IKEA Strategic Management and Branding in the US

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Table of Contents

Introduction
Statement of the Problem
Appropriate Solutions to the Key Issues/Problems
Recommended set of Solutions and Justification of the Choice
Precise Course of Action
Conclusion
Works Cited

Introduction

IKEA is a multinational corporation that deals with furniture production. By 2002, it was the leading global company in its industry. Its sales were approximated at 12billion US dollars. However, the company experienced challenges in the market. Its products could not match the needs and preferences of the American people. This case suggests the need for the company to listen to customers’ concerns and develop the appropriate business strategies to cope with customer complaints. Indeed, this challenge is the main problem that IKEA had to address to succeed in the American lucrative furniture market, which was worth 67 billion US dollars by 2002.

Statement of the Problem

The compatibility between IKEA’s products and similar goods that were manufactured in the US was the major problem that hindered the success of the company in the American market. For example, “beds and kitchen cabinets did not fit the American sheets and appliances, its sofas were too hard for American comfort, and…its products dimensions were in centimeters, rather than inches” (Moon 7). Therefore, when customers purchased the company’s products such as beds, the American-made bed sheets, whose size had been measured in inches, could not fit in the beds that had been measured in centimeters.

To address the problem of incompatibility, the company resorted to doing market research. Marketing research entails the determination of customers’ needs, wants, and beliefs. The noble function of marketing planning is to ensure that an organization develops effective strategies for gaining a competitive advantage. The goal is to guarantee that the organization remains profitable amid the changing market environments.

In the effort to develop successful marketing planning, organizations encounter various barriers. These factors or elements hinder the success of developing marketing planning strategies. As Kotler, Adam, and Denize confirm, marketing planning barriers include, “inadequate management support, failure to coordinate and comply with plans, and failure to understand the customer needs” (107). In the case of IKEA, the main challenge was the identification of clients’ needs and wants before exploring its need to explore the American furniture market. Indeed, the problem of incompatibility led to other tactical problems such as the failure to address the needs of the customer better and the disappointment in terms of getting instant welcoming of the company by the American consumers.

Appropriate Solutions to the Key Issues/Problems

IKEA has an array of solutions to deal with the problem of poor reception in the American markets. Firstly, as part of its strategic management, it can continue focusing on its efforts in conducting continuous market assessments to develop a better understanding of its customers (Barney and Hesterly 43). It can redesign its production systems, including measurement systems, to guarantee harmony between the company’s standards and those of the American products that are used together with the company’s furniture. For example, IKEA can move from imperial to metric measurement systems. This suggestion requires the company to make strategic decisions to align itself with other industry players’ measurement standards. In terms of size, this solution also requires IKEA to adopt the American people’s preferences and tastes in the future to ensure the optimal comfort of the products that it offers for sale.

Secondly, IKEA can launch an intensive campaign to challenge the status quo. The goal is to change the practices and norms of the American people on matters of furniture tastes and preferences. This strategy will include the introduction of the imperial systems and challenging other industry players such as bed sheet manufacturers. This solution suggests that IKEA needs to alter the business environment of furniture in America by compelling its American clients to accept the standards since they are also used in other places such as Europe. This move ensures harmonization of the standards and practices in furniture production across the company’s global production centers. It also suggests that the US-based companies that manufacture products that are used together with IKEA’s items will also get market access in other global markets for IKEA’s products, especially if such companies launch a combined marketing campaign to promote the fitness and compatibility of their products with IKEA’s items.

Thirdly, IKEA can stop focusing on the American markets as part of its globalization strategy. It can shift its target to other nations in which the imperial system is deployed where people import products such as bedsheets from Europe and other nations using the colonial structures. Fourthly, to ensure compatibility of its products with other global market players, IKEA can change its production system in Europe to the metric format and/or attempt to influence other players to adopt the same system. This strategy requires IKEA to alter the sizes of its products to meet those of the American tastes and preferences or American cultures.

Recommended set of Solutions and Justification of the Choice

The most appropriate solution among the four suggested solutions is the one that increases IKEA’s market success in different global regions to ensure the success of its globalization strategy. Solution 4 and Solution 2 call for the alteration of cultures, tastes, and preferences of people who consume furniture products and their related products. For success to be realized, the company needs to be sure that it can successfully implement a change in its consumers. Indeed, Kotler, Adam, and Denize claim that people fear a change, which alters their status quo (83). Therefore, instead of attempting to change people’s ways of life, IKEA should change its operations strategies. This way, people can develop the perception that the company is created to meet their needs, rather than offering products for sale to meet its need for gaining profitability.

Solution 3 calls IKEA to stop placing its products in markets that depict incompatibilities between its practices and those of the other market players. While this plan ensures that the company maintains a harmonious set of norms and practices in all its markets, it is inappropriate after considering that the exploration of the globalization strategy exposes organizations to variations in terms of cultural tastes and preferences. Therefore, the organization must ensure that it changes its practices to ensure success in such markets. Walking out of the American market is a misplaced idea after considering the lucrative nature of the market. In 2002, the market was worth 67billion US dollars. In the same year, IKEA revenues were worth 12billion US dollars (Moon 1). This finding suggests that by developing proper targeting strategies, the company can gain immense success by changing its norms to correspond to the needs, inclinations, and tastes of the American customers to guarantee high customer satisfaction (Barney and Hesterly 46). Indeed, the environment should shape the organization’s strategies. Therefore, the first solution works best for the company.

Precise Course of Action

In the process of implementing the suggested solution, the company has already been taking significant steps to ensure success as reflected in the increasing sales volumes. The company needs to screen its marketing environment. This strategy will ensure better planning of the appropriate new market in the US. New markets often present challenges in terms of aligning an organization’s culture with the local tastes and preferences, attitudes, and beliefs (Kotler, Adam, and Denize 49). Therefore, IKEA needs to study the values, flavors, and inclinations in furniture products in the existing and other new markets in the US. Besides, it needs to segment its market depending on their different needs. It also needs to develop an appropriate targeting campaign. Besides, it will also need to establish strategies for managing the arising brand assets and liabilities to ensure long-term customer satisfaction.

Conclusion

Creating a strong brand image to introduce new products in a new market is highly challenging. Faced with the dynamics of the changing marketing planning, IKEA has to deal with the challenge of building the clientele for its products in the US. IKEA faces the challenge of unpopular and inconsistent products that do not match the preferences and tastes of the US market. Thus, the company needs to conduct an extensive marketing planning to ensure a good alignment of its products with new markets, including the American souk.

Works Cited

Barney, Jay, and William Hesterly. Strategic management and competitive advantage. Mason, Ohio: Southwestern Publishing, 2014. Print.

Kotler, Peter, Smith Adam, and Stephens Denize. Principles of Marketing. Prentice-Hall, Australia, 2009. Print.

Moon, Youngme. IKEA Invades America. Harvard: Harvard Business School, 2004. Print.

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