Ass 5 Written Assignment – Evaluate marketing opportunities
IKEA is a Swedish company registered in the Netherlands that designs and sells ready-to-assemble furniture (such as beds, chairs and desks), appliances and home accessories. As of January 2008, the company is the world’s largest furniture retailer. Founded in Sweden in 1943 by then-17-year-old Ingvar Kamprad, who was listed as one of the world’s richest people in 2013, the company’s name is an acronym that consists of the initials of Ingvar Kamprad, Elmtaryd (the farm where he grew up), and Agunnaryd. The company is known for its modern architectural designs for various types of appliances and furniture, and its interior design work is often associated with an eco-friendly simplicity. In addition, the firm is known for its attention to cost control, operational details, and continuous product development, corporate attributes that allowed IKEA to lower its prices by an average of two to three percent over the decade to 2010 during a period of global expansion.
As of January 2014, IKEA owns and operates 349 stores in 43 countries. In fiscal year 2010, US$23.1 billion worth of goods were sold, a total that represented a 7.7 percent increase over 2009. The IKEA website contains about 12,000 products and is the closest representation of the entire IKEA range. There were over 470 million visitors to IKEA’s websites in the year from September 2007 to September 2008.The company uses approximately 1% of the Earth’s wood supply, making it one of the largest users of wood in the retail sector.
There are two marketing opportunities
Advertising in business is a form of marketing communication used to encourage, persuade, or manipulate an audience (viewers, readers or listeners; sometimes a specific group) to take or continue to take some action. Most commonly, the desired result is to drive consumer behavior with respect to a commercial offering, although political and ideological advertising is also common. This type of work belongs to a category called affective labour.
With the Internet came many new advertising opportunities. Popup, Flash, banner, Popunder, advergaming, and email advertisements (all of which are often unwanted or spam in the case of email) are now commonplace. Particularly since the rise of “entertaining” advertising, some people may like an advertisement enough to wish to watch it later or show a friend. In general, the advertising community has not yet made this easy, although some have used the Internet to widely distribute their ads to anyone willing to see or hear them. In the last three-quarters of 2009 mobile and internet advertising grew by 18% and 9% respectively. Older media advertising saw declines: −10.1% (TV), −11.7% (radio), −14.8% (magazines) and −18.7% (newspapers).
Event marketing is one of the fastest growing fields in marketing and advertising today. It’s everywhere you look in today’s culture although; you probably don’t readily recognize the majority of the event marketing programs when you see them. That’s because there are many flavors to event marketing and there are no hard rules about what exactly is and isn’t event marketing. That free sample of coffee you picked up from the Dunkin’ Donuts logo wrapped vehicle = Event Marketing. The huge, custom-converted tractor/trailer semi with dozens of Playstation 2 stations where you played the hottest new game titles while at the X Games = Event Marketing. Have you been on Spring Break or at a vacation hot spot and been approached by an attractive model who wanted you to sign-up or try something? That was an Event Marketing program in action.......
Ikea’s organisational goals
Porter’s Five Forces
The rivalry of IKEA in the industry is very competitive and prices must be as low as possible. But IKEA is safely the leading furniture retailer at discounted prices and no other company is testing its place. Other companies in India have not expanded a lot, so there is a lot of potential in IKEA to do well in India. The Furniture industry is quite old and traditional so it is important for IKEA to adapt to the new styles and cultures.
New entrants who have entered the industry do not threaten IKEA at all because it takes many years to just build reputation and many years to build customers. The furniture industry is already overfilled with different companies however when it comes to furniture quality is important as these furniture can last for generations. It also involves a lot of investments and expert tradesmen to build a company enough to be a potential threat to the market leaders.
Customers have a strong effect of bargaining in IKEA. This is because there are so many other potential customers that are still of high quality. This makes the industry a very tough and competitive industry full of variety and competitive global and local furniture producers and retailers.
Substitutes are not a treat to this industry and to IKEA because there are not many potential substitutes that can replace furniture. IKEA is in quite a broad market so there will always be some other items that will be sold and some that are being replaced. However if there are new substitutes, it is important for a market leader to catch on these substitutes as fast as possible or even innovate them by themselves. Home appliances are always developing but there will always be some that are at the best they can be. IKEA is not threatened by new substitutes.
The suppliers of IKEA have no real strong powers of bargaining because there are so many other production factories that could supply IKEA with quality products. However, IKEA is a company that likes to build strong, long and strategic relationships that will heavily benefit them. This means they will offer a better deal to relationship companies to keep their partnership strong.
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