IKEA marketing strategy is the brightest example of how to win a million customers’ minds worldwide. When you enter this store to buy a towel, there’s a great chance that you will finish your journey with a fully stuffed shopping cart.
On the Net, you can even find numerous “science-fictional” stories about IKEA that state it’s a supernatural object. Once you enter IKEA, you stay there forever as there’s no exit. This IKEAs are inhabited by the lost customers and zombie-staff that hunts poor people. Sounds like a cool plot for a grindhouse but there’s some truth here. We’ll find out it later.
What’s the secret of IKEA success? An accident or a well-thought-out marketing strategy?
What is good for our customers is also in the long run good for us. – Ingvar Kamprad
It’s a well-known fact that Ingvar Kamprad had an inherent entrepreneur acumen. He started his first business at the age of five when he was selling matches to his neighbors. Later he began to sell fish, Christmas tree decorations, seeds, and later ballpoint pens and pencils.
After selling pencils Ingvar decided to manufacture furniture. Seems to be a strange decision, doesn’t it?
Back then, furniture was a luxury product for almost all of the Swedish families because of its high cost. That was the time when Kamrad occupied his niche. He started to produce household goods for families of low and mid-income. In 1943, at the age of 17, Ingvar founded IKEA.
Let’s take a look at the elements of IKEA’s marketing and business strategy.
If a company has no business idea or mission, it will hardly achieve any results. Numerous researches prove that even an idea of earning money helps companies to perform better.
This slogan fully reflects IKEA mission:
“A better everyday life at home”
Ingvar Kamprad just wanted to give people the opportunity to buy cheap and beautiful furniture. His desire to bring people comfort turned into the company’s ideology.
Icon magazine called Ingvar a man who had the strongest influence on consumer tastes.
IKEA founder proves that if the company’s mission is serving people and making customers’ lives better, success is inevitable.
Finding New Solutions
IKEA business philosophy is driven by Ingvar’s golden rule:
“Regard every problem as a possibility”
This mantra helped the company to survive the first years of its existence. When Kamprad founded the company his rivals were trying to stop him. All the Swedish suppliers were banned to provide IKEA with raw material. His ‘offspring’ wasn’t also allowed to participate in furniture exhibitions.
That was the moment when Ingvar applied his golden rule in practice. The forbidden national market pushed Kamprad to develop a unique style and design of his company. He began to buy raw materials from Poland and conquering the international market with his own exhibitions.
IKEA is always looking for new niches and opportunities, forecasting the customers’ needs which they don’t even suspect. The most important thing is to promote a new item and it will bring money.
IKEA released a medium-size metal clothespin with a ribbon ring to hang magazines on a towel hook. Nobody knew how many readers were suffering while reading magazines in a bath but this clothespin rapidly became a bestseller.
There were two main success factors:
- Visibility. Neatly hung clothespins with magazines in the exposition bathroom were acting magically, urging people to buy them.
- Price. They were so cheap that people were buying them just in case.
It’s hard not to mention IKEA most famous hallmark — the final assembly of furniture is performed by the consumer. This genius decision was preceded by numerous delivery difficulties. Furniture often broke during transportation: fell off legs, crushed glass, scratched surfaces. It’s obvious that customers were refusing to pay for broken goods.
Ingvar proved his lateral thinking one more time. He decided to sell disassembled furniture in order not to lose money because of manufacturing defects. It helped to save big sums of money and let Ingvar make his products more affordable.
Kamprad also noticed that people really like to assemble beds and wardrobes by themselves. Especially when all the manuals are written in a simple way.
Total Cost Reduction
Frugality is Ingvar’s life motto.
IKEA top managers fly economy class and stay in cheap hotels. Kamprad was using minibars only if he was able to replace all the drinks by cheaper ones bought in a local store. The billionaire wasn’t ashamed of using free parking tickets and using public transport.
Strict financial discipline is also a distinctive feature of the Swedish corporation.
The rest of the furniture is bought from other manufacturers. Moreover, everything is also purchased in parts: tabletops in one country, table legs in another. It significantly reduces the prime cost.
When IKEA designers work on new products they cooperate with manufacturers to avoid possible multiple changes. Economy starts at the design level and ends in IKEA stores where the practice of “self-service warehouses” is widespread. Customers individually take away disassembled furniture packed in flat boxes.
Once upon a time, Ingvar revealed IKEA pricing policy.
How to find an optimal price of an item. IKEA method:
- You need a family of mid and low-income.
- Count how much money this family can afford to spend on home improvement, a pillow, lamp or something else separately.
- Then, the company’s specialists create a technical description of the item and find a supplier who will be able to ensure its high-quality performance within the budget.
Today it will hardly surprise somebody but back then it seemed to be a revolutionary approach. Ingvar was always saying that their prices should be breathtaking.
The corporation isn’t ashamed to state that their prices are competitors’ prices but divided by two. IKEA also uses a “second wave tactic” — when a competitor creates a similar item but cheaper, the brand develops a new version of this item but its price is a “new low”.
Ingvar thought that all the stuff made by modern designers makes the furniture more expensive. That’s why wider consumer groups can’t afford it.
IKEA designers should know the whole production process, starting from an idea to the store window. It helps the designers to understand the pricing policy. As we already know, price should as low as possible.
Nevertheless, such an approach doesn’t bother IKEA to produce really stylish and comfortable stuff. The reason is that the company doesn’t divide things into ugly and beautiful.
Sometimes, the most elementary, unpretentious and unexpected objects and materials can be included in the home decor starting from great-grandmother’s caskets to super modern fixtures.
Moreover, the degree of their aesthetics depends on the vast complex of conditions that form a specific human environment.
That’s why all the items are demonstrated in specific interiors. It’s a win-win variant as a small unnecessary knickknack may attract a customer because of the whole environment. This trick drives shoppers to make a purchasing decision.
When IKEA develops a product, the brand sets a price border and all the designers should create an item which price will be within this border. No product will be put into production unless there is a way to make it more affordable. It can take years to create something.
For example, the creation of PS Ellan chair with flexible, but stable legs took more than a year and a half. During this time IKEA invented a new inexpensive material to achieve the desired properties. It’s a mixture of rubber and wood chips.
IKEA expertly makes customers spend more time in their stores to leave more money there.
This is facilitated by the planning decision of the trading rooms. It’s easy to enter the complex but it takes a long time to go out.
IKEA turns shopping in a pleasant pastime. Leave your children on the playground, have a walkthrough wide aisles, which eliminate crowding, and admire graceful expositions. Then have a rest in a cozy cafe which offers various bonuses and unique Swedish meatballs. Moreover, the pricing policy of IKEA cafes corresponds to the main principle of the corporation — cheap and tasty.
A hearty meal that costs a penny is the last nail in the coffin. After that, you can’t leave IKEA empty-handed.
One more nuance: the sales consultants never attack the buyers, and this allows the latter to relax and look around calmly. If you need to find a consultant, it won’t be difficult. They were a bright yellow-blue uniform.
Do you remember the story I told you in the beginning? IKEA with no exits lost customers and zombies. Now it doesn’t sound so crazy, does it?
Research and Digital Experience
IKEA conducts research before opening a store in a new country. They ask customers: “Do you like our furniture?”. It doesn’t matter where this research is done. Russia, Italy, Germany or somewhere else. They always get the only one answer — NO. Nobody likes IKEA products. Nevertheless, as soon as a new store opens there is great hype around it.
IKEA invest a lot in content marketing and researches to run successful digital campaigns. For example, they were asking customers about their morning routine. They found out what irritates people in the morning most. That’s how First:59 campaign appeared. Around this campaign, IKEA tells customers how to fight pains of the morning routine with tips from expert bloggers and IKEA innovative products.
IKEA switched to eCommerce quite late, in 2016. It was made because of the consumer behavior shift. Nevertheless, IKEA took the eCommerce train quite fast and caught up their competitors.
The corporation closely follows all the technology trends to win the market. In 2017 IKEA launched an IKEA Place. It’s an iPhone app that uses an augmented reality technology. You just take a photo of your room or office, choose an item from the catalog and see how it fits your space.
Recently, IKEA announced that soon they will add an opportunity to make a purchase straight from the app.
IKEA stimulates customers to check updates. The brand always updates its websites with fresh content and new offerings. Numerous events and promotions help the company to keep consumers’ interest alive. They also motivate customers to talk about new products on social media.
To create better UX IKEA uses PayPal in addition to usual credit cards like VISA, Mastercard, American Express and others. Easy payment methods like PayPal undoubtedly make the shopping process faster and more convenient. When you use this payment method you need only your email and password. No cash, no credit cards, no infinite fields to fill.
Strict financial discipline, improvisation and innovations are the main keys to success. Ingvar Kamprad developed a unique business and marketing model. He made a number of revolutionary decisions that helped IKEA to stand out the competitors. Starting from manufacturing strategy to selling disassembled furniture. He taught us that every problem is an opportunity.
Ingvar Kamprad has built one of the most recognizable brands in the world. I would say that he has built a new religion rather than a brand. Its commandment is “To create a better everyday life for the many people”. His disciples follow it and continue his mission.
They are unlikely to lose what their leader had been creating for more than 70 years. It will be blasphemy. On the contrary, with the help of modern technology, they will save and enhance his legacy, spreading his ideas all over the world.
If you liked this article you can also read an article about Nike Marketing Strategy.