New Prodcut Development Ikea

1. IKEA & Furniture Industry

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Good HR policies,, Brand Awareness is high

1. Problems Faced By IKEA:

Inability to convert traffic to Sales. Gap b/w no: vistors and actual buyers remain large. Whatever they buy is low margin Pg 09

1. Price Vs Product Paradox

• Hyper Competition In Industry:
• Price & Target Mismatch - On par with Quimei in terms of aspirational value but people don’t buy, highewr than local vendors as they are Chinese. They reduced prices by 12% sales increased by 35%. PG 09 Proof for price – sales correlation.

1. Promotion

• Perception about foreign brands: Seen as aspirational rather than value
• Target Consumers - They removed high end products from shelves, this could have dettered the only market segment coming to actually buy. 25-35 people who want to buy don’t have money, Focus on rising

1. Cultural

• DIY
• Delivery
• Individualistic Vs Collectivist: Not so interested in unique designs

1. Legal & Infrastructure Issues

• IP - IKEA’s catalog – Imitation issues – Hyper competition, highly fragmented, price based competition
• Some products in catalogue not available due to supply issues Pg 14, Land issues etc

1. Proposed  Solutions & Courses of Action

1. Re-Configure Marketing

1. Change in Target Segment:
2. Online orders & Extensive Social Media usage: online presence + App Or Web based UI to take a picture of your home and accept furniture from IKEA’s catalogue and place them in the picture and make a more informed decision.

1. Reduction in costs: no manufacturing facilities in china. Use market surveys to find best pricing strategies.

1. Increase Local Sourcing
2. Increase Local Manufacturing
3. Improve SCM network In China:

1. Make Purchase Easier For Customer:

1. Assembly and Delivery services (Charged Services): Specialized as well from plumbing accessories etc, Extent delivery services to also include movers and packers services for after sales units. As incase people might not buy because it might be a hassle to move these items after disassembling and assembling them again.
2. Return Policy of 2months to 6 month:
3. EMI & Loan services:
4. Promote DIY Culture:

1. Value Added Services

1. Personalized Service: Designing homes based on client’s needs. For B2B IKEA can hekp design the office space using their catalogue.
2. Provide furniture specific for Chinese culture. IKEA should look for cultural adaptations of popular products to cater for the Chinese consumers. This can include the products in the canteen, such as offering dumplings or other famous Chinese dishes. Some store products can be made China specific such as chopstick holders, or decorated items for the Chinese New Year.

1. Summary

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