TEAM

Keyona Abbott

Francisco Alvarez

Kaitlin Bumpus

Jasmine Ruiz

Overview

• Founded in 1943 by Ingvar Kamprad

• Focuses on Frugality & Low Cost

• Over 226 Stores in 33 Countries

• 200 IKEA Group Owned, Rest Franchised

• 28 Stores in U.S.

Älmhult, Sweden - 1953 Atlanta, GA - 2005

Functional Divisions

• Production– Long-Term Supplier Relationships– Places Trading Offices Worldwide– Long-Term Contractual Relationships

• Marketing– Product Design– Catalogs– Advertising– Public Relations/Sales Promotion

SWOT Analysis

• Strengths– Low-Cost Structure– Anti-bureaucracy– Do-It-Yourself Approach– Added Amenities

• Weaknesses– Do-It-Yourself Approach– Service Trade-Offs– Limited Promotional Expenditures

IKEA Catalog

SWOT Analysis

• Opportunities– Urban Sprawl– Value-Dominant Buying Logic– Growing Popularity of Swedish Design

• Threats– Copycat Competitors– Changing Customer Needs

Future U.S. Expansion

• Advantages– Consumers Cost-Conscious– Melting Pot of Cultures

• Barriers– Strong Individualism– Commercials Too Edgy

Question 1

• Why are the styling and designs of IKEA products so popular? Does IKEA’s blend of style and pricing have appeal to mainstream U.S. consumers?

Positive• Trendy• Sleek• Low-Priced• Good Quality• Unique• Stylish

Negative• Cheap• Hard to install• Low-Priced• Bad Quality• Not Unique

Product Description

Problems

Price Self-Assembly

Appeals To…

College Students Kids

Young Couples Sophisticated Family

Business Office

• Gender

38%

62%

Male

Female

• Age

2%

32%

39%

25% 13-17

18-34

35-49

50+

Demographics

0

35%

48%

17%No College

College Grad

Grad. School

• Income

15%

26%

33%

26% 0-30K

30-60K

60-100K

100K

• Education

Demographics

0

76%

10%

6%7% Cauc.

Afr.Amer.

Asian

Hispanics

• Race

Demographics

• How do you account for IKEA’s growth & popularity: value or image?

What can IKEA do to sustain growth after it loses some cachet?

Question 2

IKEA Revenues(in millions)

20,000.0022,000.0024,000.0026,000.0028,000.0030,000.0032,000.00

2006 2007 2008

Hoovers Company Capsules and Profiles

Image

• What do you think of when you think about IKEA?

• Appeals to Outside Mainstream

• Socially and Ethically Responsibility– No plastic bags– Owned by a charity– Long term relationship with suppliers.– Environmentally conscious production and

manufacturing process

Commercials

500 Days of Summer

I Don’t Judge

Dining Room Table

Sustainable Growth

• Expansion into other markets– Use successful business strategy in other

ways– Open smaller “mini IKEAs”

• Put products into other retail stores.– Food from their café in grocery stores

• Speculate on what will happen at IKEA stores as they are tailored to fit local tastes. Is the company’s trade-off of service for low cost sustainable in the long term?

Question 3

U.S. Market

• A lot of Americans live very busy lives and convenience and fast pace is very important

• Most Americans are willing to pay the extra money for service rather than the do-it-yourself

• It’s believed that the low cost do-it-yourself will not be sustainable in the U.S. and other developed countries

American Invasion

• Americans did not like IKEAs’ products at first….

– The sofas were too hard

– Appliances did not match kitchen designs

– Everything is do-it-yourself

Advertising

Advertising

Advertising

Fun Facts

• Cheapest Item is a dog dish for $0.29• There are 48 room settings and three

model homes in an IKEA showroom • 522 million people worldwide went to an

IKEA store last year • In 2006, IKEA stores & distribution centers

handled 281,734 tons of waste. About 81% was recycled.