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Ikea Invades America

Essay by   •  February 19, 2011  •  Case Study  •  705 Words (3 Pages)  •  2,603 Views

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Ikea invades America

In 2002 IKEA had 14 stores and revenue approached $12 Billion and plan to have 50 stores in US by 2013. IKEA was the fastest-growing furniture retailer in the country, not only does IKEA have monster stores and great prices and it has also created a unique niche. The plan to increase 50 stores in US would increase its market shares but they don't want to be just another supplier of traditional furniture.

IKEA was founded in 1943 when 17 year old Ingvar Kamprad by used some money his father had given him. Company initially sold basic household goods at discount price and later Kamprad open his low-priced furniture. By the time 1965 IKEA opened its falship store with 45,800 square meter and later it become prototype for all of IKEA's retail outlets with childcare center, restaurant, bank and enough parking space.

IKEA's new product development process was overseen by a product-strategy council which consist senior managers. Its product developer would set the target retail price and then company would begin select a manufacturer to produce new products. Its product has a matrix with high, medium and low price and with four basic styles. IKEA worked with 1,800 suppliers in more than 50 countries and company seeking to balance cost-efficient labor and product quality. Once material and manufacturer was in place, its design will handled in-house via internal competition. All IKEA products were transported "Flat" and make it easier for company to shit product and consumers to transport the furniture.

IKEA main focus was primarily on price and its early success was functional at best and ugly at worst. As company evolve, company now offers product in low price with meaning. Over the years, IKEA had refined its retail approach, and designed its layouts carefully. Atmosphere was always bright and inviting and customers were free to lounge on the model furniture. It is very difficult for competitors to copy all its charasteric..

in United Stats and furnitures retailing accounted for $67 billion in sales in 2002. There is a huge potential for IKEA to expand its market and gain more market shares. Furniture market is highly fragmented, top 10 furnitures retailers were only accounted for just 14.2% of market share. The competition in the furniture market is intense, general retailers are tended to promote their furnitures products by cutting price. Some smaller shops that offered cheap furniture to price-sensitive customers on a tight budget. And high end retailer also face a high competition environment. Their sales representive must be high touch, who can assist with measurement and product selection. High end retailer also have to carried a dozen different styles to satisfied different customers' preference. They also have to compete on quality and service. And salesperson have to reassure customers that furniture they were buying



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