IKEA3

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Conclusion:

IKEA’s Business Strategy in China 宜家 (Yi Jia )

Conclusion:

Target-Positioning Chinese Target Middle-income/ Better educated Generation of the One Child Policy - “the little emperors” Female – make up 65% of customers Aspirational Western Target Affordable by everyone Highly mobile and space saving Modern simplistic furniture Functional

Conclusion:

Marketing Mix - Price Initially IKEA adopted the same western price strategy -Chinese perceived it as too expensive Import tax and transportation cost -Source locally: 70 % of IKEA’s products sold in China are made in China -Built factories to increase local sourcing of materials In 2002, IKEA lowered its price but still wasn’t enough - From 2000 to 2005, IKEA has reduced the general price of its products by 46 %

Conclusion:

Marketing Mix - Product Diversify products to cater to local needs -balcony furnishings, smaller beds, Chinese style of cooking and eating Concept of flat packaging – easier to transport Delivery and installations for “do –it-yourself” furniture Wide range of products IKEA food -Swedish food and drinks

Conclusion:

Marketing Mix - Place Located in the heart of the city (commercial hubs), close to highway and railway line -reaches more customers -most use public transportation

Conclusion:

Marketing Mix - Promotion Cultural considerations shown through promotion tools -uses local face -catalogues  switched to thinner booklets -micro-blogging websites High profile advertisement campaigns for its upcoming sales and other activities After sale services Promotes eco-friendly image – sustainability campaigns with WWF “Today’s visitors could be tomorrow’s clients”  long-term relationship

Conclusion:

Standard Strategy Value Proposition : Good quality, stylish furniture at low prices for everyone to afford Products: Stylish, functional products Store Location: Suburbs where access by car is easy Price: Low cost Promotion: IKEA catalogue as main marketing tool Logistics: Products are sourced and made in developing counties China Strategy Value Proposition : Good quality, western-styled aspirational brand for middle-class population Products: Slight modifications to products to suit local market Store Location: City centers/hubs next to rail networks as most customers use public transportation Price: Affordable prices Promotion: Thinner catalogues, social media Logistics: Raw material and products are sourced locally, built factories to avoid import taxes

Conclusion:

Conclusion IKEA made adjustments to the Chinese market by paying due respect to distinctive Chinse culture while still maintaining its core concept and strategy - design, functionality, low price

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