Group Strategy Consultancy Report

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Table of Contents

IKEA Market Segments
IKEA Strategic Customers
IKEA Critical Success Factors and Strategic Canvas
Reference List

IKEA Market Segments

The geographic segment of IKEA’s market can be described as omnipresent because the company does not have any problem appealing to consumers worldwide. It also shows how the organisation’s functions are always aimed at the reduction of geographical dissimilarities and a thorough approach to consumer preferences (Burt et al., 2021). Even though the areas of IKEA’s functioning can be considered relatively small, the company does not have issues with understanding the needs of unique consumers from across the globe. Regardless of the segment at hand, the company does not have a problem with expanding its reach and ensuring that all customers are treated in accordance with their needs.

Demographic segmentation is not so important for IKEA because the company knows how to appeal to almost any kind of consumer. IKEA has a natural predisposition to adapt to environmental and social conditions without any damage to its activities (Sciglimpaglia and Raafat, 2020). Consequently, the most common activity for the company’s management is to divide the target populations into smaller cohorts and see how different groups would respond to market changes. For IKEA, demographic segments do not represent a crucial contributor to the overall success across different markets.

The psychographic segment is the definition of IKEA’s worldwide success because the company is one of the best in the market to understand its consumers’ behaviours and turn them into a competitive advantage. Consumer lifestyles are often influencing the products released by IKEA, so it can be concluded that the company significantly depends on how customers convey their lifestyle choices through IKEA’s furniture and vice versa (Kotler et al., 2019). The overall drive toward one’s personality can be validated by the need to help match one’s attributes with the products offered by IKEA. Thus, the company expects to unite its customers while protecting their right to the uniqueness and personalised needs.

The behavioural segment is needed to aid IKEA in going beyond mere marketing when selling furniture. In other words, there can be various benefits appealing to different consumers that cannot be repeated or replicated. According to Brunner, Gamm and Mill (2022), IKEA tends to find a way to consider lifestyles, consumption trends, and demographic factors when predicting customer behaviours. This knowledge is important because it provides enough room for the company to reinforce certain attitudes toward the product and its alleged benefits.

IKEA Strategic Customers

The core group of customers to be addressed by IKEA are innovators who are willing to find a compromise between functional furniture that does not necessarily cost a lot of money. In order to appeal to younger cohorts of customers, the company also launched multiple initiatives based on advanced reality and artificial intelligence (Burt et al., 2021). This is one of the main reasons why IKEA conducts customer analysis and searches for additional means of collaboration and influence. By constantly processing feedback from consumers, the organisation makes itself closer to designing and launching products that either meet or exceed consumer expectations (Singh et al., 2021). As a sustainable leader and a forward-thinking innovator, IKEA drives emotion in order to make the best use of every opportunity while appealing to as many consumers as possible.

IKEA Critical Success Factors and Strategic Canvas

Critical Success Factors

The first critical success factor is the ability of the company to maintain the high quality of its products while selling them at a rather low cost which makes them affordable. This became a signature style point for IKEA and should be considered one of the biggest contributors to the ever-increasing incomes (Alenezi et al., 2019). A thorough description of each material utilised to compile IKEA furniture makes customers closer to understanding how different parts should be treated and assembled. The low cost of IKEA furniture appeals to quite a few customer segments that cannot be ignored. Thus, IKEA is a scalable organisation that has the opportunity to expand in unique ways.

The second critical success factor that can be seen as a contributor to IKEA’s success is the possibility to capitalise on self-assembling. The first idea that comes to mind when a person hears about IKEA is cheap furniture that can be assembled without any external assistance (Vuculescu, Beretta and Bergenholtz, 2021). The feeling of connection to the items that have been assembled by consumers cannot be replicated. The so-called “IKEA effect” remains a success factor for the organisation because it attracts more customers than ever (Kotler et al., 2019). Moreover, people who do not want to assemble the furniture themselves could find on-demand specialists to finish the task with a discount applied.

The biggest success factor that the company successfully exploits throughout the years is IKEA’s global reach. It was evident from the beginning that the company would have to conquer the international market because the local Swedish market did not possess the necessary level of scalability and the expected number of customers (Sciglimpaglia and Raafat, 2020). More to say, IKEA tends to exert special effort to customise local stores to appeal to the cultures and needs of locals. The inherent competition also contributed to how IKEA treated its innovative ideas. The core idea pursued by the organisation is climate-positive manufacturing and a stronger focus on sustainability (Vuculescu, Beretta and Bergenholtz, 2021). The increasing number of stores across the globe shows that IKEA ensures it stays in line with all the objectives while appealing to consumers and the environment.

Strategic Canvas

The strategic canvas for IKEA can be seen as affected by three primary and two secondary factors. First of all, the organisation is rather successful in terms of converting the value created by others without spending any additional resources. The adoption of the flatpack technology allowed the company to reduce the cost of transportation and make it significantly easier to assemble furniture as well (Singh et al., 2021). Consequently, buyers become one of the essential elements of the value chain and contribute to their well-being while also remaining one of the critical variables in the income equation for IKEA. Another primary factor is the high number of value propositions offered by IKEA. Knowing that other competitors might have trouble matching the affordable prices attained by the organisation, it can be claimed that the company does not have any issues with the value inherent in its offers (Burt et al., 2021). Ultimately, the fact that customers get to do lots of work instead of IKEA employees makes it possible for the organisation to rely on buyers even more.

With buyers remaining such a powerful force moving IKEA forward, it should be noted that the substantial savings and connection to consumers are achieved through the interface of two additional methods. First of all, modular manufacturing and design have to be included in the discussion in order to validate the need for price differentiation and flat-packing initiatives (Alenezi et al., 2019). Another reason to appreciate the organisation’s strategic canvas is the ability of IKEA to embrace a minimalistic approach to business and appeal to consumers across the globe and not just in the headquarters region. The final secondary factor is the increasing amount of savings that accumulate owing to flat-packing and its growing popularity among consumers (Sciglimpaglia and Raafat, 2020). This is a serious force that allows IKEA to reduce the cost of mass transportation of furniture and the manufacturing of new items.

Reference List

Alenezi, S. et al. (2019) ‘Analysis of IKEA’s internationalization strategy’, Journal of the Community Development in Asia, 2(3), pp. 16-28.

Brunner, F., Gamm, F. and Mill, W. (2022) ‘MyPortfolio: the IKEA effect in financial investment decisions’, Journal of Banking & Finance, 106529.

Burt, S. et al. (2021) ‘The changing marketing orientation within the business model of an international retailer – IKEA in China over 10 years’, The International Review of Retail, Distribution and Consumer Research, 31(2), pp. 229-255.

Kotler, P. et al. (2019) ‘Influence of country and company characteristics on international business decisions: a review, conceptual model, and propositions’, International Business Review, 28(3), pp. 482-498.

Sciglimpaglia, D. and Raafat, F. (2020) ‘Freemium marketing: use of demand-side research in market segmentation strategy’, Journal of Strategic Marketing, pp. 1-24.

Singh, P. et al. (2021) ‘Key determinants of international retail success: a case of IKEA retail’, International journal of Tourism and hospitality in Asia Pasific, 4(1), pp. 18-33.

Vuculescu, O., Beretta, M. and Bergenholtz, C. (2021) ‘The IKEA effect in collective problem‐solving: when individuals prioritize their own solutions’, Creativity and Innovation Management, 30(1), pp. 116-128.

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