Firstly, with the business idea “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”
PROPOSE RETAIL TYPE
Retail Type
IKEA, a Swedish home furnishings retailer, has been operating in international markets since 1973 in Switzerland IKEA now has a big number of stores in 37 countries and is expanding in a number of locations, including Asia, where the brand has only been present for a decade IKEA welcomes more than 706 million customers each year to its 378 shops In FY20, their website IKEA.com received over 3.6 billion visits With IKEA stores in many countries – and more on the way as they expand into new markets – retail is their primary business
We advocated that IKEA be chosen to develop a plan for the company's first retail store in Vietnam A specialty retail store is defined as a type of retail establishment The breadth of a company's product offering, not the product it sells, decides if it is a specialist store A specialty store is one that is regarded as an expert in a specific type of product.
Why IKEA?
Firstly, with the business idea “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them” of IKEA, it is very suitable for Vietnamese requirements about a modern - smart home Customers can easily find all the quality, nice and intelligent furniture for rearranging their house at IKEA which does not cost too much money like other luxury brands
Secondly, IKEA has a huge distribution channel which they can ensure that all customers obtain accurate products in time with the best quality Moreover, under all conditions, the flow of goods must be as efficient as possible, ensuring that the products that customers seek are always accessible for purchase Therefore, they can come to IKEA to shop anywhere at any time they want without a fear of running out of stock
Lastly, the number of visitors to IKEA's website is rapidly expanding, resulting in a favorable impact on the company It is ideal for clients who do not have enough time to visit an IKEA store but prefer to purchase from the furniture of their own home Furthermore, the online environment and shipping technique help clients feel more at ease when purchasing, allowing them to purchase more items for their homes
IKEA has the potential to become a major player in the retail industry Moreover, with a company like IKEA known for its innovative approaches to modern clients, there is a good chance that this company will flourish in this new field.
Products Sold
Coming to IKEA, customers will experience shopping with a variety and assortment of merchandise Each IKEA store carries around 10000 products in various categories and designs such as many different types of home decoration (plants, pictures, carpets, etc including RENS sheepskin carpet, which is the best seller in IKEA), a lot of smartly designed-furniture (beds, bookcases, tables, chairs, ), which Billy Bookcase is one of the most popular products, and several DIY goods that can help clients decorate their home in their own style by themselves.
TARGET MARKET
Customer Definition
IKEA’s target consumers are people between the ages of 20 to 34 as of 202 This age combined with their salary bracket are most concerned with buying stylish, contemporary, quality furniture at the best price possible, which is precisely the type of furniture IKEA sells According to analytics, after people reach the age of 34, the numbers shopping at IKEA drop off dramatically Because of the contemporary designs of their furniture and the low prices they offer, it is feasible for IKEA to attract the younger consumer This age bracket is turning to their maturity period, so they tend to tighten their budget as they move into their apartment or home Furthermore, for some who like to move house frequently, IKEA is still an optimal choice because of the aforementioned reasons Another aspect due to the target in the customer’s age is that IKEA can offer the furniture designs this age of consumers is looking for at prices their competitors cannot beat
The figures are quite evenly split when it comes to which gender shops at IKEA more frequently In terms of which gender is faster at putting IKEA furniture together, males are on average faster than females In addition, both men and women shop for furnishings in comparable places Men, on the other hand, are more likely than women to shop at retailers that encourage a do-it-yourself approach to furniture and home design, such as Home Depot and Lowes
IKEA's major target market is the worldwide middle-class customer (with an income ranging from $35k to $80k) Because they work hard and spend their money on high-quality products, people in this pay bracket seek to get the most bang for their buck Consumers in the middle class are looking for high-quality furniture at a reasonable price Furthermore, this group is ready to pay a bit extra for furniture that will last for a long time The company's ability to develop and establish a global presence is due to IKEA's cheap prices on fashionable furniture
The business strategy of IKEA targets two main marital status: single living with other significance and married and starting a family In particular, they are loyal to brands (including TV brands) that match the way they consume entertainment In such cases, they do not base all their decisions on cost, they can be extremely brand particular Moreover, they are loyal to brands that communicate the importance they place on form and function— form and function that reflects their values.
Trade Area
The store is closed to businesses, schools, residences, which can provide customers from a wide range of segmentation with a high level of accessibility In addition, we have to consider some natural and man-made barriers to make it easy for customers to enter and exit the site Besides, we can utilize a few benefits to make better availability, for example, close to transport stopping, …
Choose a place where there are few natural and physical obstructions to make it easier to recognize the store's presence whenever they have a request and reach it from multiple directions
A specialty store that supplies IKEA products
2.4.The essence of goods, assortment, alternative source locations for items
IKEA products refer to all life-related products used in people's daily life, including furniture and daily necessities Different consumer groups have different needs for household products thanks to the various aesthetic methods and consumption concepts This also requires market positioning within the home design process, so as to draw in more consumers Since its inception, IKEA furniture has been dedicated to designing and producing exquisite and sturdy low-priced products to fulfill the wants of the public for home consumption
The new stores will be located in a highly competitive location in the furniture business However, we have enough reason to choose that place as favorable for the IKEA store Firstly, IKEA’s brand value is a good reason to attract a large number of customers who passionate about DIY products Secondly, besides trading and producing specialty products, IKEA store also offer other personal services that other stores do not have, such as a small food court, which ensures customers can shop comfortably Finally, with product prices at IKEA lower than rival stores, it is a strength to attract customers in the age group of 20 to 40 who make up the majority of the Ho Chi Minh City population
In conclusion, according to the factors mentioned above, the size of trade area is relatively large which in 3 km from 50 to 70 percent of customers Moreover, the optional exchanging region will be within 5 km generating about 20 to 30 percent of site customer and the furthest region includes remaining customers.
LOCATION ANALYSIS
The IKEA’s Competitor in Ho Chi Minh City
Due to the fact that the IKEA store is the first retail store in Vietnam, we will use information about location conditions of Nha Xinh store in order to have the optimal selection for the IKEA’s location in Ho Chi Minh City The main reason for choosing Nha Xinh store is its similar business model to IKEA Nha Xinh infrastructure stores is mainly located in Hanoi and Ho Chi Minh City:
• Nha Xinh store F4 Tower, Cau Giay District
• Nha Xinh store Sun Plaza, Tay Ho District
• Nha Xinh store Vincom Center, Dong Da District
❖ In Ho Chi Minh City:
• Nha Xinh store Thao Dien, District 2
• Nha Xinh store Phu My Hung, District 7
• Nha Xinh store Hai Ba Trung, District 3
We will consider the site in Ho Chi Minh City, there are three sites that Nha Xinh store is located in the table below:
Located right in the center of the residential area Quick connection to the city center
Quick connection to the shopping center and residential area
Located right in the center of the residential area Quick connection to the shopping center
Infrastructure It is always invested and being developed rapidly
It has been and is being developed rapidly
Large-scale shopping center with high-end estate projects
Target Market District 2 and Binh Thanh
District 7 and in 10 km radius of surrounding area
Customer Customers with high social status and high living
Customers in the upper middle class Customers with high social status and high standards due to their high earnings living standards due to their high earnings
Located at the center of city High-class metropolis
Economic Grow rapidly Grow steadily Grow rapidly
Table 1 Analysis of three Nha Xinh stores
The IKEA’s Location
When choosing the site for a store, we always have a number of considerations, including visibility, affordability and lease terms There are three aspects to consider while choosing the optimal site for a new shop The first step is to choose a city Second, the location of a city's region or type of site should be examined The final step is to choose a specific location Many factors must be evaluated throughout each phase:
• The size of the trading area of the city
• The population and trends in population
• Total purchasing power and who has the most purchasing power
• The number of competitors and the scope of the competition
• The ability to attract customers
• Access routes to the stores are available
• The city's expansion's geographic direction
• The trade area's sales and traffic growth possibilities
Based on the above reasons, Song Hanh Street and Quoc Huong Street are being evaluated for the store’s location a) Huff’s Gravity Model
The Huff’s mathematical model for location calculation:
Pij = Probability of a customer at a given point of origin i traveling to a particular store j
Sj = Size of the store j
Tij= Travel time or distance from customer’s starting point to the store j
= An exponent to Tij that reflects the effect of travel time on different kinds of shopping trips
In this case, we assume the exponent to Tij is = 3
Therefore, we form a distance matrix for store location:
Table 2 Distance matrix for the current network
Determine the market size of district 1, district 2, , district 3, district 7:
The market size is defined as the number of sales or potential customers to the business by looking up the sales number Observing and researching the market is extremely important for operating the business Assuming that customers are willing to pay 4 million VND to shop at IKEA Furniture and housing stuff is quite expensive, and the shelf-life is long, so people paying at least 8 million is reasonable These are 4 districts in Ho Chi Minh city which have the most considerable demand for furniture consumption
District 1 is the place which has mostly customers buying furniture not only for houses, but also hotels, restaurants, and so on Consequently, the furniture market size of district 1 is the largest District 2 and 7 are the places that witness the development of properties such as apartments, Vinhome Beside the heavy furniture like sofa, wardrobe, people have demanded some small stuff for decoration District 3 has a smaller market size than three previous districts, but it is still noticeable
The table below presents the market size:
Table 3 The market size of Dist.1, Dist.2, Dist.3, Dist.7
The expected annual sales of each IKEA’s store are evaluated based on below formular:
The expected annual sales (billion VND)
Table 4 The expected annual sales of two IKEA's stores
Therefore, the store on Song Hanh street in District 2 should be opened for better profit b) Analysis the IKEA’s Location
Without a question, retail location is one of the most significant aspects of retailing The first reason is obvious: clients are more likely to prefer the location that is nearest to their home or workplace Second, store location is an important option since it may be used to boost maintainable benefit in order to compete with competitors The better a retailer's location, the more appealing it is to its customers Third, location selections are extremely risky When deciding on a new site, retailers must consider not only the significant cash required to invest in and develop the real estate, but also the long-term lease with developers
In the case of IKEA, the objective aims to speed the development of new stores abroad and reinforce the company's position as a worldwide brand The strategy for growth and development may vary from country to country However, the business adheres to the idea of reflecting each country's capital With the success of its existing locations throughout the world, IKEA is anticipated to expand its operation by building more new stores Vietnam is one of the prospective markets that the company is targeting
The brand awareness was significantly high since it will be the first store opened in Vietnam, especially in Saigon There are many places where most of the target customers are concentrated in Saigon According to the data above, there are a large number of sites in Ho Chi Minh City However, we have a strategy to build up separate stores or in office buildings Particularly, we constructed separate stores with a large total area and a large parking lot mostly in large streets of central districts Furthermore, have strong visibility by constructing stores in areas that might draw a significant number of people The locations have good visibility as well because of building up stores in places which can attract a large group of people Furthermore, consumers who go shopping will be able to come across their stores due to their interior needs for convenience and time saving Consequently, choosing to build up separate store on Song Hanh street, District 2 is our decision.
RETAILING CHANNELS
IKEA, a world’s leading home furnishing multichannel retailer, has many capabilities in in-store and online shopping that get the customer satisfaction and purchase intention Until now, IKEA has already collaborated with over 150 families to design the bedrooms of their dreams To inspire others with their own stories, IKEA organized family events in-store and continued the conversation online with how-to videos from our interior designers It even published IKEA Extra, a little magazine that detailed how people might implement the ideas in their own homes, regardless of their financial situation
However, in recent years, IKEA has gradually transformed its business strategy from multichannel to omnichannel (a combination of online channels and physical stores) in response to make a positive impact on the regional economy through accessibility, affordability, and customer and community engagement Customers who previously shop online or in-store are increasingly checking online or through an app before going to the store to see for themselves, then purchasing there or later online Additionally, IKEA is using AI to forecast its fulfillment and capacity needs to avoid big investment in customer distribution centers since IKEA’s stores play a completely different role in this omni-world Moreover, IKEA builds its brand positioning as a private furniture brand in which its products are solely offered in their own stores or websites and are not available through any other outlets
We also create a comparison table analyzing the advantages and disadvantages of IKEA's pre-applied physical store channel and Internet channel in order to make an accurate and appropriate decision for the Vietnamese market
- The interaction and consultation between store’s staff and customers are satisfied effectively Moreover, IKEA operates as a pop-up store, so customers can practically experience the arrangement of furniture in each different area of the house
- And to retain customers, IKEA stores also provide entertainment services such as food trucks, and the arrangement of furniture in each different area of the house
- And to retain customers, IKEA stores also provide entertainment services such as food trucks, and kids play areas that families can shop all day at the store
- As a result, customers will be more satisfied in making purchasing decisions, and choosing IKEA as their next shopping destination
- Because of in-house services like IKEA Picking & Delivery, IKEA Delivery, and IKEA Assembly, IKEA online outperforms its offline counterpart Although not exclusively for that purpose, they have all been designed to allow you to shop from the comfort of your own home
- The IKEA application allows you to virtually arrange IKEA furniture in your home to see how it looks and fits in the available space To use this function, scan selected pages from the printed catalogue using the IKEA app (available for iOS and Android) or browse the digital catalogue pages on your smartphone or tablet Place the physical copy of the catalogue where you want the furniture to go in your room, pick a product from the IKEA range, and wait for the magic to happen
- The consumers have to go to the store directly even though it is far away from their places
It is especially inconvenient in today’s COVID-19 pandemic situation
- Customers may easily find more inspiration about furniture’s designs on its websites before online creating their own products
And they can purchase them online rather than going to the store
Moreover, because of the large size of physical stores, it will waste the customer’s time if they just want to buy quickly
- IKEA is such a large company that it is unlikely that they will be able to deliver your furniture the next day, despite whatever big statements you may hear and read
- The IKEA products are produced to be simple to assemble so that customers can do it by themselves, but if customers cannot or do not want to do it, IKEA will provide Assembly Service partners for helping However, the extra cost of assembling flat packs at IKEA will be another impediment for online customers
Table 5 Advantages and Disadvantages of IKEA's Multi-Channel
According to the above analysis, IKEA should offer both a store channel and Internet channel in the Vietnam market to attract more customers and provide more convenient conditions for customers For a physical store, it will appeal to customers who have children and have more time shopping IKEA’s website will attract the ones who are living in other cities and prefer to search for more specific information about the products before purchasing Moreover, IKEA should collaborate with smaller operations that provide similar services to the home furnishings retailer in Vietnam, usually at a lower cost and with far greater customer care to support in quick and efficient assembly Last but not least, IKEA should open an official store on the apps or websites of E-commerce companies that can help to extend the market, attract customers, and collaborate with such e-commerce organizations in order to arrange and deliver products to customers.
MERCHANDISE MIX
Buying Organization
Figure 1 Merchandise Classification and Organization
Figure 1 shows the merchandising division's organizational structure for the new IKEA retail store The merchandise group is the highest level Living room, Kitchen & appliances, and Bedroom are the three merchandise groups on the organization chart A senior vice president oversees each of the three merchandise segments The department is the second level of the goods classification scheme Each senior vice president is in charge of a number of different departments The one for furniture, for example, takes judgments on how product inventory is maintained in four departments: sofas & sectionals, lamps, tables & desks, and shelving units with bookshelves The classification is the third level of organization for managing merchandise The next step down in the classification structure is categories Each buyer is in charge of a number of different product categories A stock-keeping unit (SKU) is the lowest inventory-control unit possible An SKU is, for example, a top-selling desk named PAHL, white, size 50 3/8x22 7/8.
Product Strategy
IKEA’s vision can be described as creating a better everyday life for many people Providing various range, well-designed and functional housing products despite the low price to be affordable for many people is the iconic image that IKEA wants customers to know about the brand IKEA’s logo is the most signature one that people relate to when they mention IKEA To clarify IKEA marketing strategy, this brand is so original, distinctive, and iconic even though it maintains a clear value proportion
The prices of IKEA products are cheaper than other brands For instance, IKEA sells the couches and armchairs under $500 while the other brands like Crate & Barrel sell approximately $900 One of the reasons IKEA is cheap is because they apply the distinctive method to sell goods In 1956, IKEA founder Ingvar Kamprad introduced the “flat packing” which means customers will assemble the products by themselves Beside that, customers tend to feel accomplished after investing time and effort to construct home furniture, which makes people want to buy more at IKEA
Moreover, IKEA chooses materials that meet environmental protection by using recycled elements To reduce the amount of cotton used for bedding products, IKEA strategy is to mix 50% cotton with 50% lyocell fiber These components not only make the fabric comfortable but also reduce the chemical waste by recycling while producing, which will decrease pollution
Last but not least, IKEA product design is one of the important points that make people interested in its housing products Most IKEA goods are based on minimalism style, they are simple in both characteristic and shape As a result, people can decorate their house easily and can brainstorm some creative ways to decorate with simple style furniture Simple design but good quality products, IKEA is successful in product strategy
Ikea's vision strategy propelled them to the top of the global furniture market "Perhaps no other retailer on the planet has moved its basic model into so many places with so much success," said analyst Warren Shoulberg on industry website The Robin Report The furniture retailer operates 298 locations in 26 countries and generates $36 billion in annual sales IKEA's marketing mix includes a diverse product catalog that caters to various types of furnishings as well as financial resources IKEA sells a variety of items, including:
Storage & Organization: TV & media furniture, shelving units, bookcases & storage options, display & storage cabinets, dressers & storage drawers, wall shelves & hooks, sideboards, buffets & sofa tables, armoires & wardrobes, storage solution systems, clothes organizers, storage containers, …
Home Décor: plant pots & stands, vases & bowls, decorative accessories, candle holders
& candles, plants & flowers, wall décor, mirrors, clocks, noticeboards, memo boards, & bulletin boards, storage boxes & baskets, home fragrance & diffusers, …
Baby & Kids: nursing, feeding & eating, kids’ storage & organization, kids lightning, baby textiles, baby toys, cribs & crib mattresses, changing, bathing & potty, kid furniture, …
Lighting: lamps & light fixtures, LED Light bulbs, smart lighting, decorative lighting, integrated lighting, outdoor lighting, bathroom lighting, …
All of their items have a distinct modern appearance that is current and appealing to the teenage demographic IKEA has a range of offerings for various events, as well as a section on their website dedicated to collections that might be given as gifts throughout the holidays This also aids in the acquisition of new customers.
Assortment Strategy
IKEA is famous for its strategic and logical assortment for the products especially in the architecture of the store
Interior decoration items from simple to detailed are invested and produced by IKEA in a very meticulous and diverse manner Basic furniture that is easy to use and essential is the items that IKEA pays special attention to in the assortment in the store For example, the Pâhl wooden table, one of IKEA's best-selling items This item is placed at a conspicuous place in the kitchen area Because the price of the table is affordable plus the advantage of best-selling items, on every floor, the sitting area is decorated with its “Phâl desk” which is the top seller of the store, placed at the end of each rest station so that people are able to feel the product privately as long as they want then it will be easier for them to make buying decisions avoiding the shyness when talking with the sales staff This is an outstanding method since the moment people are tired of walking around the display and sales area as well as in need of resting the most, displaying a variety of furniture for resting will give them a sense of satisfaction and comfort Therefore, they are willing to pay in order to enjoy the convenient feeling that they have experienced at the store
The notable product from the IKEA store that is suitable for home space in the table shown below, it includes 2 varieties For each kind, there are 4 SKUs (2 colors x 2 sizes)
Desk for home PÂHL PÂHL PÂHL PÂHL
Colors White Green / White White Green / White
Table 6 Assortment Plan for PÂHL Desks
Figure 2 People take a rest at the sitting area packed with IKEA's PÂHL desks
RETAIL PRICING
Pricing Background
Pricing strategies decide the value business set for their items The price can be set to boost benefit for every unit sold from the market It can likewise be utilized to protect a current market from new contestants, to expand a portion of the overall industry inside a market or to enter another market Estimating methodologies can carry both upper hands and inconveniences to its firm and frequently direct the achievement or disappointment of a business; subsequently, it is essential to pick the appropriate methodology A business can utilize an assortment of valuing procedures when selling an item or service To decide the best estimating system for an organization, top managers need to initially distinguish the organization's assessment position, value segmentation, estimated capacity and their estimated response technique In this section, IKEA's pricing policy will be inspected, in every part, pricing technique, answers for rivalry among existing furniture stores and how it keeps retaining clients.
Pricing Strategy
IKEA, the world’s biggest furnishings retailer, is understood for presenting excessive value in phrases of innovative designs, more than one functionalities with a quite low price It has been capable of stake out a completely unique valuable strategic position for itself by carrying out some of the following activities from its rivals Shoppers love IKEA because of how affordable furniture is IKEA sells couches, armchairs, and tables for about half of what competitors do According to Business Insider, people can buy a couch for under $500 at IKEA However, at other stores that specialize in home furnishings, like Pottery Barn or Crate
& Barrel, couches typically cost at least $900, if not more Obviously, IKEA is assumed to apply the Everyday Low Price strategy, which is defined as selling between the regular non- sale price and the deep-discount sale price The secrets of low price products at IKEA are that firstly, they decide the cost value they want to sell a product at before determining the actual specifics of the product, such as the materials Secondly, this is the key point that makes IKEA a phenomenon, they propose the flat packing of furniture Flat packing not only makes products easy to ship but also reduces the price because of cutting down the cost of assembling Customers of IKEA need to make the trade offs for affordable furniture that involves assembling products by themselves.
Pricing Competition
Along with a decent pricing strategy, convincing advancements and offers should be delivered to improve the competitive limit of the retailers IKEA, as going up against other furniture stores, additionally presents different value prices for their clients
Successive deals at unequaled of the year, with direct discounts on the item costs, not just furniture but different items also
Coupons for charges that meet a few terms
Setting Retail Price
The current pricing approach used to determine the price level that will be followed is a competitive pricing strategy This is because, due to the vast number of rivals in the business, data about competitors is widely accessible
IKEA purchases PÅHL table at $48.993 and needs a 30 percent markup ( the appropriate markup is the amount that covers all of the retailer’s operating expenses such as labor costs, rent, utilities, advertising, etc.) incurred to sell the merchandise and produces a profit for the retailer to meet the financial goals for the category, the retail price needs to be:
Therefore, to maximize the profit as well as to meet the sale expectations, IKEA store in
Ho Chi Minh City should set the retail price for PÅHL at $69.99.
Price Method
Taking into account IKEA's and its competitors' business situations, product prices are set lower than or equivalent to those of other retailers, implying that IKEA conducted market research in order to produce a logical pricing range Rather than selecting a high price for low selling capacity, IKEA considers and counts all of the prices in their manufacturing phases, as well as dealing with their suppliers about costs, before deciding on a low price for high selling capacity They also have a fixed selling price for the entire year, which is calculated by adding the fixed cost of the product These methods should include both markup pricing and competition-based pricing, in which a company considers the prices of its competitors when determining the price of its items, and may charge higher, lower, or equal prices in comparison to its competitors' prices However, it usually uses product differentiation and cost leadership as cost-reducing measures These techniques have enabled the corporation to reduce costs, allowing it to retain low selling prices while keeping a high profit margin As previously stated, it can be inferred that IKEA does not use cost-oriented pricing in its strategy because its product prices are set identically to the market, despite its significant operating costs.
Frequent Shopper Program
IKEA provides a frequent shopper program called “IKEA Family” as a club for everyone From individuals who are passionate about their homes to those who are just getting started and require assistance Customers will get discounts on a variety of things just for being a member, and IKEA’s staff even give them a complimentary hot drink every time they come in To become a member of this family, the customer just needs to download the IKEA app and register an IKEA Family card and receive some benefits which are exclusively offered to customer members As a member, the shopper gets a discounted member price on select IKEA products, as well as access to inspiring workshops, brilliant ideas, and a free hot drink whenever he or she says "hello” Moreover, IKEA also becomes an adorable friend with many awesome gifts on members’ birthdays Also, IKEA is always ready to share home furnishing knowledge, tips and skills to help its customer members improve their home The last but not least, the customer may enter to win a $100 gift card by scanning his or her IKEA Family card every time he or she visits IKEA
MARKETING COMMUNICATION MIX
Type of Paid Advertisement
Billboard advertising is the use of large-scale printed advertisements to promote a company, brand, product, service, or campaign Billboards are typically placed in high traffic areas, such as along highways or in cities and so on Consequently, the billboards are seen by a huge number of people, which attracts more customers Firstly, IKEA has paid for the promotion on billboards like other brands but IKEA has their own unique way to make the promotion extra attractive One of the coolest advertisements is the RGB colors Billboard of
IKEA, this contains many messages that IKEA wants to propose depending on the colour of the light bulb illuminating it
As the image below shows, IKEA always makes their billboards extremely distinctive
In addition, IKEA also provides advertisements on the panels at bus stops While waiting for the buses, people would enjoy the advertising program
Figure 9 Advertisement at Bus Stop
Besides billboard advertisement, in these few years, Facebook has become more and more popular Due to the pandemic, people spend additional time surfing Facebook, so marketing via this platform is the wise choice to attract more customers Realizing that key to success, IKEA built the brilliant Facebook geo targeted advertisement There is a 31% increase in store traffic with the customers in 22-25 years old and 11% lift in people at 26-30 years old following this campaign on Facebook This geo targeted campaign created by IKEA delivered from December 2013 to January 2014 and the result is incredible
Moreover, national television is the most common means of reaching a large number of people throughout the world, from developed to developing nations When it comes to ads, we can't overlook how firms, including IKEA, use national television to promote their products IKEA spent less than $100 million on advertising in the previous year, which included national television IKEA has partnered with a number of media companies to air their commercials on national television Their most recent TV commercial aired on BBC America in December 2021, which has a significant audience
Finally, nowadays, Search Ads 360 is one of the most popular and successful methods of advertising It increases efficiency and reduces account maintenance time Furthermore, when the amount of shop visitors grows, Search Ads 360 gives various chances to automate everyday operations, such as bid strategy optimization for return on ad spend, budget management, and web query for reporting IKEA's cost per click was reduced by 38% using Search Ads 360 Store visits rose by 232 %, revenue grew by 117 %, and ROAS increased by
68 % for the firm With Search Ads 360's corresponding campaigns, it's now easier than ever for IKEA to assist its enormous number of items flourish.
Types of Unpaid Advertisement
Unpaid media is any marketing strategy in which you do not spend to advertise — and it has two-fold:
Owned media, or any platform over which a brand has ownership and is not required to pay for basic usage Blogs, social networks, and websites are examples of common channels
Figure 10 Official Facebook Page of IKEA
Figure 11 Official Instagram Account of IKEA
Another unpaid media is earned media Earned media is digital word-of-mouth supported by mentions, shares, reposts, reviews, or other content curated by a third party publisher For example, customers posted their reviews about their experience in KEA on customeraffair.com - a website whose content is all about reviews
Figure 12 and Figure 13 Review on Customer-Affair
Cooperative Advertisements
Cooperative advertisement can be an extremely useful asset for the entrepreneur, particularly one with restricted means to help the sort of publicizing effort which can be imperative to the endurance and achievement of a business enterprise
This can be an effective marketing campaign that can be applied to IKEA in the future IKEA can combine with well-known enterprises such as Vingroup or Parkson enterprise to have stores in Vincom or Parkson to promote purchase in places with high shopping demand such as shopping malls A successful example of this cooperation is Uniqlo:
Figure 14 A Cooperative Advertisement between Uniqlo and Vincom
Figure 15 A Cooperative Advertisement between Uniqlo and Parkson
Types of Sale Promotion
Sales promotions are special incentives or excitement-building programs that encourage consumers to purchase a specific product or service in order to gain additional benefits for the company over a short period of time; they are typically used in conjunction with other advertising or personal selling programs such as special offers, personal selling, and telemarketing, sales promotions that are not normally seen in the normal course of business Many sales promotions, such as free samples or point-of-purchase (POP) displays, are designed to generate short-term sales, whilst others, such as loyalty programs, contests, and sweepstakes, have become essential components of retailers' long-term customer relationship management (CRM) operations Sales promotion can readily reach their target clients thanks to the invention of media, which includes advertisements in printed newspapers, magazines, catalogs, and, most importantly, social media
There are some major types of promotions that IKEA is offering for almost all stores around the world namely Discount Promo Codes, Special offers, Limited-time Sales such as Holidays or Anniversary, and Pay Later
The first promotion type in the list is among the most popular methods that IKEA has applied for the store system all over the world These promo codes are easily found in the printed materials like newspaper, magazine and catalog so that they effortlessly approach the clients It is understandable that many customers hope to purchase favorite items with an affordable price so the ultimate way to increase the sales is give away the promo codes so that clients can enjoy shopping frequently When it comes to IKEA, the stores aim to give out a variety of promo codes for the proper customer segment so that the promotion program is effective to all types of customers For example, for a customer's first purchase the discount is very tempting which ranges 5% higher than that of the loyalty customers but for the loyalty the variety of promo is considerable like the last chance program, new lower price to the same price products This type of promotion happens all year round with the constant change to stimulate the buying behavior
Figure 16 Deal for New Customers
Figure 17 Deal for Loyal Customers
Turning to the Special Offers that is also a featured promotion that IKEA provides for the customers IKEA will combine the best-selling products and the newly launched products or products that have not met sales expectations into a combo with an appropriate price in order to boost sales as well as limit the inventory level with hard-to-sell products For this type of promotion, customers will get a sense that they are able to purchase many things at a cheap price and even though there are such things they do not intend to buy, when they receive this attractive offer, they will not hesitate much because IKEA gave them a sense of victory over the brand This is an interesting shopping experience because surely every customer wants to be treated by the store as an important person
The coming of shopping season happens all year round and every store should grab that chance to boost the sales since people are willing to purchase comfortably on such holidays, this type of promotion comes and goes fast so the promotion should be made appealing to people and the price should be competitive with other brands
IKEA also pays attention to customers who are interested in the store’s products but get stuck with the financial situation This is the reason why the “Pay later” promotion satisfied the most fastidious customer The program allows people to pay within 6-24 months of interest-free financing with a store credit card Interest-free shopping will make people confident to pay for their favorite items without worrying about the additional money that can arise and the exclusivity of payment methods (only for IKEA cards) will help IKEA better manage their debts and increase the number of people using their credit card system
Moreover, to promote value services and attract more customers, two new suggested types of sales promotion that should be offered by IKEA are Branded Gifts and Loyalty Point
The first suggested sales promotion type is Branded Gifts Previous IKEA stores in the world provide many special services for members of IKEA Family, such as discount prices, birthday gifts, and gift cards However, they do not give frequent gifts for either members of IKEA Family or normal customers In the Vietnam IKEA store, branded gifts can be offered as lower price products or items that have not met sales expectations in order to increase their appearance in front of the customers Branded gifts are not only a chance for customers to test the quality of IKEA’s products, but also increase the sales of those products So, this activity should be performed in order to build customers’ loyalty
Loyalty Point is the second suggested type of sales promotion in the Vietnam IKEA store Each customer becoming a member of IKEA Family will be given a Family card / Gift card The customers will gain specified points whenever they make purchases in IKEA stores or IKEA online stores The collected points can be transformed to the money for future purchasing This program will boost the customers’ buying spirit and build the customers’ loyalty.
CUSTOMER SERVICES
IKEA’s Current Customer Services
Customer service is the connection between purchasers and the company that offers the products - both before and after they buy and use your products or services that enables them to have a pleasurable and convenient experience with your company If you want to keep clients and expand your business, you must provide excellent customer service Great customer service is one of the things that contribute to a company's success
IKEA gathers and analyzes client input through questionnaires, e-commerce sites, and customer care centers in order to pursue customer happiness IKEA's key principle is open communication, which encourages consumers to contact the company for improvements
IKEA is a worldwide corporation that provides pre-assembled furniture, small motor vehicles, appliances, and home accessories IKEA is keen to hear what consumers say about their customer service and goods As a result, the company provides a customer loyalty program, the IKEA Customer Satisfaction Survey at www.ikea.com/survey, where recent guests may report their visit experience
The IKEA Customer Feedback Survey is all about the customer's most recent visit experience, and the survey primarily seeks to determine how the customer's most recent visit went What do IKEA consumers think about their customer service? What changes should be made? How did the product quality and environment fare? Is the staff helpful or unhelpful? as well as several more remarks
You will be entered to win a surprise prize on your next visit if you provide honest feedback at www.ikea.com/survey
IKEA may see consumer insights, assess markets, measure performance, and follow-up with loyal customers by doing the survey in order to continually improve the business
Table 7 Customer Satisfaction Survey of IKEA
IKEA offers two types of customer service: offline and online
Offline, Customer Service Centers are located in front of each IKEA store's entrance They may help their consumers promptly using this strategy if they are in a difficult scenario
The Centers will receive comments and questions via phone and chat assistance online The input is then forwarded to the appropriate department for resolution as soon as feasible The information obtained is used in product development, and the complaints that are considered to be of high priority are communicated with the appropriate stores and departments to prevent recurrence
Figure 19 Online Contact Service of IKEA
Customers may also receive helpful instructions on IKEA website's customer support page, so they don't have to phone or chat through contact
Figure 20 Online IKEA Website Supporting
1.2.Using data to create the best product and services for IKEA’s customers
When the board of management meets, the data IKEA receives through surveys, feedback from Customer Service Centers, and other channels that consumers requested for improvement will be read and presented They will then use it as a foundation to further build their IKEA
IKEA then shows goods that have been enhanced as a result of user input on their website Consumers will feel appreciated since IKEA's objective is to value every customer's opinion and improve the relationship in order to extend the lives of customers
If you're not totally satisfied with your IKEA purchases, you can return new and unopened items for a full refund within 365 days, together with your purchase confirmation You can also return open items for a full refund within 180 days of purchase with proof of purchase IKEA may be able to mail replacement parts from one of their stores Customers are encouraged to bring the harmed item or part(s) along with your request confirmation or receipt to an IKEA store for the quickest resolution To return or trade your purchase, you must have your receipt and a valid government-issued photo ID
IKEA Promotional Cards are conveyed to clients as per different reliability, rewards, or limited time programs Promotional Cards might terminate contingent upon the promotion; in this way, kindly allude to the agreements for your Promotional Card No expenses for service apply to Card.
Renovation
Customer issues are the core value, which means mostly strategies, planning, design, etc are based on customers As a result, customer service is one of the most essential sections that make up the success of retailers Customer-centric approach denotes putting the client first and at the center of everything the companies do With a clear mission to easily improve their customer’s everyday lives, nowadays IKEA creates thousands of visits to customer homes, to ascertain how they will make customer lives easier This implies they can establish what customers in different markets want and make their stores more native and personalized IKEA uses these insights into client relationships with their houses to orientate their campaigns around people’s needs Their campaigns emphasize how they have become a part of their consumers' lives, in each big and small moment
In the technology era, digitalization will make more value to every section in retailing Bringing customers to digital experience is the key that leads to IKEA success and builds more loyalty in client relationships So many of IKEA’s digital offerings centralize the experience of the customer, encouraging them to immerse themselves in the products Customers can design their kitchens either online or at a design station in-store They can receive the annual IKEA catalog by mail, or interact with it online Customers will have many questions about the products like: “If the desk fits or not?”, “Would this color of table match the wallpaper?” and so on To answer all of these questions, IKEA came up with the mobile application called “IKEA Place '', which provides AR (augmented reality) to let customers design their rooms in 3D models with more than 2,200 items available in IKEA stores
Above all else, explicit objectives are expected to keep away from confusion Every objective spotlight on 1 region as it were In addition, subsequent to characterizing the objectives the exhibition ought to be followed and improved to take these objectives to activity KPI is one of the instruments that assist organizations with monitoring the objectives that have been set KPI estimates how well the organization deals with client support There are some tasks that KPI that can be applied to control the outcome:
In order to deliver a satisfying customer experience and standardize the service, IKEA needs to learn and develop the right strategy Therefore, establishing a core team to manage, coordinate goals and develop the highest customer service is the ultimate requirement that IKEA's core team must meet
The goals that are set should be clear to all of the members so that they can follow strictly and properly The Core Team should come up with a project or program that aims to upgrade the customer service like professional customer care, manage customer service on social media channels thoroughly, and enhance staff's customer care skills.
STORE LAYOUT AND DESIGN
Store Design Objective
IKEA is the world's largest furniture retailer, offering a wide choice of well-designed and practical items at affordable prices with the goal of servicing low-to-middle income groups The IKEA Concept originated with Ingvar's revolutionary notion to offer high-quality home furnishings at significantly cheaper rates than competitors by implementing basic cost-cutting measures that did not compromise product quality
However, did you know the reasons why this company became the world's largest furniture retailer ?
The IKEA store layout is a "fixed-path" design, which means that there is a specified road that you must take and that directs you through the shop in one direction Customers only view roughly 33% of the products on the market in most stores However, IKEA's set route method means you spend more time in the store and are exposed to most of the brand's merchandise
Figure 21 Sample Layout of IKEA's Store
IKEA may methodically apply the Gruen Effect to their experience by applying a fixed path design In the store, customers are overexposed to light, sound, color, texture, and even smell They've only been halfway around the store when they've had enough When the Gruen Effect takes hold, shoppers put products in their cart that they never planned to buy but that appear appealing at the time Customers forget why they came in and instead view the store as an enjoyable experience As a consequence, buyers purchase more products than they intended because they want to experience the store.
Criteria for New Store
As mentioned above, we will apply the “Fixed-path” layout for the first IKEA store in Vietnam Customer flow is the pattern of behavior and way that a customer navigates through the store Understanding customer flow and the common patterns that emerge when customers interact with merchandise based on the store layout is critical to retail management strategy
This following map illustrates how to Vietnam IKEA store layout would be:
We build up a prearranged walking path that takes customers in one direction through nearly the whole merchandise display of the store unless customers don’t take short-cuts, which are available in some places Following the guided path, customers are passively influenced by more prone to suggestion In addition, this kind of layout allows customers more space to observe the merchandise
Fixtures are defined as purposes that are used to hold and display merchandise in an efficient manner At the same time, they highlight store areas while also directing traffic flow Fixtures complement other design aspects like floor coverings and lighting, as well as the store's overall image Customers automatically anticipate seeing a lot of wood rather than plastic or metal fixtures in establishments aiming to give a sense of heritage or history, for example The usual orientation of wood is altered when it is blended with metal, acrylic, or stone Straight-rack, rounder, and four-way fixtures are used by apparel stores, while the gondola is used by most other merchants
Locations of product areas: When the customers go to IKEA store, they will go through furniture showrooms designed according to each area of the house to note selected items Then they will take a trolley and forward to an open-shelf warehouse containing smaller items The previous selected items will be taken at the furniture-warehouse (self-serve) before being made a payment If the customers want to buy old, returned, taken out of the IKEA product range, they can go to an area located right before check-out counters, but with a “no- returns” policy
Displaying merchandise: Hundreds of inspirational displays, ranging from realistic room settings to real-life homes, are available at the IKEA store, all with product combinations that offer new ideas and know-how on current interior design Merchandise is grouped and arranged according to the amount of floor space available, demonstrating what can be done with IKEA products regardless of space Props are used to increase the sensory stimulus aspects for the customers as much as feasible Merchandise is properly placed out in other areas, with extra products used as props to enhance the overall impression it offers to customers Beds and sofas, for example, are encouraged to be tested by customers This enhances the consumers' sensory appeal at the post-transaction period, calming the knowledge and impression that has already been conceptualized by the brand's image Besides, the children's department has a diverse selection of merchandise in a rainbow of hues This section is very lively, with appealing merchandise ranging from complementary colors to contrasting and eye-catching ones
For the whole image of the store: The major colors of Sweden's flag, yellow and blue, are used on IKEA's faỗade At key locations, life-size banners are erected to attract people's attention right away IKEA attracts clients by using atmosphere and psychological aspects (contrasting colors, magnitude, and tonality) with a single goal in mind: clear and succinct visual communication with its customers
For the lighting: IKEA uses bright lighting to provide the impression of a discount store, as it caters to the general public and works within their budget However, incandescent lighting is used in the majority of its showrooms and exhibits for a relaxing and friendly feel, hinting how perfect houses should look, leading to classical conditioning Soft calming music is played in the background to appeal to the senses of shoppers, creating a more relaxed ambiance that encourages them to remain longer.
Final Layout Design and Detailed Explanation
Figure 13 First Floor Layout Design for IKEA Vietnam
Figure 14 Second Floor Layout Design for IKEA Vietnam
When you arrive at the IKEA store, the first thing you need to do is grab a free pencil and measuring tape and one of the small carts equipped with a handle to attach one of the large plastic bags the store offers
Larger vehicles with baskets are not allowed upstairs Take the stairs or elevator to the showroom on the second floor Here, arrows and signs guide you through the cavernous displays, so you don't miss a thing The gallery has several model homes that will give you sample ideas on how you can use IKEA furniture in your own living space, regardless of its size You'll also find plenty of sample rooms and dedicated areas for living rooms, storage, kitchen and dining, workspaces, bedrooms, bathrooms, and kids' rooms
Everything you see is for sale, whether it's a framed print in the bedroom, a dollhouse in a kid's room, or a full set of kitchen cabinets
Several smaller items are available on the showroom floor for you to toss in your shopping bag
However, anything with a red tag, you must purchase it yourself in the Marketplace or the Self-Service Furniture Warehouse, both located on the first floor Self-service doesn't mean no service, IKEA employees, all wearing recognizable IKEA yellow shirts, are available to help you with any questions you may have Cards provide all the information you need about where to find each item, so take careful notes Large, bulky items may have yellow tags, which means you'll need to pick the item up at Furniture Pick-Up or pay for delivery
Before you leave the gallery upstairs, you may want to take a break at the IKEA Restaurant, which serves breakfast, lunch, and dinner daily
Once you're ready to go downstairs, there's much more to see and buy in the Marketplace
This is where you'll find many of the decorative items you see in the showroom, along with cookware and dishes, textiles and rugs, bathroom accessories, organizers, lighting, wall decor, and more
Once you find your way through the Marketplace, which is no small feat, you arrive, eventually, at the furniture self-service area, where you can complete your shopping trip by Picking up larger items that catch your eye in the showroom
Finally, customers pay at the checkout counter, where a conveyor moves purchases to the checkout staff The exit area has service counters and a delivery area that allows customers to bring their vehicle from the parking lot and load it.