Ikea Invades America Essay

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Week 5: Individual Case Analysis IKEA Invades America MKT523-97 Kayla L Quillen November 25, 2012 Step #1: What are the facts? Fact #1: IKEA has a product strategy that is extremely different than any other furniture retailer. IKEA would come up with a product, such as a chair, and then map out how much they wanted to charge for it first. They usually set their retail prices around 30% to 50% lower than their competitors. IKEA then begins to look for a manufacturer to produce the product. “IKEA would circulate a description of the proposed product’s specifications and target cost to its suppliers and encourage them to compete for the production package,” (Moon, 2004). The entire product did not always come from the same supplier, meaning that different components could be made by different manufacturers and then placed together once a consumer selected each piece individually. The third step in the product process is the decision of what materials the product will be made out of. Once these three steps were complete, then IKEA would hand over the price point, product specifications, and the materials list over to the design team and they would compete for the winning design. The final idea that sets IKEA apart from the rest with their product strategy is the fact that all of their products are designed for flat shipping. This means that customers assemble their purchases at home which cut down on shipping costs for both the company and the consumer. Fact #2: The design of their retail stores differs widely from its competitors. “Upon entry, shoppers were gently coerced into a predetermined path through cheerfully decorated model bedrooms, kitchens, living rooms, and bathrooms. The atmosphere was always bright and inviting, and customers were free to lounge on the model furniture as they made their way through the store,” (Moon, 2004). Their stores also

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