Ikea Case Analysis

Ikea is a successful global brand with varying presence in geographical markets. Numerically, Ikea has significantly more store locations in Europe than in the growing markets of Russia, China, and the United States however the customer response is quite similar across the board. Ikea's success is overwhelmingly due to the company's innovative product offering and the large market it serves. Ikea stores provide a common experience to customers in all of their locations: a giant warehouse, thousands of furniture goods and accessories, products that are stylish yet affordable and functional. Ikea's target market of the global middle class has demonstrated that it strongly shares buying and spending habits, despite any cultural differences. The leading models of furniture purchased and even the average amount of money spent per store visit is a market trend.


The Ikea brand is strongly linked to design. The design of an Ikea store is organized in the shape of a circle, so that customers can see everything in the entire place by moving in only one direction. This is convenient. At the same time, the circular path is a wide one to allow for some customers to stop and look at products and display setups without hindering the experience or blocking the pathway of others. A restaurant is often placed in the center of an Ikea store, where a customer can step off the circle for a pit stop before resuming shopping with the encouragement of recent nourishment. Product design itself is even more important. The company strives to produce stylish and even beautiful items, although always within cost constraints. If an offering cannot be made affordable to middle class shoppers, it won't be offered at all. Ikea makes inexpensive complementary products to point out all the things the customer never knew they needed and then rotates out a third of its entire catalog line every year to keep items fresh, desirable, and relevant. Additional design considerations include using recycled products as raw materials and a fold-flat architecture for ease of transport and minimization of shipping expense. Design is crucial to Ikea's positioning and is the key differentiate in building its brand equity.

Ikea's brand equity is currently strong, however the emergence of competition in growing markets make it harder to defend. The brand equity of Ikea is encompasses its individual products, product groupings, real-life displays, business processes, and sales initiatives. In the U.S., a couple of established companies which are now challenging Ikea's brand equity in its target markets are Target and Kmart. The strength and advantage these two bring to the table is that they already have a customer base of middle-class Americans to solicit new offerings to, and the physical marketplaces and infrastructures. If Target and/or Kmart can successfully build stylish, functional, and affordable out-of-the-box furniture into their store catalog, Ikea may lose out on some ground it's aiming to gain in the United States. Although not a lone wolf in corporate strength, Ikea's product edge is a major piece of its brand equity.

Ikea is leveraging its brand smartly. The company's outward focus on product design is slickly enhanced by unique promotions and an almost cult-culture following. I believe Ikea should stick to its current expansion strategy, growing in number of stores annually based on strict financial ability. By maintaining a frugal attitude throughout all operations, Ikea will continue to strengthen its brand reputation. A rapid expansion into the United States, Moscow, or Beijing could prove futile; Ikea has received lessons in this arena from past failures in Japan and the United States. Ikea must continue to leverage its cult following, the lifestyle aspect of its brand--making subtle adjustments as regional markets demand.

Risks to the Ikea brand include the loss of its cult following, a change in relevance to the global middle class, and decreased sales in the face of competition. To address all these possibilities, the Ikea Brand Manager needs to be especially careful about a change in the company's inner corporate culture. As Ingvar Kamprad, Ikea's founder, ages and his influence on the company is distanced via a diminishing link through long-time employees, culture change could become a reality. If the brains and workers of Ikea start to think about things and act upon things differently, "Ikea World" may cease to exist.