Marketing Plan Action for IKEA

Marketing Plan Action for IKEA

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Executive Summary
This paper presents an Integrated Marketing Communications scheme for IKEA, which has opted to introduce not only eco-friendly modern design furniture in the UK market but also cost-effective.  The company’s main targets include attention on pricing, high-income earners, middle-income earners, and families.

Social class is an aspect of concern particularly, when it comes to middle-income earners. The argument has been pegged on the fact that middle-income earners represent the demographic of persons requiring quality furniture that are also cost-effective, but who prefer elegant furniture. The attention of the suggested campaign and a great arrangement of scholarship have been recognized to determine and put into use IKEA’s strong points, drawbacks,prospects and perils to formulate the most beneficial of plans to the company (IKEA, 2011). Aims and strategies have been developed in tandem with IKEA’s forward-looking responsibilities and values. This comprehensive scheme consists of marketing, resourcefulness, media and public image approaches, in addition to direct marketing and promotions proposals. An inclusive budget and media scheme flowchart map out the campaign as well as the suggested measurement,analytical plan will evaluate the campaign upon end.

Marketing Plan Action for IKEA

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Situation Analysis
Company: IKEA was established by a Swedish business entrepreneur known as Ingvar Kamprad in 1943. His aim was to supply quality furniture at relatively competitive rates. To realize this Kamprad exploited this cost reduction loophole and also be executing novel ideas to attain this objective. The community from which Kamprad grew up in, had the reputation of commitment and cautious in their spending. Kamprad integrated these ethoses into his organisation (IKEA, 2011). He went ahead to incorporate the acronyms of farm and town where he grew up into the organization’s name.  The company’s main goal is to develop a better day to day life for the many persons while its mission is to offer a far reaching and well developed, functional home furnishing items at rates that are so low that as myriad persons as probable will be in a position to procure them.  Demonstrating their commitment to these values, IKEA has persistently reduced pricing, by average of 2%-3% per annum, while still growing monetarily.  As far as a press released in January 2011, the company’s operations and capital base has been as strong as ever (IKEA, 2011).  The company’s sales for the year 2010 amounted to $29.3 billion with a net value of 6.6% higher than the preceding year (Cornelissen & Lock, 2003).
Competitor Analysis: Target and Kmart are IKEA competitors, both collaborating with designers to avail beautiful, operational furniture choices into the stores while at the same time keeping costs low. Pier one imports, perhaps the most direct rivals in the United States market, equally offers classic items with so much flair, hence keeping clients captivated.  This outlet has proved to be North America’s largest specialty store when it comes to ornamental home furnishings, endowments and associated products with 693 stores in 47 states, Puerto Rico, Canada and global operations in the UK and Mexico (Barwise & Meehan, 2004).

Marketing Plan Action for IKEA

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Customer Analysis: Pier 1 aims at capturing women of age 21-39, which extend beyond the target audience of IKEA.  Pier 1 illustrates itself as a collectively ethical establishment and contents that their IMC schedule, proposes 5 items preferred to recommend a particular item that represent excellent quality at a competitive rate (Climate Ride, 2011). Tier 1’s takes advantage of internet, social media, press releases, promotions, direct marketing and various sales advertisings. The firm uses mass media, print media and social media to communicate products to the market. Pier 1’s Facebook wall comprises of several exclusive coupons in addition to one of their perpetual direct mail campaigns targeting new movers by sending mailers who offer credit cards as a voucher for the initial credit card procurement (Bossidy, Larry & Charan, 2002).  Whereas the mailing assists in sustaining a stable flow of new credit card holders during the course of a year, it has nonetheless been established that it drives store traffic and creates auctions with bank credit cards.
Market analysis
United Kingdom’s furniture sector is large contributing roughly 9.4 billion Euros to the nation’s gross domestic product (GDP) this is equivalent to 1.8 percent of manufacturing output and provides job opportunities to 115,000 individuals in 8,116 firms. Furniture consists of various products, conventionally segmented in three sub-categories in accordance with buyer’s characteristics;
·    Domestic; that serves the larger public through retail stores as well as for household
·    Contract; mainly for public places such as hotels, learning institutions, health care facilities airports, stadia among others
·    Office such as tables, desks, cabinets and other office facilities

Marketing Plan Action for IKEA

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In most instance, companies serve in many market. Particularly the differences between office and contract categories are usually blurred, as such some manufactures supply to domestic and contract customers. On average, it is believed that 30 percent of United Kingdom’s furniture turnover is attributed to contract and office categories. With regards to the industry structure, it has a high rate of micro, small and medium businesses (Percy, 2008). Focusing on furniture manufacturing, about 260 firms report a turnover of more than 5 million Euros and 84 percent of firms’ turnover of below one million Euros. This trend is evident in the employment numbers with roughly 78 percent of companies providing jobs to less than 10 individuals while 35 firms employing over 250 people. Regardless of the sector contribution to the economy, it experiences inadequate recognition especially at political level. In addition, lacks a traditional regional center (Percy, 2008).  As a result, and with support targeting regional basis, its regarded that the sector lacks government support necessary for its size and benefits to the economy. Since 2011, the sector has increase to 7.8 billion Euros while total imports has increased to 4.6 billion euro and exports reduced from 992 to 95 million Euros in 2011 and 2013 respectively. Import rise is mainly driven by China, Germany and Italy and exports from Ireland, USA, France and Germany.

Porters Five Forces
Rivalry
The Furniture industry is extremely competitive. Companies like Wal-Mart, ASDA, Kmart, Target and Tesco among others have been entering the market.  IKEA competitors use almost similar marketing strategies the company thrives on.  This factor is highly likely to exert the pressure on the firm’s proceeds: It is therefore necessary for IKEA to differentiate its products enhance highly creative product design. The company will be expected to have presence in diverse geographical points.
Buyer Power
Many business rivals in the industry underscore the existence of the many providers.  IKEA commands a huge clientele with a transnational reach.  Furniture business in the UK has many buyers, and yet with an emerging middle class, the company is slated to make an even bigger impact (Porter, 2008).

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Threat of Substitutes
In retrospect to Porter’s model, substitute items are items from various industries. Thus far, furniture industry is enormously competitive and yet costs are centered on substitute products an aspect that creates high demand for furniture owing to a wide array of choices. Consequently, this has a fiscal bearing on the well-being of the company.
Target market
The company concentrates on cost, well-designed and middle-class families. In addition, IKEA targets middle-class families, because this group needs quality and stylish furniture at affordable rates. Majority of its customers (roughly 75%) are female, and the company has attempted to adjust its stores to accommodate them. For instance, the targeted audience market share spends about USD 85 per every visit (Bossidy, Larry & Charan, 2002). The company exercises psychographic selection to identify its clients concentrating on individual with identical values, ecological awareness, quality and thriftiness. So far, that company has attempted to accommodate these customers, it is a reliable protected place that individuals can walk in and feel as part of like-minded, price, design and ecologically sensitive inclusive family. The company is appealing to socially accountable, modern audience who are budget conscious, particularly Generation-Y (16-34 years). This age group is technology savvy and heavily uses social media platforms like Facebook and Twitter, and like products wit well-designed social as well as media presence. Incentive and loyalty plans are necessary to this group and their buying behaviors are needs-oriented and also experimental compared to older generations (Climate Ride, 2011). Moreover, Generation-Y is optimistic, and self-assured. Their main priorities are being good parents, getting married, being a home owner and assisting the needy.
SWOT Analysis

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Strengths
·    The company has a robust culture and internally attempts to nurture it.
·    Defined mission statement to provide a variety of stylish products at reasonable rates
·    The firm is authentic and effectively embraces different components of authenticity- integrity, strong approach, place and serving a huge purpose. For about seven decades of operation, IKEA continues to provide quality products. The firm’s vision that aims at creating healthier daily life for several individuals symbolizes strong attitude. Moreover, the firm’s commitment to sustainability epitomized by their long term objective to be 100 percent natural is a clear indication of how the company acts as a larger purpose.
Weaknesses
Whereas, the company is financially stable, it invest heavily in the production of accommodate cost effective rates. This approach may not be fiscally sound for the company. In addition, the company does not reach its targeted clients through widely used channels such as social media platforms.
Opportunities
Generation Y represent the greatest prospects for IKEA. This demographic has a soft spot on family-friendly outlets, brands with a perceptive community presence and better deals.  IKEA has put up their stores so they make their items available to a family-friendly outlet, from the children’s play ground to the restaurant at the end of the tryout around the stockpile.  The company works to enhance their dedication to society and aims for competitive pricing. The generation Y cohort will unconsciously advertise for the firm. Through tweets and Facebook posts, they make their thoughts regarding a particular brand known.  With a myriad of fans on social media platforms, the company has a huge clientele base that listens to their prospects.  Generation Y is definitely a group of persons that gather views from the many social media infrastructure prior to making central decisions (Schultz et al., 2003).

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Threats
IKEA main rivals the reminiscent of Wal-Mart, ASDA, Kmart, Target and Tesco among others have merged with designers to bring beautiful operational furniture choices into the stockpiles at competitive rates. As more reasonable, well crafted furniture alternatives become accessible, the company will be forced to concentrate on other strong points to ensure the company remains competitive. A wider clientele base represented by Generation Y prefer making purchases from Target stores because they offer discounted products, a store credit card that presents discounts and donations to institutions (Schultz et al., 2003).
Marketing Strategies and goals
Enhance awareness among the targeted clients, particularly the Millennials from 15 to 30 percent of the firm’s pledge to sustainability in a year’s time. This goal will be attained through the use of direct mails, social media platforms, press release and store displays.  In addition, concentrating on Millennials households with children, improve the volume of sales specifically children brand line by 10 percent within one year (AdAge, 2011). This goal will involve the use of verbal or word of mouth promotion to encourage Millennials mothers to purchase kids furniture while sharing personal experiences on social media platforms.
Marketing Communication Mix
The targeted audience will be reached through internet marketing, publicity, personalselling and sales promotion. This will enable IKEA to market to the targeted audience to buy their product (AdAge, 2011). This audience heavily depends on marketing strategies to make decisions when it comes buying products, and that is the reason why publicity, internetmarketing and sales promotion will reach them.  This audience concentrates on being good parents; as aresult they have struggled to get job opportunities following the recent financial crisis,accordingly they are expected to be conscious when it comes to purchasing products. Magazines used in marketing are centered on families as well as kids. Promotion in every medium will be made inmanner that demonstrates IKEA as a store where trendy and busy familiesexperiences enjoyable shopping sprees and getlong lasting brand withability to endure abuse children that kids provide.

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Internet marketing
Internet promotion strategies will include Adword, and social media platforms such as Facebook.  In this case, Google Adword technique will entail roughly USD 80 on a daily basis. The objective of this strategy is to reach targeted audience and identify ways they use in searching for products sold by IKEA (IKEA Catalog, 2011). In addition, this will help in adjusting the effectiveness of Adwords as well as act as a basis of informal research to provide an opportunity for identifying appropriate language for Millennial when viewing or listening to adverts.  Majority of Millennials have accounts with social media platforms like Facebook, as such they spent a considerable amount of time on Facebook, thus using it as a promotional channel will reach majority of targeted audience. Internet marketing will be initiated by setting up a presence on social media sites allowing fans to increase. Upon establishing online presence, promotion will start; this will enable adverts to link to Facebook and Twitter pages with adequate information so as encourage more people (AdAge, 2011). Both timing and development of these sites will provide a basis for required degree of focus on every aspect.

Publicity or public relations
The aim of publicity technique will be enhancing awareness of IKEA’s dedication to sustainability in the targeted group from 15 to 30 percent in a period of one year, through press release, corporatemarketing and press conference. To realize this aim, IKEAuse several tactics including; organizing and funding national competition to support its promise to sustainability. Winners will be awarded scholarships and donations.  This competition will serve various intentions. To begin with, it will demonstrate the firm’s social initiative that purposes to progress rights of several children by giving scholarships to winners. Additionally, it will involve clients in increasing sustainability which will make them feel part of the firm. Integrating this competition with other public relation initiatives including press release prior to, throughout and afterpress conference to demonstrate that the awards will enhance sustainability awareness among the targeted market. Another tactic will be funding climate ride from New York City to Washington DC, which will aim at inspiring as well as empowering the public towards a new future (Climate Ride, 2011).

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Generating opportunities for the targeted is another aim of publicity advertising, which will help the targeting audience learn about children brands, thus enhancing volume of sales by 10% in a period of one year. To achieve this aim, IKEA will support press conferences which showcase a variety new children brands, allowing a few children to use these brands as evidence to durability and request the press to interview executives, parents and children regarding children’s products. Once the conference is over, the company will post all the information on its site as well as social media platforms.

Direct Marketing
Direct marketing will aim at increasing store visits to approximately, 20% for one month. In this case, branded note books will be developed with dedicated sections. In addition, every section will comprise of grid paper for room design, current measurements or preferred furniture and recommended accessories. Besides the notebooks, clients will get measuring tape and pencils. The notebook will have a pull-out piece with 15 percent discount and entry in the drawing to win a room created by the notebook. Mailers will be mailed to client about a week following projected in-home selection for catalogs. Subsequently, mailers will inspire clients to utilize notebooks. After putting their ideas on paper, they will be ready for shopping (Percy, 2008). The direct marketing will help the company understand as they plan to shop while making it convenient for them. This goal will be calculated by the use of counters at the entrance of the store evaluated against to total monthly scores in past years.

Furthermore, direct marketing will aim at increasing traffic towards children’s furniture in stores and on the site by roughly 10 percent. This will involving sending direct mailers to families receiving the company’scatalog, demonstrated as having kids, themails will containa coupon discounts of in-store shopping, which will promote more visits and increase sales. Every coupon will have a distinct identifier which will be scanned after use (Schultz,2004).. Thus, coupons will help in updating the database for future mailing and evaluateeffectiveness of the promotional plan. Discounts offered will be to some extent higher compared to working margin; therefore it will be reasonably cost effective campaign. This goal will be assessed based onthe quantity of coupons. Nevertheless, branded notebooksseems to be the appropriate direct marketing approach since it islikely pass through junkmails. A mailer that looks unique in the client mailbox has higher chances of being opened- human beings are generallynosy.Additionally a number of people may feel responsible trashing “a gift’ though they may not be guilty throwing a postcard (Schultz, 2004).

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Sales Promotion
Sales promotion will purpose to enhance store visits in a span of 6 months. The firm will use several specialties randomly to increase visits (IKEA Catalog, 2011). The main strategy to strengthen this is by creating as well as maintaining activities that are inclined on a variable-percentage plan. With this awareness, the company will randomly offer products of changeable values to compensate clients for visiting the shop on a certain day. Furthermore, these offers would vary in price; inexpensive products will be used. This is necessary as it will make clients to concentrates on low-cost products sold by the company. In essence, this will inspire clients to frequent the stores if that is a rewarding day. Considering that buzz is produced verbally and through social media sites, more clients will frequent the stores, in turn make purchases. This goal will be assessed by use of counters at the entrance compared to monthly total of past years. Moreover, receipts will have surveys to assess effectiveness of the promotional plan (Percy, 2008).

Additionally, sales promotion will intend to enhance traffic towards children’s furniture in stores and on the site by roughly 10 percent.  In thisscenario event promotion will be used to reach targeted audience. In conjunction with local children charitable trust, they will design kids’ rooms with the company’s furniture. Participants will be requested to sign up for this online event and contribute USD 25 to their preferred charity organization. On the other hand, participants decorating rooms will get 25 percent discount on their next shopping while the rest will be a five percent discount. This strategy will enhance product identification and positioning. This strategy will act as sales promotion technique and also increase corporate promotion. Commitment to the company’s social initiative of promoting children’s rights and opportunities will be emphasized during this campaign. Throughcreation of support within and outside will help in increasing the firm’s total sales. However, distributing various specialties is the best direct marketing tactic for IKEA (IKEA Catalog, 2011).  This is because, while distributing various specialties randomly and even promotionare cost effective for the company, distributing various specialties randomly will reach a number of targeted clients. In addition, event promotion is an aspect of corporate marketing which is somewhat controversial as it alleged that buyers are not “attracted in this marketing strategy” “it isexpensive type of self-indulgence, “the company must be in mess” or corporate marketing is a waste of financial resources”. Consequently, distributing various specialties at random will focus on smaller, lest costly and overlooked products.

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Conclusion
Basically, integrated marketing communication program aims at providing a firms entire marketing as well as campaign strategies. As such, the proposed integrated marketing communication program adheres to this aspect. The program incorporates all external forms into a single promotional message that will assist IKEA increase its sales as well as traffic (Anderson, 2005). The goals integrated in this program can effectively be evaluated and plans are adequately examined, practical methods to enhance branding and also positioning of the firm. Both goals and plans have been developed based on the mission and vision of the firm.  A number of strategies to be executed can fulfill several aims, making this program cost effective.

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References
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Marketing Plan Action for IKEA

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By admin in Essays on February 11, 2017