IKEA (Case Study Report – Conclusion)

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IKEA (Case Study Report – Conclusion)

            Good company culture, easily recognizable brand image and high brand quality are responsible for the success of Ikea. In addition, the company’s creation of a value-based business model has gone a long way in ensuring Ikea’s success. It provides economic value to the customer due to its competitive price rates, and has then gone ahead and created sustainable customer value-based service. In fact, Ikea not only considers itself a furniture retailer, it also focuses on service provision to its customer base (Edvardsson and Bo, 161). This makes Ikea stand out among its competitors and ensures its difference from other brands. This approach of providing both products and excellent service experiences has made the business quite successful.

Ikea’s turnover however tells a different story. While the company’s turnover continues to increase, the rate at which it does so has declined over the years. For instance, the company’s turnover between 2006 and 2007 increased by about three million euros, while between 2008 and 2009, it increased by less than a million. This shows that the rate of turnover increase has gone down and that in future, the company risks not showing any increase in turnover whatsoever. This may be indicative of the stage in which Ikea is in its product life cycle. A graph of the company’s product life cycle indicates that its product is currently in the maturity stage, having just passed the growth stage. The curve of the graph predicts that the next stage for Ikea’s product is the decline stage, meaning that the company’s success may be at stake (Haskel and Holger, 549). While that may not be certain, the company does need to change some of its strategies to ensure that its product does not head into the decline stage. BCG also indicates that the company is in “cash cow” but that it may soon be headed to “dog.”

In order to ensure that Ikea’s success rate continues into the future, we offer a few suggestions. Firstly, Ikea should increase its market share in Asia where such upcoming markets like China and India look to be quite promising. Specializing in the Asian economy is a good idea because these countries have high profit margins as well as high demand for products like Ikea’s. In addition, the company should consider extending business hours in a number of its strategically located outlets. This will ensure that the rate at which products sell increases as the period within which they are available to the customers is more.

Ikea should also penetrate into the high-end market by creating a new brand line for consumers belonging to that market. This can be done by earmarking some of the company’s resources for creation and marketing of the new brand line. Moreover, Ikea would benefit from creation of a value-adding concept for both women and children, their strategy customers. This can be done through the joint-venture method where the company can introduce boutiques in Ikea stores to tap into its strategy customer. The company would also benefit immensely from e shopping (Martenson, 14). Companies that have ventured into online marketing have benefited immensely due to market penetration, brand awareness and increased distribution. Ikea too could benefit from online marketing especially in the fact that its distribution channel would be increased. Use of the internet could also benefit the company by facilitating provision of the product user’s manual, thereby decreasing the cost, and the amount of paper and paperwork the company would be required to do. By employing these suggestions, Ikea would ensure that its success in its field continues. Indeed, the company should take action so that its product life cycle does not advance into the decline stage.