such clarity about what you want to do, then you can set out and try to maximize how you approach that. Essentially IKEA built a system, to do exactly that, extremely well and their distinctiveness made them truly an iconic firm. And it’s great when you talk with students about, what’s the purpose of your business?, What are you doing? What’s interesting is that oftentimes they can describe much more carefully what IKEA is doing, than what their own businesses doing. The last thing I would add, is that as Juan one said, they’re really synonymous with Sweden and they put that right out there. It’s almost like the way that Coca-Cola is synonymous with the US. And that has been a big part of their advantage.

BRIAN KENNY: Okay. So we’ve painted a very rosy picture for IKEA, but it’s an HBS case. So there’s tension, inevitably. So let’s dig in a little bit to where the case brings us. I’m going to mispronounce his name. I hope I don’t, but Torbjörn Lööf is that close?

CYNTHIA MONTGOMERY: Yeah.

BRIAN KENNY: He is the protagonist in the case. And he is stepping into a leadership role here really after an iconic leader has stepped back and that’s a challenge. Any time that happens, and a leader has to step in. And as he starts to sort of peek underneath the hood a little bit, he starts to see some of the challenges that IKEA is facing in this now seventh decade, I guess, of their existence. So Juan, maybe you can set that up for us a little bit.

JUAN ALCACER: It’s not only that he is stepping in the shadow of a leader that created the company. It’s that the company is still controlled by the family. So this is not a public firm, this is a private firm. So, he had to basically walk a very, very thin line, trying to take IKEA towards the future, but still preserving the past. And he had basically two main tasks, one is short term, that organization restructure that we were talking about, that was very complicated was created products. As I said before, the franchisee, which is basically the one that was running all the operations, was also the manufacturer. But there were other franchises. So for instance, the operations in Middle East are run by another company. So they wanted to create a system of transparency, that all the franchises are run the same way. When you have a franchisee that has basically represented 80% of your sales, and the ones that are representing 2% or 3%, there is an imbalance of power. So they tried to create a structure that is more managerial, that is more modern, that will allow to create incentives for new franchisees to come into the system. So that transaction was basically transferring production and transferring the functions that were in the franchisee back to the franchisor. There were 25,000 people that have to move from one place to another.

BRIAN KENNY: Wow.

JUAN ALCACER: They didn’t move physically, but in terms of the legal status they shift around. And the second is to bring IKEA to the world. What they observed is that there were some changes in demographics, they were targeting the low-income, what they call the thin wallets of the world, but it turned out that people that would go to IKEA are not thin wallets anymore. These people have already moved towards the middle-class and they also have this whole, to increase the number of consumers to three billion, and that meant that they have to basically grow globally, at a rate that they have never done, before they had two or three markets, like China and India. They also have the issue of eCommerce, to pick up and every retailer in the world is dealing with that. So, it’s two steps. One, getting the house in order, and second one, creating a path for the future for IKEA to become an icon for the next 75 years.

BRIAN KENNY: Yeah. And I also think at some level it’s hard to sustain that original mission that they set out with, when you’re trying to expand so rapidly and bring in a much larger audience. Cynthia, I don’t know if you have other observations about these changes they were facing.

CYNTHIA MONTGOMERY: Absolutely. Because one thing is that you can look at the challenges that came from expanding into new geographies. But the other thing that they found in a large study that they did, is that there were challenges in their core business as well, that the countries they’d been in for a number of years, and what I’ll call the big blue box stores, mostly in developed countries. What they found is that increasingly many of their customers in those markets wanted new conveniences. They wanted stores that were located closer to city centers because a number of people say in their late twenties, early thirties are not driving and don’t have cars. And they found that there was an increasing demand for delivery and assembly services for shopping online. These trends are worrying to a huge number of retailers, but particularly a challenge to IKEA because low price, low, low price, so low that that people can recognize the difference. That being at the heart of their strategy. And customers’ willingness to spend time getting to the store, hauling furniture about, ultimately assembling it. Those are at the very, very heart of their low-cost strategy and their very distinctive value proposition. It was a big challenge within the developed markets as well.

BRIAN KENNY: And depending on where they went in the world, a different set of challenges pops up almost everywhere. Juan, you mentioned earlier that they pushed back against localization, but is that a sustainable strategy? When you’re trying to go into entirely new markets like China and India.

JUAN ALCACER: The beauty of IKEA is that they found a segment across different cultures that was very similar. College students the United States, that needed to have furniture for a few years only, it could be young couples that are opening a new house, in some places it’s immigrants that are moving from one country to another country that need to buy furniture, but they don’t have the money to do so. So there was this very common segment across the world that they were able to then define, that allows them to have basically 80% of their line, of their range, is common across countries. And they have around 10% to 20% that varies by country. Now, when they go to China, and they go to India, they find that the changes have to be of a higher scale for three reasons. One, the tastes are different, also the materials, when you are going to India and you are going to houses that are in a high humidity environment, the type of wood that you can use is different. Now you start, not only changing the look of the product but you also have to change how you made it. And the third big challenge is when you look at what is defined as thin wallet, in these markets, is really thin. It’s not thin wallet in Sweden, it’s not thin wallet in the United States. So, you have to go to prices that are really, really low. And that means that you are already a low cost producer but you have to go even lower. That means that you have to change your supplier, so it starts changing the fundamental parts of the business model that they created through the years.

BRIAN KENNY: And it could probably, pretty easily, get away from you. So this does call for a strategy. Cynthia, can you describe for us what the three roads forward are? This was sort of underpinned their strategy going forward and how they were going to deal with some of these challenges.

CYNTHIA MONTGOMERY: Basically, the three roads, the first was affordability, as Juan said, this isn’t affordability in the way that they, at the level at which they’ve traditionally thought about it. This is affordability for wallets that are either very thin or actually where the willingness to pay just isn’t as high, because they’re accustomed to having goods that are at very low prices. So they wanted to attack affordability for people who could not afford IKEA today. They cared a lot about accessibility. They’ve got to reach and interact with people where they are. And the last is sustainability, and they felt really, really strongly about this. And I think much in line with what you see with a number of other countries in Europe, that they cared a lot about the sustainability of the products and wanted to make a positive impact for people, society and the planet. And they’re taking on all three of these aspirations at once.

BRIAN KENNY: You have written many cases, I’m sure that parallel this, what are some other firms that have faced similar challenges and maybe figured out a way to deal with the same sets of challenges?

JUAN ALCACER: The challenge of going overseas, we didn’t write cases about multinationals for many years. They always have this tension between coordination in headquarters and adaptability in each one of the subsidiaries. So IKEA was very good at playing that game for many, many years. In a way they were going to countries that were somehow similar to Sweden. Now that they are venturing to countries that are farther away in many dimensions, not only physically, but also in terms of economic distribution, in terms of taste. They are seeing this tension to be amplified. We have seen that in many companies, Procter and Gamble has been doing that for years and years, Unilever has been doing that for years and years. IKEA has done it for 75 years. They went overseas very early on. But now the challenge is a little bit higher. The other challenge is that Cynthia also mentioned, which is basically adapting to new technologies and new demographics. Every retailer is facing that. Any supermarket, any chain that has been selling in brick and mortar is facing those challenges. So, what is interesting about IKEA is that they are facing these all at the same time and they’re facing this during the process of transition from the leader that created the company to a new set of managers that are more professional and are not part of the family.

BRIAN KENNY: You mentioned technology. I’m just curious, the role that the internet plays in this, because now everybody can see, you know, through YouTube and other things, what the experience is like from one place to the other, and how important is consistency across all those geographies, versus a little bit of localization to make it feel a little bit more like this is the China version of IKEA versus the European version of IKEA. Cynthia, do you have thoughts on that?

CYNTHIA MONTGOMERY: That’s the real challenge here in the sense that, how do you take this whole model that has been developed over so many years? And it’s very, very hard to imitate, which has given them a lot of strength over the years, but when the environment changes, instead of responding in a piecemeal way to all kinds of external stimuli, it’s how do you take this whole model and evolve it in some coherent way that stays true to the iconic sense of who IKEA is? I really see it fundamentally, as an existential question for IKEA.

BRIAN KENNY: Such a great point. Look, I want to thank both of you. This has been a really interesting discussion about a brand that we all know and have experienced many times firsthand. I have one more question for each of you before we part ways. And that would be if there’s one thing you want people to take away from this case, what would it be? Juan, let’s start with you.

JUAN ALCACER: What I would like listeners to take from this, is we have this mentality of growth, growth, growth, and expanding and doing different things, and when you look at IKEA, you have to wonder, is it better that IKEA stays doing what they do well, or do they have to keep growing and entering all these markets and adapt to overseas. We have this basic assumption that growth at any cost should be the goal. I would like the listeners, when they look at the case and think about the cases, to question that very basic assumption.

BRIAN KENNY: Cynthia?

CYNTHIA MONTGOMERY: One of the things about IKEA that I think it’s really, really important to know is that they really brought something different to the world and they did it in a very compelling way. So at the heart, to do something that’s distinctive, that adds value. It comes through really strong in the IKEA story. At the same time, when the environment changes, how do you evolve, is really challenging. And so the fact that they’re being so open in how they’re confronting this, I think there’s a lot to learn there. It’s a challenge. I think it’s really important to remember what’s at the heart of this company, is that they’re really bringing something that’s very unique and they need to continue to do that.

BRIAN KENNY: Juan Alcacer, Cynthia Montgomery, thank you so much for joining me. The case is called, “What IKEA do we want?” Thanks again.

JUAN ALCACER: Thank you.

HANNAH BATES: You just heard Harvard Business School professors Juan Alcacer and Cynthia Montgomery in conversation with Brian Kenny on Cold Call .  We’ll be back next Wednesday with another hand-picked conversation about business strategy from the Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review. We’re a production of the Harvard Business Review. If you want more podcasts, articles, case studies, books, and videos like this, find it all at HBR dot org. This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Special thanks to Maureen Hoch, Adi Ignatius, Karen Player, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.

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IKEA's Winning Formula: An Analysis of IKEA's Marketing Strategy

Archana Karthikeyan , Bhoraniya Huda Hifzur Rehman

Ingvar Kamprad, a 17-year-old carpenter, founded IKEA in 1943. IKEA is a well-known global brand today. It began with the sales of pens, wallets, and jewelry to satisfy consumer needs at reasonable costs.

Today, IKEA focuses mostly on ready-to-assemble furniture, kitchenware, and home furnishings with the same motto. The introduction of furniture in the business model was done after five years of its inauguration.

IKEA now operates with 422 stores in 50+ markets. IKEA is a well-known furniture brand that has an extensive customer base in Europe with over 70% of its stores. Recently it launched 19 new stores. With recognizable logos, campaigns, and advertisements, Ikea has set a strong brand example with its marketing plan.

IKEA's success may be attributed in large part to its high-quality goods, reasonable prices, and DIY assembly philosophy. Additionally, the company's marketing plan is customized to be among the best in the industry, which also helps.

IKEA Target Audience IKEA Business Model IKEA Marketing Strategies

IKEA Target Audience

IKEA caters to the specific functional requirements of each target market , with a focus on people between the ages of 16 and 34. It has offerings for bachelors, singles living alone, newly married couples, families with children below 6, Older couples, the labor force, students, professionals, etc.

It caters to the requirements and preferences of a specific client segment that values affordability.

IKEA provides customized options to the client based on their shopping taste and also frequently repositioned the products and services in order to let the customer experience each and every detail of their products. With ongoing popularity, it is not inappropriate to say that IKEA reflects minimalism through its products.

IKEA Business Model

They employ a price-leadership tactic. Low prices serve as the primary pillar of the IKEA vision, business strategy, and philosophy. IKEA products are a spotlight for people looking for deals.

The foundation of its whole business strategy is pricing its product as affordably as feasible . IKEA's business strategy is centered on its goal of offering a wide selection of well-designed, functional home furnishings at prices that allow as many people as possible to afford them.

IKEA Marketing Strategies

One of the most profitable sellers of home furnishings and accessories in the world is IKEA. The business has established a solid name for its chic, cost-effective products and cutting-edge marketing techniques.

Product innovation, improving the customer experience, digital marketing , and sustainability programs are among IKEA's primary marketing methods. These tactics aid in ensuring that Ikea can continue to serve customers' demands ethically while still being competitive in the market for home furnishings.

IKEA maintains its position as a market leader and is well-positioned for expansion in the future by utilizing these basic methods.

1. Brand Identity

The brand employs a consistent and easily recognizable theme. The blue and yellow logo with the bold font was first published in 1967 and it has been consistent over the years.

The product names and colors are also easily recognizable.

It has also remained consistent with its original mission of high quality at affordable prices. IKEA which started as a seller of pens and wallets has grown into a globally acclaimed furniture store but stays strong about its mission. “To create a better everyday life for the many people”.

You must build your brand in a way that makes clients choose you over rivals. IKEA is extremely focused on this. Its goal is to take leadership of every household. IKEA puts the customer and the product first, something that many companies struggle to do.

If you produce what your clients desire, you may establish a strong brand identity. Your brand should be reflected in all of your actions. IKEA uses this tactic in its marketing . You won't have to think too hard to recognize this as an IKEA advertisement if you've been following IKEA for a long time

IKEA boldly displays its cultural history, from the national colors of Sweden painted on its buildings to the delectable meatballs served in its store cafeterias. It's better to flaunt your heritage!

Delivering a cohesive experience to your audience is made easier by brand consistency. It gives your offerings authenticity, increases customer confidence in your business, and distinguishes you from your rivals.

Because of its strong brand image, IKEA is quickly recognized. It has put in countless hours to create its reputation as one of the biggest furniture manufacturers in the world. Today, before consumers look at the products, it is the name that draws them in.

2. Product Innovation

The key to IKEA's commercial success is its product design . To produce well-planned, subtle, and useful goods, it draws on the democratic approach and the distinctive Nordic style. Consequently, in addition to being aesthetically pleasing, its homeware is also created to meet the demands and preferences of its target market.

IKEA furniture is well-liked by consumers due to its appealing designs and customization options. They fit into a tiny flat with ease and give your space a trendy, airy appearance.

IKEA supports versatility, individualization, and mix-and-match furniture modules. The secret to this achievement is the union of affordability and sustainability.

Keep in mind that you are essentially expelled into a warehouse after meandering around IKEA's eye-catching showrooms. The company's supply chain is streamlined and end-user prices are decreased by outsourcing some of the logistics and assembly to customers.

An excellent product design balances visual appeal and usefulness just perfectly. It ought to live up to your customer's expectations and provide the value it guarantees.

3. Clever packaging

What do you think helps IKEA provide quality products at much lesser prices than their rivals?

It’s their flat packaging!

It helps the business save on raw material costs of close to $175,000 and transportation costs of $133,000 annually.

Furthermore, by letting consumers assemble the furniture themselves, IKEA is able to deduct a percentage of shipping costs from their prices.

The flat packaging serves two purposes. Firstly, it reduces overhead costs and reduces the price of products. Secondly, its unique packaging makes it easily identifiable.

The company first developed flat packaging to save money and space, but subsequently, it evolved into its hallmark design. It now intends to increase the number of sustainable solutions to further cut costs by 50% while enhancing its brand.

Despite being a minor aspect of your company's operations, product packaging may significantly affect your earnings and brand reputation. Your packaging style may reduce costs, promote your brand, and boost sales all at once.

4. Vast User Insights

While some companies use chatbots to interact with their audience, IKEA uses them to learn more about its consumers. Instead of publishing dull surveys to acquire data, the research team instead offers engaging questions to make its audience's experience entertaining.

It makes the most of visuals and user interactions to collect updated information about its target market.

One Shared House 2030 is a survey that is a prime illustration of its insightful market research methodology.

IKEA conducted an interactive study to gauge public interest in shared living space design. Not only did it receive a significant response, but it also discovered that by 2030, about one in three city dwellers will likely choose co-living.

In order to better understand its customers' demands, IKEA uses digital media, sophisticated technologies, and interpersonal interactions.

Your marketing plan is built on the foundation of your preliminary study. It enables you to develop a data-driven action plan and comprehend your prospect's demands.

While traditional surveys do yield useful information, IKEA has shown us that there is another, more effective approach to identifying our customers' problems.

5. Excellent In-store Experience

IKEA excels in product displays and understands how to present products in the best possible way to increase sales.

In order to stimulate decorating ideas and promote impulsive purchases, it carefully arranges the best-matched objects in mock rooms.

It gives guests a memorable experience that entices them to return by having aesthetically pleasing décor and first-rate customer care.

IKEA's structure, in contrast to typical stores, has a single-route architecture that guides you step-by-step through its full product line. There is a cafeteria to take short breaks while on a shopping spree! The cafeteria has delicious food to make the shopping experience more memorable.

The design purposefully takes the shape of a maze to maximize product exposure and extend visitor stay.

6. The food Court Experience

The IKEA store has lavish Swedish restaurants in all their stores. The IKEA Restaurant offers delicious food at great prices, making it a great place to visit for a quick snack or a leisurely meal.

The food court features an array of Swedish-style dishes, local specials, and a range of healthy, organic, and vegetarian options that cater to the whole family. Whether you’re looking for something tasty on the go or a cozy spot to enjoy some delicious food with friends and family, the IKEA Restaurant is sure to have something for everyone.

This tactic accomplishes two goals at once: it gives consumers a positive shopping experience and lures in new customers who come to the restaurant to check out the store. Additionally, it serves as another source of revenue.

7. Content Marketing

To stand out from other furniture businesses, IKEA has always turned to its content marketing approach.

The attention-grabbing substance of all of its advertisements, whether they appear in print ads, television commercials, or social media posts, stands out. In order to create advertisements that catch people's attention and motivate them to purchase its products, it combines humor, creativity, and its brand core values.

To boost its brand, IKEA also makes significant investments in direct marketing. It has been successfully employing one of its most popular tactics, the product catalog, for the past 70 years.

One of the most difficult components of marketing is surely regularly producing content, especially hilarious material. But it also produces three times as many replies as other forms of advertising.

8. Adapting to advancements in technology

IKEA has transformed from a modest Swedish retailer to a global brand by keeping up with trends and embracing new technology.

In order to make its products more accessible to its audience, it has revolutionized the retail experience over time by digitizing its processes.

It has always employed newer technology like Augmented reality(AR) and Virtual reality (VR) to provide a better customer experience . These technological advancements help customers check out the products, their functionality, and their use in the customer’s space.

People download its 3D modeling program mostly to visualize their ideal home.IKEA can upsell its low-demand products by inspiring consumers to redecorate the area, one of its most effective marketing strategies.

IKEA's marketing strategy is multifaceted and effective. They prioritize offering low prices to their customers, while also promoting self-serve shopping, introducing new innovative technology, focusing on the food court experience, providing more accurate packaging, etc.

Additionally, IKEA has made a significant investment in digital marketing to stay relevant and reach a wider audience. All of these elements combine to create a unique brand identity for IKEA that resonates with consumers around the world. Overall, IKEA's marketing strategy has been successful in establishing them as a global leader in home furnishings and retail.

Who is IKEA's target market?

IKEA's target market is the global middle-class group and those falling between the 20-34 age group.

What is IKEA's unique selling point?

IKEA's most unique selling point is its low prices on unique and flat-pack furniture that can be easily delivered to different locations.

Who is IKEA's biggest competitor?

The biggest competitor of IKEA is Walmart.

How does IKEA engage with its customers?

IKEA follows multiple ways to be in touch with its customers. Some of the common ways used by IKEA are to visit them at home, be in touch through an online platform, present them with in-store options, and also through the IKEA family. IKEA also uses AI and virtual reality to make the process more fruitful.

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How IKEA are innovating in customer research

IKEA isn't just innovating in their design process, they are innovating in their customer research approach too

Global home furnishings and meatball brand (IKEA sell 150 million meatballs a year), IKEA of Sweden already innovate in their democratic design approach when producing new products, but now they're taking a leading approach with their customer insights: chatbot surveys.

The IKEA concept already works to make their products attractive, functional, sustainable, accessible and affordable. IKEA are the masters of efficiency and it seems that they are working with their research agencies, to take this approach to customer insight.

The world of market research and insight has somewhat an obsession with innovation, researchers are always looking for new ways to gain insights, hence big data, online communities, shorter surveys (though I question whether many are actually getting shorter). But in the day to day, researchers tend to stick with the same old quantitative and qualitative methods and IKEA clearly does see the value in the survey, but they (along with their insight agency) conducted a customer satisfaction survey with a twist. They turned the survey into a chatbot.

Marketers are starting to embrace the chatbot, Pizza Express have used Facebook Messenger chatbots, as well as Marriott and Heineken. But chatbots aren't used so much for customer feedback.

Let's have a look at what IKEA did, why it was a great way to get customer insights and finally how you can do something similar.

Using chatbots for customer satisfaction

Rather than the usual survey structure, IKEA created a chatbot, called ORC.

In typical IKEA branding, they say "Hej!" in Swedish, they offer an incentive and a link to terms and conditions of taking part. It's friendly, appealing, doesn't look like a survey and is fully branded.

The survey uses emojis, it asked qualitative questions and quantitative questions.

They finish the session with some demographic questions.

Why is this survey so great?

I love this survey for a number of reasons.

Firstly, it's less about length and number of questions. It's more about gaining insight and having a conversation with customers. How many questions were there in the survey? I couldn't tell you. It was also a little longer than expected, but there is no progress bar or question numbers, so participants won't realize - again because it's a conversation.

It's easier to reply and seems simpler to reply because it's not a traditional survey. It also offers a real variety of question types and styles, whilst being conversational. It's also rooting around like a survey normally would, but it feels more conversational.

It allows you to collect a lot of information in one session too and this is encouraged by the language used ("you've been awesome today").

There are most likely some cons though:

The questionnaire can be written like a normal questionnaire, but you need the addition of a full script to be produced for every answer. It's also probably much longer to program and for many researchers, there's the issue of getting their heads around another platform. But does it pay off? It's highly engaging and there is only one way to find out: try it.

Let's think of this from the user's point of view though: the survey below (not by IKEA) is not very user-friendly, engaging or inviting. It's time for insight to innovate! If you want responses, you have to work for them.

What are other companies doing to innovate in the customer insight sphere?

The insight world is focusing on automation. According to the latest GreenBook Research Industry Trends (GRIT) report, there are a number of techniques which researchers are starting to automate, as part of innovating their research. Analysis of test data, project design, matching suppliers and buyers amongst other areas are being automated.

The GRIT report also summarises a number of research agencies and research buyers (clients) who are innovating too.

System1, previously known as BrainJuicer has come top or ranked highly for a number of years, their approach to insight is regarded as innovating. They innovate on ad testing and brand tracking.

Unilever, Google, Coca-Cola and Facebook are ranked highly as innovative by respondents of the GRIT report.

So just how are researchers innovating? According to a previous GRIT report (2016 Q3-4) , mobile surveys, online communities and social media analytics are the emerging methods used by both buyers and suppliers. There's been an explosion in the number of research agencies and software as a service (SAAS) companies offering online communities: even panel companies like Toluna have developed an online community offering. Online communities are a little complex to set-up but offer fast turnaround and are cost effective to run, reducing the cost of insight collection compared to "traditional methods".

Social media is also hugely important - marketers are taking advantage of platforms which crawl social networks for comments about brands, to understand customer sentiment towards a brand. I expect this area to grow and become more established over time, for example just crawling social media doesn't always produce useful insight, projects can be more targeted and researchers may end up using technology less and simply delving into social media more manually. Or perhaps they will use social media to ask questions with their audience more - a more conversational approach, like chatbots perhaps?

Customers may not always like surveys, but they love conversations.

By Robert Jones

Robert Jones is a specialist in CRO, UX Research, insight and digital Marketing. He is CRO Analyst at Enjoy Digital . He has a Psychology Masters of Research, has run large digital marketing campaigns to build research panels and worked in insight roles for Vision Critical, ASDA and WhatUsersDo. He also managed all of Smart Insights member resources and published several guides including "How to conduct Persona Research" as well as contributing over 100 blog posts to the Smart Insights blog. When he isn’t working on marketing campaigns he is most likely eating authentic Italian food or planning his next short trip. You can connect with Robert on LinkedIn or follow him on Twitter .

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What IKEA Do We Want?

• Format: Print
• | Language: English
• | Pages: 34

About The Authors

Juan Alcacer

Cynthia A. Montgomery

IKEA Marketing Strategy and practices: A Case study

Ikea marketing strategy, introduction:.

Building a global brand is not an easy task. While excellent product quality and affordable prices can be good for penetrating new markets, the way a brand is marketed decides its fortune in the long term. In the global environment, success rests especially on marketing. IKEA is a well-known global brand of home furnishing products. Behind its global presence and excellent performance is an excellent marketing strategy. However, IKEA has not achieved its success without being through its fair share of troubles. It too has experimented and been through ordeals before being successful in the foreign markets.

Cultural sensitivity has grown important in the 21 st century. The one size fits all strategy will not work any more. IKEA too had to face cultural hurdles while trying to penetrate new markets. Today, it is a highly recognized brand and behind it is the power of marketing. The Swedish brand of furniture sells a wide range of home furnishing products. Its affordably priced but good quality products have grown popular in several countries globally. This is an analysis of the marketing strategies and techniques IKEA utilized to achieve global success.

Store design and location:

IKEA sells more than 9500 products from its stores. For such a large range of products, a brand must also have excellent store design. This does not just increase shopping convenience for the customers, but provides a pleasant experience and helps create a great brand image. If shopping from a store is an exclusive experience in itself then more and more customers would like to visit and revisit. Traditionally, the IKEA stores have been like warehouses located outside the town where customers can shop in peace. However, rising urbanization and e-commerce have made IKEA experiment with new formats. It introduced pick up points, small stores and inside the town stores. The pick-up points are for the online customers from where they can pick-up the products they ordered online.  The smaller stores are built in towns where a full size store may not be necessary. These stores showcase a limited range of products. The third type, full size inside the town stores with transporter bikes are being opened at city centers in the large towns. However, IKEA has designed its stores in a manner to provide its customers with an unforgettable experience.

Their maze like design provides a unique experience. There are maps to guide you through the labyrinthine stores so no customer feels lost. Its stores’ design is a primary attraction and apart from customer convenience it helps at customer engagement. Both these factors have grown important to marketing a retail brand successfully in the 21 st century. Inside the stores there are tiny model homes so the customers can borrow ideas for ;interior decoration. They can grab ideas from the models at IKEA store. There is also space for you to drop your kids or have lunch if you are feeling hungry. The IKEA cafeteria serves cheap yet good quality food. In this way, IKEA has designed an entire experience inside its stores that maximizes shopping pleasure. The purpose is to engage the customers and attract and retain them in larger numbers. Such an experience also creates a lot of favorable buzz for IKEA.

Target market:

The target market of IKEA is mainly the global middle class. It sells good quality and durable but affordable home furnishing products. The middle class consumers generally look for products that are good in terms of design and quality and come for low prices. It is also a reason behind the increasing presence and popularity of IKEA globally.  The consumer demographics are also changing globally and the focus is now on the millennials. However, IKEA sells contemporary and stylish designs that are a big favorite among the millennial customers.  Through its affordably priced and good quality products, the brand has been able to attract the millennial and middle class consumers in large hoards. It complements its products with a great customer friendly shopping experience.

Promotional techniques:

IKEA uses a variety of promotional techniques to promote its brand. Most unique and most successful among the tools used by IKEA to promote its brand are the promotional catalogs. It is also the most used and most effective of all its marketing communication channels. These catalogs of IKEA products are printed in several languages and different catalogs are served in different markets. Apart from unique home furnishing ideas, there are real life stories and a wide range of products showcased through the hundreds of pages of the catalog. The catalog is available both in print and online. Apart from that an extended version of the catalog is available in the IKEA app. The IKEA websites, publications, brochure, advertising and public relation campaigns are also used for the promotion of the brand.

IKEA uses both traditional and digital channels to advertise and promote its brand.  It has used social media to attract and engage customers. Separate country pages are used to engage customers on Facebook. Pinterest, Twitter, Google plus and other social media channels are also used by the brand to promote itself. From time to time, it also uses well designed outdoor campaigns for promotion. Now, IKEA is using augmented reality to help customers get a better experience of how well IKEA products fit into their homes and lives. Another key area where IKEA has focused to build a better reputation is sustainability. People and environment are an important focus area at IKEA. This has helped it build a stronger brand image.

Brand localization:

When IKEA started expanding to overseas markets, it did not outright see the kind of success it expected. It researched to find out the reason. The reason was that people’s taste, style and preferences varied from market to market and culture to culture. It was not essential that the furniture or the glasses popular in Sweden were going to be loved in the US or UK too. So, IKEA decided to bring changes to its products and marketing techniques and adapt them to the local markets. It studied local cultures and their preferred styles before introducing products in new markets following which its products started selling and growing popular. From product designs to its catalogs all are developed keeping local culture and tastes at the center. Brand localization has helped IKEA find quicker success in the overseas markets.

CSR and Sustainability:

Apart from everything IKEA invests in CSR and sustainability to improve its image and reputation in the society and among its customers. While investing in CSR and sustainability is good for the planet and for the future of the communities, it is also good investment in a brand’s reputation and helps engage the customer audience better. It is investing in healthy and sustainable living, energy and resources as well as people and communities and governance and ethics. It starts with making more sustainable and affordable product range. Sustainability is one of the five dimensions of democratic design at IKEA.  By investing in more sustainable products the brand is investing in a  greener future for the brand. Apart from these things, IKEA is working to improve the condition of migrant workers as well as that of social entrepreneurs and children in disadvantaged communities. Its publishes its efforts .and investments in CSR every year in the for of an annual publication in its annual CSR report. The brand has also partnered with Save The Children for the protection of the children’s rights and to prevent child labor and promote the welfare of children globally. The two organizations are working together to address the root causes of child labor in several parts of the world including India and Pakistan. IKEA also raises money to provide quality education to children from disadvantaged classes. Over the several years along with Save the Children and UNICEF, IKEA has reached out to more than 11 million children in 46 countries providing them quality education and saving them from utter poverty. Involvement in such programs globally has helped the brand grow a strong reputation and create a better image among its customers and the community.

Controversies:

All has not been so easy for IKEA and it faced several big challenges on the way. Primarily, the challenge of culture and adapting to suit local cultures has been the biggest one. In 1994, IKEA had to face significant protests and criticism for using ads casting gay couples. Again, it has faced severe criticism for not casting women in its Israeli catalog. “The male-only catalog featured ultra-Orthodox models (wearing sidelocks and kippah hats) and highlighted items in demand among ultra-Orthodox families, such as bookshelves carrying extensive collections of books on Jewish law, and folding tables and beds meant to accommodate visitors during big family gatherings on Jewish holidays”. (DW, 2017) The cultural challenges abound and one or another challenge always troubles the international brands like IKEA. While designing and printing its catalogs, IKEA has to ensure that they rhyme with the local culture and flavor. It is not just IKEA, several other brands too have born the ire for using culturally offensive material for advertising.

Conclusion:

Today, IKEA is a successful brand. However, the power of marketing is evident behind its success. One key thing that is important to focus when operating in a global environment is cultural sensitivity. IKEA has responded to the cultural challenges by using product designs and marketing techniques that suit the local markets. Most important things to be successful in any market are product quality and pricing strategy . IKEA has managed these two factors very well. Its products are not just affordable but also of great quality. Apart from that, IKEA has complemented it all with great customer convenience and tried to engage shoppers in the best possible manner. Its catalogs are its main medium of marketing communication. Print and digital channels also play an important role in the marketing of  its products and promote its brand. It has also released an app and is using augmented reality to provide customers with a better experience. IKEA’s case suggests that marketing in the international environment requires intense focus and apart from advertising you must engage your customers better.

Abhijeet Pratap is a passionate blogger with seven years of experience in the field. Specializing in business management and digital marketing, he has developed a keen understanding of the intricacies of these domains. Through his insightful articles, Abhijeet shares his knowledge, helping readers navigate the complexities of modern business landscapes and digital strategies.

• DOI: 10.54254/2754-1169/4/20221085
• Corpus ID: 258161012

Marketing Strategy Research in the Furniture: Case Study from IKEA

• Published in Advances in Economics… 21 March 2023

8 References

Emotional branding speaks to consumers’ heart: the case of fashion brands, data-driven scene marketing based on consumer insight, scene marketing in the era of big data, experiential marketing, related papers.

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India As a Marketplace: A Case Study of IKEA

17 Pages Posted: 6 Dec 2018

Ritika Goel

UCD Michael Smurfit Graduate Business School

Shraddha Garg

GLS University, Faculty of Management, Students

Date Written: November 2, 2018

According to a study by World Bank, India’s organized furniture industry is expected to grow 20% per annum over the next few years and is projected to cross $32 billion by 2019. Online home décor market in India is projected to grow at a CAGR of 50.42% in revenue and the luxury furniture market is expected to garner $27.01 billion. Global corporations view India as one of the key markets from where future growth is likely to emerge. The growing purchasing power and rising influence of social media have enabled Indian consumers and this is evident by entry of big players like H&M, Zara, IKEA, Decathlon, etc. This paper aims to capture the essence of India as a marketplace and consumer psychology analysis. This has been done with a special focus on IKEA-a global furniture company. IKEA, with the opening of its first store in India (in Hyderabad) has paved way for a completely new experience in furniture market for Indian consumers. This paper aims to study IKEA both as a global and an Indian company. The purpose is to reflect on how IKEA fits into the Indian consumer market and vice-versa.

Keywords: Consumer, IKEA, India, Psychology

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How Ikea is using digital to gain ‘richer customer insight’

By better understanding consumers’ desire for sustainable consumption Ikea has been able to implement a number of new initiatives as part of its ‘human-centric, conscious agenda’.

Since its inception 77 years ago, the Swedish retailer has been putting itself “in the shoes of people” and spending time in their homes around the world to help it decide what furniture to develop.

But the rise of digital has allowed the brand to gain a much deeper understanding of customers at a more granular level, according to Ikea’s chief digital officer, Barbara Martin Coppola.

“If we ladder up the digital capabilities [with traditional research] we can have even richer insight,” she explained, speaking at an event hosted by brand consultancy Wolff Olins.

“Every day, 24-hours a day, we get feedback on what people want through clicks and expressions, and through this dialogue that is possible in real time through digital. When you combine both it gives you very rich insight and a deep understanding about life at home, which helps then to connect and better serve many people around the world.”

‘Humanise the data’: Why market research is having a digital reboot

One of the key insights Ikea has gained as a result of this layered approach to research is the fact people want sustainable consumption, which led Ikea to launch its ‘buy back’ service last year.

The initiative allows anyone wanting to get rid of old Ikea furniture the opportunity to sell it back to the retailer, which will then resell it via its ‘bargain corner’ department.

I have the overall global responsibility of our digital agenda and I think a human-centric, conscious agenda will be a must-have for any brand moving forward. Barbara Martin Coppola, Ikea

The initiative, which launched on Black Friday, has been “widely successful” Martin Coppola said, but it has been temporarily paused due to safety restrictions around Covid.

“By using [furniture] and giving it back we’re starting a circular Ikea, a new business model that allows you to use the furniture and then give it to other people for a second life. Furniture as a service is something we’re putting in place and by 2030 we will have circular business models in place at Ikea for many to enjoy,” she said.

Given Ikea’s reputation as a value-led retailer, Martin Coppola said it’s important that sustainable living doesn’t cost consumers more, which is why the brand is encouraging people to “take simple, affordable steps to make a difference”, such as reselling used furniture or switching to LED light bulbs.

“When it comes to sustainability at large, in general today it often comes at a price premium. We want to show our customers and co-workers that living more sustainably shouldn’t come at a premium,” she added.

The benefits of female leadership

Another side of being a conscious brand, as Martin Coppola describes it, is to ensure people working within the business are treated fairly and with “human rights at the core”. That’s why 50% of the managers at Ikea are women.

“Coming from the tech sector this has been a clear surprise to me to see how much benefit this brings to the company, in terms of innovation, open-mindedness, inclusiveness and the bottom line,” she said.

“We urge all companies to not give up before 50% [female leaders] is achieved, before the company reflects the society we play in.”

This focus on sustainability and doing right by its people is why Martin Coppola joined the business.

“I went to Ikea because it is a value-based, very strong, human-centric brand,” she explained. “It’s a tremendously conscious brand, which gives meaning to my work in digitalising the company, transforming the company for the next era, to suit many more people.”

Martin Coppola believes the businesses that will thrive in future will be the ones that make a difference and don’t put the wellbeing of the company before that of its people or the planet.

“Instead of focusing on short-term profits only, they [companies] need to balance their decisions carefully to take a broader perspective and [make] a positive impact on society and the world at large,” she said.

“I have the overall global responsibility of our digital agenda and I think a human-centric, conscious agenda will be a must-have for any brand moving forward. It’s not only the right thing to do, but it also makes business sense.”

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IKEA Marketing Mix (IKEA 7Ps of Marketing)

IKEA 7Ps of marketing comprises elements of the marketing mix that consists of product, place, price, promotion, process, people and physical evidence. The furniture retailer places greater emphasis on the price element of the marketing mix over other elements due to cost advantage business strategy it pursues.

Product Element in IKEA Marketing Mix

There are nearly 12000 products across IKEA range and the company renews its product range annually. The company develops approximately 2000 new products each year. IKEA products are designed by its in-house, as well as, contracted designers.  IKEA promotes the idea of democratic design. The furniture maker adheres to the following five dimensions of democratic design: form, quality, function, sustainability and low price.  IKEA products are associated with no-frills simplicity to sustain its cost leadership business strategy.

Furthermore, some of IKEA products such as furniture are not assembled and ready to use by customer. Instead, the retail giant prefers to sell large furniture items as flat pack and customers have to assemble furniture themselves according to clear guidelines and illustrative instructions supplied by the company.  Selling products in flat pack form immensely contributes to cost leadership business strategy because it is much cheaper to transport and store flat packs than ready assembled items.

Place Element in IKEA 7Ps of Marketing

IKEA has 11 franchisees operating in more than 500 locations in 63 countries. [1]  The Swedish furniture chain promotes itself as a multi-channel retailer effectively integrating online and offline sales channels. Currently IKEA is concentrating on smaller city-centre stores and planning studios for kitchens, as the world’s largest furniture retailer tries to decrease its dependence on selling only through giant out-of-town warehouses.

Price Element in IKEA Marketing Mix 

IKEA pricing strategy integrates the following:

1. Cost leadership . Competitive costs are placed at the core of IKEA pricing strategy. The company aims to offer its products “at prices so low that as many people as possible will be able to afford them” [2] . The home improvement and furnishing chain is able to maintain its low prices due to the economies of scale the company benefits from in the global level. Selling large furniture items as flat pack, instead of ready assembled products is one of the main enabling factors for price reduction for the world’s largest furniture retailer.

2. Psychological pricing . Psychological pricing also represents an important aspect of IKEA pricing strategy in a way that the retailer appeals to emotional, rather than rational side of customer decision-making. Accordingly, IKEA applies Price Point Perspective (PPP) 0.99 Cents instead of 1 US Dollar for the majority of its products. For example, as of June 2022, SOLVINDEN string light costs USD 12,99 and LISABO dining table has a price tag of USD 199,00.

3. Geographical pricing . IKEA uses geographical pricing and accordingly, there are price variations between different locations of the home improvement and furnishing chain. Pricing level in any given market depends on a wide range of factors such as competitive environment, costs of raw materials, cost of labour and others.

IKEA Group Report contains a full analysis of IKEA marketing mix ( IKEA 7Ps of marketing) and IKEA marketing strategy in general. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on IKEA . Moreover, the report contains analyses of IKEA leadership, organizational structure and organizational culture. The report also comprises discussions of IKEA business strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Inter IKEA Holding B.V. Annual report FY21 

[2] Group Yearly Summary (2017) IKEA Group

Exploring digitalisation at IKEA

International Journal of Retail & Distribution Management

ISSN : 0959-0552

Article publication date: 15 March 2022

Issue publication date: 19 December 2022

The paper aims to clarify how an incumbent retail organisation explores digitalisation for its existing business.

Design/methodology/approach

The paper draws from an in-depth case study of home-furnishing retail giant, IKEA conducted with semi-structured interviews, participant observations and document analyses.

In the exploration phase of digitalisation, three major activities – interpreting, interrelating and integrating – illuminate how the exploration process can be organised in practice.

Originality/value

Although digitalisation ranks amongst the most significant ongoing transformations in retail businesses, research on how incumbent retail organisations have engaged in exploring digitalisation in practice has remained scarce. The paper contributes insights into digitalisation processes in retail businesses that may also apply to other trends affecting the retail industry.

• Digitalisation
• Exploration

Hagberg, J. and Jonsson, A. (2022), "Exploring digitalisation at IKEA", International Journal of Retail & Distribution Management , Vol. 50 No. 13, pp. 59-76. https://doi.org/10.1108/IJRDM-12-2020-0510

Emerald Publishing Limited

Copyright © 2022, Johan Hagberg and Anna Jonsson

Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

1. Introduction

Digitalisation , defined as the “integration of digital technologies into everyday life by the digitization of everything that can be digitized” ( Hagberg et al. , 2016 , p. 696), ranks amongst the most significant ongoing transformations in business, one that has introduced new ways of doing business whilst challenging established ones ( Leeflang et al. , 2014 ). As such, digitalisation has been characterised as a disruptive change that tests industries, their accepted logics and even individual businesses (e.g. Verhoef et al. , 2015 ; Hänninen et al. , 2018 ).

In literature addressing retail, digitalisation has received increased attention from both consumers' and retailers' perspectives ( Frasquet et al. , 2021 ), including in terms of omni-channel strategies ( Verhoef et al. , 2015 ), business models ( Jocevski et al. , 2019 ), multi-sided platforms ( Hänninen et al. , 2019 ) and the reconfiguration of retail stores ( Hagberg et al. , 2017 ). Most recently, according to Hänninen et al. (2021) , such research has integrated far more discussion and theorising about digitalisation across the value chain. However, the organisational processes that catalyse the incorporation of digital technologies in retail businesses – in March's (1991) and Winter and Szulanski's (2001) terms, the exploration phase – have received less attention. Therefore, this paper focusses on that very phase – the early stage of digitalisation – to contribute insights into digitalisation in retail ( Hänninen et al. , 2021 ) whilst answering the call for research on “how firms adapt their business models in response to external threats and opportunities” ( Saebi et al. , 2017 , p. 567).

The paper aims to clarify how an incumbent retail organisation explores digitalisation for its existing business, even as potential disruptions, their meanings and their consequences remain uncertain. To that purpose, the paper builds upon an in-depth case study on IKEA, an established firm in today's dynamic retail sector, an environment in which digitalisation especially urges business actors to rethink their ways of doing business and attracting customers ( Hänninen et al. , 2018 ; Blom, 2019 ; Jocevski et al. , 2019 ). It draws upon first-hand experiences with, and insights into, how IKEA has explored digitalisation, even when the concept was relatively elusive and how it would affect IKEA's business. In describing IKEA's exploration phase and what digitalisation has meant for its business, the paper delineates three major activities of that exploratory process: (1) interpreting what digitalisation means, (2) interrelating digitalisation and the existing business and (3) integrating new ideas and solutions in light of digitalisation.

In what follows, we review literature on digitalisation in retail and research focussing on that process's exploration phase and development in businesses. Next, we describe the methodological considerations made for our case study on IKEA. After that, we present our findings in terms of three major activities that guide the exploration phase. We conclude the paper by discussing our findings in relation to the literature and addressing our research's limitations.

2. Literature review: exploring digitalisation in retail

Having significantly impacted retail in recent years, digitalisation has become an important topic in research on the industry ( Hänninen et al. , 2021 ), especially regarding specific applications of digital technology – for example, the use of smartphones in physical retail settings ( Fuentes et al. , 2017 ; Grewal et al. , 2018 ), augmented reality ( Scholz and Duffy, 2018 ; Caboni and Hagberg, 2019 ) and digital signage ( Dennis et al. , 2012 ; Jäger and Weber, 2020 ). Studies on specific technologies have been accompanied by broader frameworks for integrating various digital technologies into retail, not only by turns based upon their usage and retailers' objectives ( Wolpert and Roth, 2020 ), their social presence and consumers' convenience ( Grewal et al. , 2020 ) and their use in relation to shopping behaviour at various stages of the customer's journey ( Rosengren et al. , 2018 ; Blom, 2019 ; Roggeveen and Sethuraman, 2020 ), but also by general frameworks of what digitalisation implies for retail business overall ( Hagberg et al. , 2016 ). In such studies, digitalisation in retail has received sustained attention regarding several aspects of consumer behaviour ( Hure et al. , 2017 ; Pantano and Gandini, 2018 ), the retailer–consumer interface ( Hagberg et al. , 2016 ; Roggeveen and Sethuraman, 2020 ) and retailers' ways of doing business ( Verhoef et al. , 2015 ; Hänninen et al. , 2018 ). The processes in which incumbent retailers develop their businesses in light of digitalisation, however, have received far less attention.

Because digitalisation, understood as the integration of digital technologies, is arguably not a binary shift from one stage to another but an ongoing process without a clear beginning or end ( Hagberg et al. , 2016 ), its exploration in retail warrants a more processual perspective, particularly regarding its influence on how retail organisations alter their businesses (cf. Langley, 1999 ). Along with frameworks addressing how retail businesses can integrate digitalisation in various ways, the actual processes that may result in digital integration need to be explored and modelled. That need directs our attention to the exploratory processes through which retail businesses may approach digitalisation and, more specifically, to how digitalisation consequently influences established business models. Especially for the latter reason, we gave priority to incumbent retailers, whose business models and established ways of conducting business often confront such considerations.

Despite extensive research on what constitutes a business model, understandings differ about how to define, explore and leverage one. In fact, Teece (2018 , p. 41) has estimated that there are probably as many definitions of business model as there are models themselves. According to Ritter and Lettl (2018) , a business model, simply put, is a company's “way of doing business”. In this paper, considering how business models have been discussed in retail settings ( Sorescu et al. , 2011 , p. 4), we broadly understand a company's business model as representing “the firm's distinctive logic for value creation and appropriation”.

Although various external events may necessitate changes to ways of developing and operating businesses, digitalisation itself is not an event but an emergent, comprehensive and uncertain phenomenon. Indeed, digitalisation can span several external and internal aspects of businesses, as well as pose myriad implications for individual business models. To date, though scholars interested in digitalisation have examined different approaches to innovating business models, from making gradual, evolutionary adjustments to radically altering them ( Berends et al. , 2016 ; Inigo et al. , 2017 ; Snihur and Wiklund, 2019 ), how the exploration phase of digitalisation is understood and organised merits further investigation.

Following March's (1991 , p. 71) definition, exploration refers to searching for, innovating and experimenting with something novel. The concept as used by March (1991) is often considered in relation to exploitation, which refers to refinement, efficiency and implementation of “old” routines or certainties in an organisation. As noted by He and Wong (2004 , p. 481), researchers in strategic management, organisation theory and managerial economics have applied the two concepts in order to understand how innovations occur and how an organisation learn and develop dynamic capabilities to meet change. Previous studies either focus on the trade-off between exploration and exploitation or the balancing act between the two as discussed within literature focussing on ambidexterity and means for developing dynamic capabilities (e.g. Benner and Tushman, 2003 ; He and Wong, 2004 ; Vahlne and Jonsson, 2017 ). The two concepts have also been applied in processual research describing the evolution and development of an organisation. Winter and Szulanski (2001) use the two concepts when outlining their theory of replication as strategy and suggest a two-phase model where the organisation first enters the exploration phase “in which the business model is created or refined” (p. 731) and then move on to the exploitation phase. The argument that exploration and exploitation can be understood in terms of different phases of a process has been adopted also by researchers focussing on, for instance, retailers' internationalisation process ( Jonsson and Foss, 2011 ), the transition into retail omni-channel strategies ( Picot-Coupey et al. , 2016 ) and reverse knowledge flows within franchise organisations ( Friesl and Larty, 2018 ). Still, how the exploration phase is organised and how it can be understood remains to be further investigated. To the best of our knowledge, there is a dearth of research focussing specifically on the exploration phase and how it develops in practice. Whilst existing studies do explore the exploration phase, it is also discussed in relation to the exploitation phase with focus on the outcomes rather than the processual aspects of the phase as such. For this paper, we zoom in on and examine the exploration phase and how it can be understood in the context of retail digitalisation. In particular, when emergent trends such as digitalisation, a change process, challenge established business models, more comprehensively re-engaging the exploration phase can become essential.

3. Methodology

Investigating a complex phenomenon such as digitalisation, and given our aim, calls for a qualitative in-depth case study ( Eisenhardt, 1989 ). According to Dyer and Wilkins (1991 , pp. 615–617), case studies aim to “provide a rich description of the social scene”, “describe the context in which events occur” and thus offer opportunities for other researchers to see “phenomena in their own experience and research”. In that sense, rich, explorative case studies provide avenues for future research or, as more broadly conceived by Doz (2011 , p. 588), “offer the opportunity to help move the field forward and assist in providing its own theoretical grounding”.

Our in-depth case study focussed on IKEA, a global home-furnishing retail company, and its work with developing an understanding of digitalisation. IKEA is a particularly interesting case that has attracted practitioners seeking a benchmark in a hitherto successful business model (e.g. Jonsson and Elg, 2006 ; Edvardsson and Enquist, 2011 ; Burt et al. , 2016 ). IKEA has frequently been used as an empirical example in the business models literature (e.g. Hedman and Kalling, 2003 ; Sorescu et al. , 2011 ) and subject to in-depth case studies of the development of specific aspects related to the IKEA business model over time (see e.g. Salzer, 1994 ; Jonsson, 2007 ; Tarnovskaya et al. , 2008 ; Edvardsson and Enquist, 2011 ; Hellström and Nilsson, 2011 ; Burt et al. , 2016 , 2021 ). In addition, there are several studies of various aspects related to digitalisation, including store format development ( Hultman et al. , 2017 ) and comparison of IKEA's digital catalogue and website ( Garnier and Poncin, 2019 ). IKEA has also served as an in-depth case for studies of exploration in relation to exploitation and replication ( Jonsson and Foss, 2011 ; Vahlne and Jonsson, 2017 ). The present study adds to this literature through an in-depth case study of IKEA's digitalisation process in an early explorative phase.

In the ten months from September 2014 to June 2015, we observed IKEA's work on exploring digitalisation and the trend's potential impacts on various parts of the organisation's business model and participated in a project undertaken in support of such exploration. In that form of action research ( Patton, 1980 ), engaging in IKEA's internal exploratory work as researchers allowed us to understand digitalisation's implications by discussing them with representatives at IKEA, which, at the time, considered knowledge of those implications to be important because they, along with digitalisation itself, remained unknown. Using such methods enabled us to contrast findings from interviews with findings from observations and synthesise the results in light of theory ( Ghauri and Grönhaug, 2002 ). In particular, our case study revolved around two ongoing projects and the processes of working within them: IKEA's “E-Commerce Programme”, later named the “Multichannel Transformation Programme”, and a project designed as a pre-study addressing the future role of IKEA's physical stores and the challenges and opportunities that they face amid digitalisation.

We collected data with three overlapping methods: in-depth semi-structured interviews, participant observations and document analyses (for an overview, see Table 1 ). As for the first, we conducted 21 interviews with senior executives with different functions in different departments at IKEA as detailed in Table 1 . Using purposeful sampling, we interviewed IKEA managers and employees working with and/or preparing for the organisation's digitalisation about their experiences with and thoughts on the concept of digitalisation and its implications. The interviews combined retrospective questions about IKEA's business model with questions about current situations experienced by the interviewees and prospective enquiries about IKEA's future in relation to digitalisation. All interviews began with open-ended questions about digitalisation in general and digitalisation at IKEA in particular. As the interviews progressed, questions became more structured and delved into the future role of IKEA stores, the specific challenges that IKEA faces, whether they will affect the IKEA concept and if so, then how. All interviews were recorded and transcribed verbatim and translated into English in those cases the interviews were made in Swedish.

Meanwhile, participant observations involved three meetings – before, during and after data collection, respectively – with the project manager of the pre-study to discuss the overall project. Those meetings lasted 11 h and 36 min in all. We also engaged in both in-store observations and meetings, lasting 10 h in total, whilst visiting an IKEA store in the Altona borough of Hamburg, Germany that operates as a test store for new concepts (e.g. urban proximity, technical solutions and delivery solutions). The local managers who accompanied us during our in-store observations also met with us twice: once with five other store managers and once with five employees from different departments. We conducted both meetings as group interviews guided by the same questionnaire used in the individual interviews. During all observations, we took field notes for data about the employees' perspectives and what digitalisation meant in practice. That information was valuable when conducting interviews with IKEA managers responsible for strategic decision-making and for translating digitalisation into IKEA's business model. Last, we also collected documents and visual communication, both public and internal, for analysis. The internal documents contained information about the pre-study, the “E-Commerce Programme”, the “Multichannel Transformation Programme” and the movie “ Shop with Laura ” (see Table 1 ) and public documents included information about the IKEA history, vision and business idea statements. Documents were collected on the basis of their mentioning during the interviews or participant observation sessions. These constituted sources of detailed information preserved from the time in which they were written and less dependent on the informants' memories. Throughout data collection, we facilitated informants' validation of the data on several occasions (cf. Silverman, 2006 ), which afforded us the opportunity to discuss our observations and findings with the participants. Apart from our participant observations, we also hosted two internal workshops with the project manager of the pre-study to discuss our findings.

To analyse the data, we used systematic combining ( Dubois and Gadde, 2002 ) – i.e. alternated focus between our empirical material and theory – whilst developing our case study and the emerging framework. For integrity's sake, we triangulated the three major sources of data – participant observations, interviews and document analysis ( Silverman, 2006 ) – during all four steps of data analysis. First, we coded the transcripts with reference to keywords and phrases related to digitalisation and its consequences for the retail industry in general and IKEA in particular. In that step, we adopted an emic perspective that prioritised the perceptions and understandings of the informants ( McCracken, 1988 ). Second, following Langley's (1999) suggestion, we took a narrative approach to comprehending the process-related data, namely by drafting a general description of the process with illustrative quotations from material collected in the field ( Berends et al. , 2016 ). Third, whilst working abductively between the empirical material and our emerging analytical framework, we used theoretical coding ( Charmaz, 2014 ) to sort, integrate and organise the material to represent a three-phase process. In so doing, we gradually shifted to an etic perspective – i.e. from the informants' perspective to our own perspectives as observers of the empirical material. Fourth and finally, we reorganised the material and wrote a case narrative structured according to the three abovementioned activities as presented next.

4. Exploring digitalising: the IKEA way

In the past 70 years, IKEA has grown from a small, family owned company in Sweden into the world's largest retailer of home furnishings. Arguably, IKEA's rapid international expansion resulted from the three-phase development of a formula that has been replicated in all markets where IKEA has entered an expanded, where the first phase commenced by exploring IKEA's business idea and opening test stores in markets outside Sweden ( Jonsson and Foss, 2011 ).

IKEA's business idea builds upon two concepts – the idea concept and the concept in practice – that together define what, in theoretical terms, could be understood as IKEA's business model. Whereas the idea concept refers to IKEA's vision “to create a better everyday life for the many people”, its philosophy of co-creation (i.e. “We do our part, and you do yours”) and the central role of IKEA stores, the concept in practice refers to IKEA's practices of examining specific sets of variables whilst adjusting to local markets ( Jonsson and Foss, 2011 , p. 1,090). The two concepts are mutually dependent; if the concept in practice does not change, then the practices of the idea concept will eventually become irrelevant and not reach “the many people”.

In 2014, drawing from insights during its internationalisation, IKEA realised that digitalisation could be both a challenge and an opportunity amid its recently declining expansion. For decades, IKEA had experienced outstanding success in replicating its business model: an average yearly increase in sales of approximately 8–10%, the constant meeting of new sales targets and a steady rate of expansion, with 12–14 store openings per year. In 2013, however, IKEA's steady growth declined in some markets, as the rapid worldwide growth of e-commerce in retailing continued to challenge physical stores and change the competition. In response, the company decided to decelerate its international expansion in favour of exploring what digitalisation could mean for their established business model. At IKEA, it was, therefore, considered increasingly important to return to a state of exploration in which key variables describing the idea concept and the established concept in practice would be re-evaluated. Moreover, as increasingly more young employees at IKEA sought new, 21st-century ways of reaching “the many people” – i.e. current and potential customers – both IKEA's employees and customers began looking for digital solutions and new ways of working.

In the following sections, we recount how IKEA engaged in exploring digitalisation in the IKEA way and how it (re)imagined reaching “the many people” in the shifting retail landscape. The story begins when the intersection of digitalisation and IKEA's business model was becoming increasingly apparent but not yet regarded as a phenomenon that would require radical changes, and it ends six months later, when the exploration phase resulted in an understanding and approach that we term the re(in)innovation of IKEA's business idea. In particular, we discuss how IKEA interpreted, interrelated and integrated digitalisation with its established ways of doing business. Although we have structured our discussion in three subsections, each addressing one of those three activities, the activities should not be considered as occurring along a linear path but instead as three aspects of the exploration phase.

For an overview of the activities and related steps, please see Table 2 .

4.1 Interpreting digitalisation

In 2014, aware that IKEA retailers in the USA were witnessing a cannibalising effect on their physical stores because of e-commerce, IKEA took its first steps towards exploring digitalisation. IKEA realised that its E-Commerce Programme launched only a year prior, could not simply be rolled out as initially planned but needed to be informed by a discussion about what e-commerce and digitalisation would mean for sales in IKEA's physical stores. Although digitalisation was becoming a widely discussed concept in retail at the time, it had remained undefined, and it was unclear how, or even whether, it was distinct from e-commerce. Recognising that possibility, IKEA's global expansion manager initiated several internal projects to explore what digitalisation meant and how it might relate to IKEA's business idea.

E-commerce is how we do business electronically, so it's about selling: selling online. But digitalisation is much bigger than that […] It's about the whole company, because it involves, for example, online learning. I think that e-commerce is not just about selling; it's about fulfilment, the buying process. (Development Manager, E-Commerce Programme)

Digitalisation is broader than e-commerce. It's also more about how we approach customers: how we communicate and how we ensure that all of our customers have the same knowledge, whether they're buying things in the store or online. Digitalisation is something that happens in the store. It's how we provide all of the information to our customers: where the products come from, what they do and how you can use them. (Supply Manager, IKEA Supply AG, Logistics)

As that quotation suggests, despite references to what digitalisation might mean and what it truly is, its signification remained vague. Even so, it appears that digitalisation might have generally been understood as offering digital information to customers. Making sense of digitalisation thus involved distinguishing digitalisation from e-commerce to not only explain how the concepts differed but also make digitalisation manageable for and relevant to customers.

So, all of a sudden, the amount of information that we have about people and how they live, move, interact etc. is phenomenal. And it's in combination. It's not urbanisation only; it's urbanisation plus digitalisation that gives us the opportunities. It's an example of how combined trends can become very powerful. (Digital Business Manager, Inter IKEA Systems B.V.)

It is exponential because every new invention in the digital space is built on previous ones. So, it's a combined effect that creates exponential speed. So, ignoring it, as Kodak or Nokia did, will be very dangerous. On the contrary, it can be very powerful, like for Apple, Google, Facebook, etc.

For me, digitalisation is a moving target. Its content is changing all of the time. To some extent, we use a lot of digital technology already—it's just that it’s outdated, right—so we're changing how we digitalise instead of digitalising something that is not digital. (Global Retail Logistics Manager, Retail Logistics IKEA of Sweden)

Gradually, it became clear that digitalisation not only needed to be understood in the sense of selling goods online but would have broader implications for the company. As a case in point, when observing customers who had already developed new shopping behaviours – using mobile phones to search for products from both outside and inside stores, for example – IKEA realised that new mobile solutions had to be integrated with traditional retail logic. As a result, IKEA unveiled the “Future Role of the IKEA Store in a Multichannel Environment” project to emphasise the need to understand and combine related trends. The project was initiated to jumpstart a shift towards what IKEA called a “seamless customer journey”. Consisting of five sub-projects, the project prompted the redefinition of the E-Commerce Programme and later evolved into the Multichannel Transformation Programme.

Digitalisation means nothing, I would say. Because what we want is to secure a solution for when you, the customer, move between the store and the web. It might be a digital solution, but it can also be a physical solution, or something else. The only thing that's important is to solve some sort of need and to learn more about those needs. (Group Retail Manager, Global Retail Services IKEA Group)

The expansion manager also emphasised that instead of simply focussing on defining digitalisation, routines and skills need to be developed for facilitating “disruptive developments” and finding new solutions and ways of testing new ideas. Understanding how various activities were organised and integrated was also considered to be pivotal. The idea addressed in many interviews – namely, that digitalisation both enables and requires the integration of knowledge – was explained as enhancing the focus on customers and their experiences. That perspective marked a shift into the phase in which IKEA began actively exploring what digitalisation meant to its ways of doing business by revisiting the idea concept and the concept in practice.

Altogether, the first activity of the exploration phase, interpreting, refers to ways of understanding and making sense of digitalisation and the changes that it was considered to imply. The process can be described as encompassing three steps: differentiating (i.e. distinguishing and delimiting digitalisation from other concepts), combining (i.e. making connections between digitalisation and other trends and concepts) and concretising (i.e. defining digitalisation and making it actionable). Building upon lessons from that work, IKEA transitioned into the second activity of exploration where it began relating digitalisation more explicitly to IKEA way of doing business.

4.2 Interrelating digitalisation with established business ideas

Whilst interpreting digitalisation, informants increasingly reflected on what it would mean for IKEA's established business ideas. After all, the replication formula was being challenged by not only digitalisation but also urbanisation. Mounting criticism about globalisation and calls for de-growth were also seen as challenging the existing understanding of doing business – i.e. by selling furniture “to the many people” – and concerns for sustainability were identified as needing to be incorporated into understandings of digitalisation.

To ensure that all IKEA employees shared the same interpretation of digitalisation and how it relates to IKEA's established business model, it was considered to be necessary to visualise the future. To convince internal sceptics, it was considered to be especially important to also visualise how digitalisation could generate opportunities for sales and attract a broader customer base and thereby more fully reach “the many people”. It additionally required ideas about urbanisation, sustainability and ways of offering not only furniture but also services, both in terms of continuity and making it easier to shop. Some proposals even conceived collaborating with second-hand retailers or establishing an organisation that would create opportunities to sell recycled and/or used furniture.

We wanted to have a completely different kind of interaction with our customers: a completely different type of conversation, a completely different type of engagement. So, I made a video that I think is very entertaining. […] She [Laura, the protagonist] wants to decorate her children's room, and the videos show her journey until she's satisfied. (Web and Digital Manager, Web and Digital Retail Services)

To develop a “seamless” experience for customers, it was considered to be crucial to introduce multiple perspectives, which seemed to require visualising the journey of customers in order to ensure focus on their experiences. To that end, it was expressed that all perspectives in IKEA's value chain had to be considered, and a consensus was emerging that different perspectives needed to be integrated in order to realise digitalisation. It was also clear that integrating knowledge from various functions in order to avoid a silo mentality would require more effort.

Our model has been built on direct deliveries to our stores, where you [the customer] do your part, we do our part, and then we save money. We need to think about a completely different kind of integration in how we develop and how we lead the overall development. To make that happen, we're now investing billions in new infrastructure—large investments in IT—but that's not what will take us into the future . (Group Retail Manager, Global Retail Services IKEA Group)

It was necessary to look inwards and to involve different views and perspectives, both across different parts of the company and from the outside. The same informant underscored the importance of accessing different perspectives to also “integrate the outside perspective into our structure, so that we do not get too isolated and, in that way, also cultivate our own skills”. The involvement of different functions and external partners prompted discussions about what digitalisation meant in relation to the established retail logic of “You do your part, we do our part (and together we save money)”. As it became clear that digitalisation would inevitably affect IKEA's business model, the question of how that process would unfold increasingly became the topic of discussion.

In sum, the second activity of the exploration phase, interrelating, refers to assessing digitalisation in relation to established ways of doing business in three steps: visualising (i.e. what the future might look like), mapping (i.e. what functions, areas and parts of the business model will be involved) and evaluating (i.e. how digitalisation will affect the business model and current ways of doing business). Based upon insights from that work, IKEA advanced to putting lessons learnt into practice and began the third activity: integrating new knowledge with existing knowledge.

4.3 Integrating digitalisation into a business model

From the internal projects related to efforts of interpreting digitalisation and interrelating it to other trends, IKEA's managers concluded that its established business model needed an update and that the antidote, digitalisation, also offered an opportunity to fully realise the business idea of offering products and services to “the many people”. To that end, testing new ideas, learning from them and making any necessary adjustments were considered to be important tasks. Thus, to be able to integrate digitalisation with the business model, it was necessary to experiment with numerous ideas and solutions as was done at numerous IKEA locations. For example, at IKEA in Altona, new ideas and concepts were tested to see whether they could satisfy a more digital, urban segment of customers. The Altona store was not only constructed differently from the standard global store format, in terms of size and layout, but also to accommodate for trends in urbanisation. It had also been adapted to test new concepts in practice, including new logistics and distribution solutions, and the normal pathway through the IKEA store had been partly removed to attract customers passing by outside. In the United Kingdom, by comparison, as a result of exploring digitalisation and testing new digital solutions, IKEA had launched its first app.

Experiences from testing new ideas and solutions were transferred back to the IKEA Group and Inter IKEA Systems. Thus, an important step was reviewing and learning from those experiences followed by transferring them internally within the organisation. In relation to the Altona store, both IKEA's management team in Germany and the IKEA Group's management team followed the experiences closely. Beyond that, many employees from IKEA worldwide visited the UK and/or Altona stores simply out of curiosity.

That's the essence of IKEA. If you remove everything, then the core is what's left, and that's IKEA… [We] need to develop our concept, take it further and say, “This is how I see IKEA today”. We have to be on track and dare to test and create other formats… So, IKEA has to change; otherwise, it's the beginning of the end. (Group Retail Manager, Global Retail Services IKEA Group)

The concept manager also reflected on how those changes would affect the idea concept and the concept in practice, as well as the latter should not come at the former's expense: “I mean the concept, if we go back to it, and the vision… part of the recipe for success has been just doing things together, engaging people” (IKEA Concept Manager, Inter IKEA Systems B.V.). Thus, integrating digitalisation into IKEA's business also implied reconnecting with IKEA's roots and reflecting on the idea concept as “the core of the core”. After all, although IKEA was changing at the time and continues to change, it remains the same IKEA. In that sense, revising the business model appeared to be quite natural, for though it had always changed in one sense, in another sense it had also always remained intact. The conclusion was that to be able to sustain the idea concept, “the core of the core”, the concept in practice needed to change, which would imply searching for new formats and new solutions to further leverage IKEA's business. IKEA's managers realised that although the basic needs were the same, people had changed and were continuing to change, and the experiences of customers demanded far more focus. For those reasons, a new position, global customer experience manager, was created. The shift implied a return to the core of IKEA's concept and vision – “to provide products and services that are both cost-efficient and innovative” – and that digitalisation had forced IKEA to rethink its processes of achieving those ends. As another informant argued, the entire process of re-evaluating the way of doing business – i.e. the IKEA way – had alerted managers and employees not only to IKEA's strong vision and business model, but also its need to seize the opportunity to fully realise that vision and reach “the many people” both online and offline.

All of the work to prepare IKEA for the digital shift had prompted a return to the company's roots and the questioning of proven solutions, which is indeed one of IKEA's ten values, perhaps best be described as shifting from interpreting digitalisation and interrelating with IKEA's business model into integrating and turning it into practice. That integrative phase also precipitated how IKEA re(in)novated its business model. IKEA's approach of digitalisation could thus be understood as returning to the company's original idea; the understanding of the idea concept will never change, but the concept in practice has to be rethought and new ideas and practices tested and evaluated in order to continue to reach “the many people”. To that end, practising and testing new solutions were crucial strategies for IKEA, not to mention integral to the IKEA concept and its organisational culture.

In all, the third activity of the exploration phase, integrating, refers to the actual digitalisation of the business idea by steps of practising (i.e. developing and trying different solutions to test and learn from them), reviewing (i.e. sharing knowledge within the organisation to learn from practice) and revising (i.e. connecting and evaluating changes to the established business model in order to provide continuity).

5. Conclusion

This paper has sought to illuminate how an incumbent retail organisation approached digitalisation for its existing business at an early, exploratory phase when possible disruptions, their meanings and their consequences remained uncertain. To that aim, we have provided an account based upon our in-depth case study of IKEA and how the company explored digitalisation at an early stage. We have delineated the exploration phase as consisting of three chief activities – interpreting, interrelating and integrating – each of which we have detailed by identifying certain steps therein. Together, and with reference to IKEA's case, those aspects allow an understanding of the exploration phase.

Compared with previous studies on exploration and exploitation (e.g. March 1991 ; Winter and Szulanski, 2001 ) and specifically in the context of retailing ( Jonsson and Foss, 2011 ; Picot-Coupey et al. , 2016 ; Friesl and Larty, 2018 ), our paper contributes with insights on how the exploration phase is understood and organised in practice. The study further contributes to previous literature of IKEA's business model ( Hedman and Kalling, 2003 ; Sorescu et al. , 2011 ) and specific aspects of the IKEA business model (see e.g. Edvardsson and Enquist, 2011 ; Burt et al. , 2016 , 2021 ) by outlining the exploration phase in further detail. Although the activities of the exploration phase – interpreting, interrelating and integrating – stem from a specific case, we believe, following the potential of qualitative in-depth case studies ( Dyer and Wilkins, 1991 ; Doz, 2011 ), that they may provide value for analysing what digitalisation or any other current or future trend means to retail businesses apart from IKEA.

Because our study was performed at a relatively early phase of adapting the business model at IKEA, some of the outcomes of that process were beyond our study's time frame. However, conducting the study during the process afforded the advantage of revealing ambiguities, scepticism and reservations amongst employees and managers, all of which are important for understanding how retail businesses can be transformed in practice due to digitalisation. In hindsight, some of those uncertainties may be expected to fade or fall into oblivion once changes appear as a continuation of their antecedents and become institutionalised in the ordinary course of business, whether such a development occurs and, if so, then how it remains to be investigated. In any case, a key contribution of our study is the understanding of how an organisation such as IKEA, a global retail giant, organises its efforts to explore digitalisation in relation to its existing business. Still, as this study was conducted in a relatively early phase of the digital transformation, we believe that the findings may differ from later implementations when digitalisation has increasingly become a norm rather than an exception and retailers having increased abilities to learn from their and other's previous experiences. An important opportunity for further research would be to study more recent cases of exploration phases in relation to digitalisation as well as comparing incumbents and entrants as well as larger and smaller organisations.

Using a case study to develop an understanding of digitalisation in retail has advantages and disadvantages. On the one hand, it affords a more profound understanding of how retail businesses are transformed due to digitalisation in practice, as well as detailed insights into the practical work within the company (cf. Saebi et al. , 2017 ). On the other, however, it can be difficult to apply the results of case studies in forming a basis for scientific generalisation ( Yin, 2003 ). Although an analysis based upon a particular case can indeed provide an understanding of the practical process, that process is liable to differ between companies and between industries. In IKEA's case, as an organisation that many companies use as a benchmark due to its long-term success, no precedent construct existed for understanding how digitalisation in retail would look – for example, by relying on normative models – but instead surfaced as an emerging process. A better understanding of how a specific retailer has approached digitalisation complements current understandings of retail's digitalisation in general ( Hagberg et al. , 2016 ; Hänninen et al. , 2021 ). By extension, we believe that the suggested conceptual framework for understanding and organising the exploration phase could be a useful tool for retail managers to explore not only digitalisation, but also any other transformation and the consequences for their businesses.

Types of data sources

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Acknowledgements

The authors contributed equally to this work. The paper is part of a research project with financial support from The Swedish Retail and Wholesale Development Council. The authors would like to thank Niklas Egels-Zandén for comments on an earlier draft of this paper, and also colleagues Catrin Lammgård and Malin Sundström who were also part of the research project. In addition, the authors would like to thank the people at IKEA who have contributed with their time and reflections, and in particular, the authors would like to appreciate Martin Hansson and Carole Bates for showing interest in this research and for inviting the authors to participate in the internal work of trying to interpret what retail digitalization means to IKEA.

Corresponding author

About the authors.

Johan Hagberg is professor of business administration specialising in marketing at the School of Business, Economics and Law, University of Gothenburg. His research revolves around the digitalization of retailing, consumption and markets.

Anna Jonsson is associate professor at Lund University, School of Economics and Management. Her research interests include learning and knowledge sharing in organizations and society. She has conducted research about various industries and organizations, including the retail industry.

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Ikea Branding Strategy and Marketing Case Study

Analysis and examples of ikea’s identity, positioning, key messages, tone of voice, brand archetypes, customer benefits, competitors, and marketing content..

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Brand Overview

• Home and Garden

Business Type

Physical Products

https://www.ikea.com

Target Customer

Budget Home Shoppers

Primary Need ( Job To Be Done )

Furnish my home with goods that are fashionable but affordable

Brand Visual Identity & Content

Primary brand colors, brand typefaces, hero content.

Hero Content Type

Content features people, brand messaging, key messages, benefit or feature focus, tone of voice, brand archetypes.

( Learn More About Brand Archetypes )

Everyperson

Brand Positioning Strategy ( Elements of Value )

( Learn More About The Elements of Value )

Aspirational

Self-Actualization

Design & Aesthetics

Reduces Cost

Brand Benefits

Ability to furnish everything I need in my home at one single shopping location 

Access to modern and trendy design aesthetics at extremely affordable pricepoints

Consistent, well thought out assembly instructions to get new furniture ready to use quickly

Competition

Key competitors.

Target, Wayfair, Amazon, Lowe’s, Home Depot, Ashley Furniture, Cost Plus World Market, Floyd

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• International Marketing
• Localization

IKEA’s Localization Strategy: A Masterclass in Global Expansion

• January 12, 2024

Table of Contents

The ikea localization strategy, ikea’s localization strategy: a delicate balance of standardization and adaptation, ikea’s localization strategy in china: adapting to local preferences, ikea’s localization strategy in india: embracing local customs and tastes, ikea’s localization strategy in japan: the importance of understanding local preferences, key takeaways from ikea’s localization strategy, accelingo: your partners in localization success.

In a world where companies are increasingly competing globally, the ability to tailor products and services to local markets is crucial for success . Thanks to their localization strategy, IKEA, the Swedish furniture giant, has mastered this art, becoming a household name in over 50 countries and amassing a staggering $42 billion in annual revenue.

IKEA’s international expansion success can be attributed to its unique localization strategy, which strikes a delicate balance between standardization and adaptation. The company maintains a core set of principles and values that resonate across cultures , but it also makes strategic adjustments to cater to local preferences and market conditions.

This localization approach has allowed IKEA to successfully navigate the diverse and ever-changing landscape of international business. From adapting its product designs to fit smaller Asian homes to partnering with local assembly services in China, IKEA has consistently demonstrated its ability to connect with consumers on a global scale .

In the realm of international business, localization is the art of adapting products, services, and marketing strategies to suit the specific needs and preferences of a target market. This involves a delicate balance between standardization, which ensures consistency and brand recognition, and adaptation, which enables a deeper connection with local consumers . IKEA, the Swedish furniture giant, has masterfully navigated this balance, becoming a global success story with over 450 stores in 52 countries, according to Statista .

Standardization versus Adaptation: Striking the Right Chord

Standardization, often associated with economies of scale, involves creating a consistent product or service offering across all markets. This approach can streamline operations, reduce costs, and enhance brand recognition. However, a purely standardized approach can fail to resonate with local preferences and cultural nuances , leading to missed opportunities and potential brand alienation.

Adaptation, on the other hand, involves tailoring products, services, and marketing messages to specific market contexts. This approach can foster deeper connections with local consumers, address cultural sensitivities, and enhance brand relevance. However, over-adaptation can lead to brand dilution , fragmentation of the global brand identity , and increased costs from localized production and marketing efforts.

IKEA’s Middle Ground: A Strategic Approach to Localization

IKEA has successfully navigated this standardization-adaptation dichotomy, adopting a hybrid approach that strikes a delicate balance between the two strategies. The company maintains a core set of design principles and values that underpin its global identity, such as its commitment to affordable, stylish furniture that can be assembled by consumers . However, IKEA also makes strategic adaptations to cater to local preferences and market conditions.

Examples of IKEA’s Localized Approach

IKEA’s localization efforts are evident in its product designs, store locations, and marketing strategies across different markets. In China, where many consumers prefer to have furniture assembled professionally, IKEA partnered with local assembly services to enhance customer convenience. In India, IKEA adapted its product range to include items more suited to local tastes and dietary habits , such as smaller furniture pieces and vegetarian dishes in the company’s restaurants. And in Japan, where smaller living spaces are common, IKEA introduced smaller-sized furniture designs that better fit the constraints of Japanese homes.

The Importance of Cultural Understanding

IKEA’s success in localization is deeply rooted in its commitment to understanding local cultures and customs. The company conducts extensive market research and cultural sensitivity training for its employees to ensure that its products, services, and marketing efforts align with local expectations. This deep cultural understanding has enabled IKEA to forge meaningful connections with consumers across the globe.

The Value of Localization for Businesses

IKEA’s localization strategy serves as a valuable case study for businesses seeking to expand internationally . By striking an effective balance between standardization and adaptation, companies can enhance their brand relevance, increase customer satisfaction, and gain a competitive edge in global markets .

IKEA’s entry into the Chinese market in 1998 marked a significant milestone in the company’s global expansion journey. However, the company’s initial attempts to replicate its successful Swedish model in China met with challenges due to cultural differences and consumer preferences .

Cultural Barriers to Overcome

One of the primary challenges IKEA faced in China was the cultural norm of having furniture professionally assembled. In Swedish culture, self-assembly is seen as a badge of honor, symbolizing resourcefulness and DIY capabilities. However, in China, furniture assembly is considered a time-consuming and undesirable task , often assigned to hired professionals.

This cultural difference posed a significant obstacle to IKEA’s core business model, which relies on customers assembling their own furniture. IKEA’s initial efforts to introduce self-assembly instructions in Chinese were met with resistance, as many consumers were hesitant to tackle the task themselves .

Partnering with Local Expertise

To address this cultural barrier and enhance customer convenience, IKEA made a strategic decision to partner with local furniture assembly services in China . This move proved to be a game-changer, allowing IKEA to tap into the existing expertise of local professionals while still maintaining its commitment to affordable furniture.

The partnership with local assembly services not only addressed customer preferences but also created new employment opportunities and strengthened IKEA’s ties with the Chinese community. As a result of this adaptation, IKEA’s sales in China skyrocketed, reaching $1.6 billion in 2019 .

Other Localized Adaptations in China

IKEA’s localization efforts in China extended beyond furniture assembly. The company carefully tailored its store locations to suit Chinese shopping habits , opting for central locations near public transportation hubs to cater to busy urbanites.

IKEA also adapted its product range to meet the specific needs of Chinese consumers. The company introduced smaller-sized furniture designs to fit the limited living spaces of many Chinese households, and it also expanded its selection of home appliances to include items more suited to local cooking and dining preferences .

The Success of IKEA’s Localization Strategy in China

IKEA’s success in China is a testament to the power of localization in global business . By understanding and adapting to local preferences, the company has successfully established itself as a leading furniture retailer in China, with over 36 stores and a strong online presence, as per IKEA .

IKEA’s experience in China highlights the importance of cultural sensitivity and adaptation in international business. By making strategic changes to its products, services, and marketing strategies, IKEA has successfully connected with Chinese consumers , demonstrating that localization is not just a matter of complying with local regulations but also about forging meaningful connections with local communities.

IKEA’s expansion into India in 2018 marked a significant milestone in the company’s global journey, opening doors to one of the world’s most populous and rapidly growing markets . However, the Indian market presented its unique set of challenges, including cultural nuances, regulatory hurdles, and a diverse consumer base.

Navigating Cultural Nuances and Regulatory Hurdles

India’s complex cultural landscape presented IKEA with a unique set of challenges. The country is home to a diverse range of religions, customs, and traditions , which IKEA needed to carefully consider in its product offerings and marketing strategies.

Additionally, the Indian market was characterized by complex regulatory frameworks and logistical challenges, requiring IKEA to adapt its operations to comply with local standards and ensure efficient supply chains.

Adapting to Indian Consumer Preferences

To succeed in India, IKEA recognized the importance of tailoring its products, marketing, and customer experience to resonate with local sensibilities. The company conducted extensive market research to understand Indian consumer preferences, cultural norms, and dietary habits.

Tailoring Products and Menus to Local Tastes

One of the most notable adaptations IKEA made in India was the expansion of its product range to cater to local tastes and preferences. The company introduced smaller-sized furniture pieces to suit the compact living spaces of many Indian homes , and it also incorporated elements of Indian design and craftsmanship into its products.

In addition to product adaptations, IKEA also made significant changes to its food offerings in India. The company’s restaurants in India feature a menu that includes a wide variety of vegetarian and vegan options , reflecting the dietary preferences of a large portion of the Indian population.

Pricing Strategy for Affordable Furniture

IKEA’s commitment to affordability, a core tenet of its business model, was particularly important in India, where price sensitivity is a prevalent consumer trait . The company carefully considered pricing strategies to ensure its products remained accessible to a broad range of Indian consumers.

Localization Efforts in Marketing and Customer Experience

IKEA’s localization efforts extended beyond product design and menus; the company also adapted its marketing strategies and customer service approach to Indian sensibilities . The company employed local marketing campaigns that resonated with Indian cultural references and values, and it also trained its employees to provide culturally sensitive customer service.

The Success of IKEA’s Localization Strategy in India

IKEA’s efforts to embrace local customs and tastes have been met with remarkable success in India. The company’s stores have been warmly welcomed by Indian consumers , and its sales have grown steadily since its entry into the market. In 2020, IKEA opened its second store in India, and plans for further expansion are underway according to INGKA .

IKEA’s experience in India serves as a compelling example of the power of localization in international business. The company’s ability to adapt its products, services, and marketing strategies to align with local preferences has been instrumental in its success in this challenging yet promising market.

IKEA’s journey into the Japanese market in 1974 marked a pivotal moment in the company’s global expansion strategy. However, the company’s initial foray into Japan was met with challenges , highlighting the importance of understanding and adapting to local preferences in international business.

Initial Setback and the Over-Reliance on Standardization

IKEA’s initial attempt to replicate its successful Swedish model in Japan failed to resonate with local consumers. The company’s standardized product designs, often characterized by larger sizes, were incompatible with the compact living spaces of many Japanese homes . Additionally, IKEA’s marketing campaigns, which emphasized self-assembly, conflicted with Japanese cultural norms of craftsmanship and professional convenience.

As a result of these missteps, IKEA’s sales in Japan were initially sluggish , and the company was forced to withdraw from the market in 1986 .

Learning from Failures and Embracing Local Preferences

After withdrawing from Japan, IKEA took a step back to reassess its approach and make necessary adjustments. The company conducted extensive market research to understand Japanese consumer preferences , cultural nuances, and design sensibilities.

Strategic Comeback with Localized Adaptations

In 2006, IKEA made a strategic comeback to Japan, this time with a localized approach that emphasized adaptation to local preferences. The company introduced smaller-sized furniture designs, tailored to the limited living spaces of Japanese households . Additionally, IKEA partnered with local assembly services to offer convenient and professional furniture assembly services, aligning with Japanese preferences.

Localized Marketing Campaigns and Cultural Sensitivity

IKEA’s marketing campaigns in Japan also underwent a transformation, incorporating local cultural references and values. The company used traditional Japanese art and design elements in its store décor and marketing materials , creating a more immersive and culturally appropriate experience for Japanese consumers.

Continuous Research and Adaptation

IKEA’s experience in Japan highlights the importance of continuous research and adaptation in the face of cultural and market shifts. The company recognized that globalization does not mean homogenization ; rather, it requires a deep understanding of local preferences and a willingness to adapt to the specific needs of each market.

The Success of Adaptation: IKEA’s Thriving Presence in Japan

IKEA’s localized approach has been instrumental in its success in Japan. The company has established a strong presence in the market, with over 10 stores and a growing customer base . IKEA’s sales in Japan have consistently increased since its comeback , demonstrating the power of localization in connecting with local consumers.

IKEA’s experience in Japan serves as a valuable lesson for businesses seeking to expand internationally. By understanding and adapting to local preferences, companies can successfully navigate the complexities of global markets and build strong relationships with consumers across borders.

IKEA’s remarkable success in expanding its global footprint can be attributed to its unwavering commitment to localization , a process of adapting products, services, and marketing strategies to suit the specific needs and preferences of a target market.

Accelingo is a leading translation and localization agency with a proven track record of helping businesses thrive in the global marketplace. With over a decade of experience and a team of highly skilled linguists and cultural experts, Accelingo provides comprehensive localization services that enable companies to seamlessly adapt their products, services, and marketing strategies to local markets.

Accelingo’s Localization Expertise

On top of our language translation services , at Accelingo we offer a wide range of localization services , including:

• Expert translation: Accelingo’s team of native speakers delivers accurate and culturally sensitive translations across a diverse range of industries and languages.
• Cultural adaptation: Accelingo goes beyond mere translation to ensure that content resonates with local audiences, considering cultural nuances, sensitivities, and market trends.
• Localization strategy development: Accelingo helps businesses develop comprehensive localization strategies that align with their overall business goals and marketing objectives.

As you embark on your global expansion journey, let IKEA’s localization playbook serve as your guide. By embracing a deep understanding of local cultures, continuous adaptation, and a balanced approach to standardization and localization, you can unlock the key to success in the ever-evolving global marketplace . At Accelingo, we’re ready to partner with you every step of the way, from market research and strategy development to expert translation and cultural adaptation . Contact us today for a free consultation and let’s transform your global ambitions into reality.

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Equality and efficiency tradeoffs in revenue recycling of emission trading scheme: a case study on the recent chinese national ETS market

• Published: 13 September 2024

Cite this article

• Shuyang Chen   ORCID: orcid.org/0000-0002-1033-5053 1  

Owing to real constraints, a first-best climate policy is rarely socioeconomically optimal; therefore, policymakers may prefer a second-best or mixed policy, where revenue recycling (RR) is usually implemented as a complementary policy to the first-best policy. Unfortunately, how different RR policies affect equality and efficiency during first-best policy implementation remains to be researched. This paper attempts to narrow the research gap by designing and evaluating the RR policies for the emission trading scheme (ETS) simulating the Chinese National Emission Trading Scheme (CNETS). To achieve this research target, we have employed a dynamic recursive computable general equilibrium (CGE) model to analyze how the designed RR policies complement the ETS effects on emission abatement and economic growth. The results of the CGE model have confirmed the existence of a tradeoff between equality and efficiency. RR for income tax reduction is beneficial to emission abatement, but it has the worst performances on equality, Gross Domestic Product (GDP), and household welfare. RR for subsidizing renewable energy causes the lowest GDP loss, but it adversely impacts emission abatement owing to the induced economic boom. Lump-sum income transfer to low-income households is the best RR option because it is the most equitable way to use ETS revenues and induces the highest household welfare with satisfactory performances on emission abatement and GDP. Hence, ETS revenues are recommended to be transferred to low-income households.

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Abbreviations

Average propensity to consume

Business as usual

Constant elasticity of substitution

Constant elasticity of transformation

Computable general equilibrium

Chinese Household Income Project

Chinese National Emission Trading Scheme

28th Conference of the Parties

Emission trading scheme

Equivalent Variation

Gross Domestic Product

Nationally Determined Contribution

• Revenue recycling

Rest of the world

Social accounting matrix

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Chen, S. Equality and efficiency tradeoffs in revenue recycling of emission trading scheme: a case study on the recent chinese national ETS market. Environ Dev Sustain (2024). https://doi.org/10.1007/s10668-024-05380-0

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Received : 28 July 2022

Accepted : 29 August 2024

Published : 13 September 2024

DOI : https://doi.org/10.1007/s10668-024-05380-0

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