Justin Bowers

M3A2

1/27/2016

IKEA Analysis Report

How do IKEA’s products, services, and related attributes satisfy the wants and needs known as its value proposition? Before I get into the meat and the potatoes of the paper that’s talking about IKEA, I would like to talk about and define the value proposition and its purpose for a company. The value proposition is basically, something that is stated or promised that is going benefit your customers. The value proposition helps you with three main points. The first point is that it helps recognize the product roadmap which, will help identify anything that needs to be let go that’s not going to help contribute to the value proposition. The next point of value proposition it helps promote and sell of whatever product you have. Also, it is the opening to your customer pitch. The last in final point is that it also lets you know the higher prices. Sometimes the value can be unclear of the product, and the customer is thinking in terms of cost based prices. That going into how long did it take it to build, how much did the materials cost. Value based pricing is about revenue increase and money savings. If you want to have high profit margins, use prices based on value. The Strategy of IKEA is to provide low cost on their products and have some great designed furniture that will intrigue the customers mind that will enhance their over all experience at IKEA while shopping. “Low Price with meaning,” is IKEA’s slogan that will help gain the customers that the products are going be well designed and cheap so the customers can afford them. What helps IKEA stand out is how they operate, from their materials strategy which will focus on finding materials that doesn’t cost a lot from different countries. IKEA puts all the parts of the product in a flat box because they want you to do it your self so you can cut out the manual labor. The company lays everything out in a room to show how it can potentially look so you can get a visual how it would look in their rooms. There are some customers that would be upset with products that have low quality, but at IKEA they don’t have that problem. IKEA is ranked second in the furniture business right now and they keep get popular the more they build in America.
The Strategy of the company ties into their value proposition because IKEA originally came form Europe and bright over to the United States. The same lay out that it has in Europe is the same layout we use here in America which helps the customers see the designs that forced them to walk in a certain path through the store before reaching the self service warehouse. IKEA shifted the onus of furniture assembly onto the consumer who assembled the furniture after they transported it themselves. The store has daycares for their kids and a café if you get hungry. This helps the family feel like they can shop all day or look around because they have everything they need right there at the store.
IKEA’s wants to focus on placing their stores in suburban neighborhoods, With a population rate of middle class people. They want to identify that the customers have unique taste that will vary across spending categories. Also, another part of IKEA’s plan is to offer a broad range of products to hedge against the risk of fluctuation in any particular consumer segment. With the economic recession, IKEA is more so keeping the cost down for the customers.
How does IKEA create a well-defined market position that appeals to customer wants and needs and differentiates its offering from competitive offerings in a process known as positioning and differentiation?
IKEA has been the market leader in furniture for awhile now. This has to do with their Positioning for their competitive strategies for a global market place. The main points of the company have been focused on the company's value chain on the product that’s quality and lowering the cost so customers can afford the furniture. IKEA's technological concepts has help them gain a competitive advantage in the furniture industry. The technology will focus on helping with the development of new products, research and development systems and methods to improve on the production process. IKEA is also looking to gain competitiveness in the household furnishings industry. By enhancing their relationship with their customers, which will help them increase the development and systems to make sure that the products get to the customers in due time. Its also, the highest marketable quality available at affordable.
The differentiation strategy for IKEA is that they are looking for competitive advantage. They are looking for these advantage by having products that the quality of the products is going to be better and its going be different than competitors' products by customers’ unique taste in their products because of it quality and cost. The differentiation strategy is also focusing on their quality designs. IKEA does not do this, so they could charge a premium price. They do it to promote their brand.()
Explain sources of value as they relate to the wants and needs of IKEA’s core customer.