Description
Presentation on IKEA and how they design the sexy price tags.
? About IKEA
? Core Competencies
? Results ? Product Development Process
? Creating Customer Value
? SWOT Analysis ? Strategies
? Recommendation
? Swedish Furniture Retailer
? Promoted by Ingvar Kampard in late 1940
? Dominates in market in over 32 countries ? 19.8 billion Euros in revenue for financial year 2007
? Growth rate of 14% for the previous financial year
? Good quality at low price – challenging the status quo
? Price 30 to 50 percent less than competitors
? Reduce retail prices by cost reduction techniques ? Low priced products with stylish look
? Cost reduction at every step from designing to sales
? Design the product with low cost in mind – create the
price tag first
? Select manufacturer with great care – have long and ?
?
? ? ?
fruitful relationship Continuous product innovation and redesigning Flat packages save space and money – disassembled shipping Low transportation costs Increase market share during downturn Environmental and social responsibility
? Retailers increase prices over time; IKEA reduced
prices by 20% over four years ? Sales increased by 267% in 10 years ? 19.8 billion Euros in 2007 from 5.4 billion in 1997 ? Dominating player in Western Europe and Scandinavia
? Price the product
? Pick the price at which product is to be sold ? Design the product to conform to price tag
? Choose the Manufacturer
? Best quality – right product – right price – right time ? Selection of raw materials, components revolve around price.
? Design
? Each product has its own team – designers, developers,
purchasers and suppliers ? Product to give maximum functionality at minimum cost
? Design
? Selection of raw materials, components revolve around price ? Stylish design – be innovative – attract customers – conform
to changing tastes
? Shipping
? Size and shape – flat – save space and money ? Rationalizes production as well ? Company Policy – “We will not pay to ship air”
? Selling
? Sell without sales people ? Furniture assembly by customer ? Meticulously designed shop layout
? Vision of IKEA is to create better everyday life for ? ? ? ? ? ?
?
?
everybody Products broadcast ethos for living in modern world Wide range of well designed, functional products at low prices Low price does not translate to low quality Efficient packaging allows ease in transport Stores provide free child care facility Displays are realistic model homes rather than aspirational Information kiosks that aid decision process An elaborate catalogue in 34 different languages
? Strengths
? Dominating, multinational retailer ? Good quality at a low price ? “Low price with meaning” mantra
? Environmental awareness among suppliers
? Non-stop work to reduce costs of products ? Maximum functionality of products at minimum cost ? Environmentally friendly products
? Flat packaging to reduce shipping costs
? Strengths
? Global network of well-located distribution centers
? Excellently designed catalogue ? Stores providing “complete” experience
? Weakness
? Product assembly by customer ? Does not ship products to customer ? Blatantly manipulative store layout ? Failed to establish a large chain of North American
suppliers
? Opportunities
? Average fill-rate target of 75%
? Grow its stores worldwide ? Untapped Asian Market
? Threats:
? Initial appeal of offerings may fade with time ? Belief of customers’ wants being same at different
locations ? New markets may not subscribe to company’s philosophy
? Designing and Manufacturing Strategy
? Pricing first step of design process
? All decisions with price in mind ? Cheap but not cheapo products ? Use of light and cheap pigment ? Environment friendly products ? Design attributes to reduce in transportation cost ? Recycling transportation packaging
? Suppliers Strategy
? Strong backward integration
? Long term relationship with reliable suppliers ? Suppliers as manufacturers ? Help suppliers develop and meet quality standards
? Selling Strategy
? Customer purchase without aid of salesman ? Assembly and Shipping by Customer
? Highlight low prices
? Store layout that aids customer decision making
? Expand network to cover the lucrative Asian Market
? Carefully study and understand the customer psychic
in these markets ? Existing business model may not suit certain markets
doc_500454669.ppt
Presentation on IKEA and how they design the sexy price tags.
? About IKEA
? Core Competencies
? Results ? Product Development Process
? Creating Customer Value
? SWOT Analysis ? Strategies
? Recommendation
? Swedish Furniture Retailer
? Promoted by Ingvar Kampard in late 1940
? Dominates in market in over 32 countries ? 19.8 billion Euros in revenue for financial year 2007
? Growth rate of 14% for the previous financial year
? Good quality at low price – challenging the status quo
? Price 30 to 50 percent less than competitors
? Reduce retail prices by cost reduction techniques ? Low priced products with stylish look
? Cost reduction at every step from designing to sales
? Design the product with low cost in mind – create the
price tag first
? Select manufacturer with great care – have long and ?
?
? ? ?
fruitful relationship Continuous product innovation and redesigning Flat packages save space and money – disassembled shipping Low transportation costs Increase market share during downturn Environmental and social responsibility
? Retailers increase prices over time; IKEA reduced
prices by 20% over four years ? Sales increased by 267% in 10 years ? 19.8 billion Euros in 2007 from 5.4 billion in 1997 ? Dominating player in Western Europe and Scandinavia
? Price the product
? Pick the price at which product is to be sold ? Design the product to conform to price tag
? Choose the Manufacturer
? Best quality – right product – right price – right time ? Selection of raw materials, components revolve around price.
? Design
? Each product has its own team – designers, developers,
purchasers and suppliers ? Product to give maximum functionality at minimum cost
? Design
? Selection of raw materials, components revolve around price ? Stylish design – be innovative – attract customers – conform
to changing tastes
? Shipping
? Size and shape – flat – save space and money ? Rationalizes production as well ? Company Policy – “We will not pay to ship air”
? Selling
? Sell without sales people ? Furniture assembly by customer ? Meticulously designed shop layout
? Vision of IKEA is to create better everyday life for ? ? ? ? ? ?
?
?
everybody Products broadcast ethos for living in modern world Wide range of well designed, functional products at low prices Low price does not translate to low quality Efficient packaging allows ease in transport Stores provide free child care facility Displays are realistic model homes rather than aspirational Information kiosks that aid decision process An elaborate catalogue in 34 different languages
? Strengths
? Dominating, multinational retailer ? Good quality at a low price ? “Low price with meaning” mantra
? Environmental awareness among suppliers
? Non-stop work to reduce costs of products ? Maximum functionality of products at minimum cost ? Environmentally friendly products
? Flat packaging to reduce shipping costs
? Strengths
? Global network of well-located distribution centers
? Excellently designed catalogue ? Stores providing “complete” experience
? Weakness
? Product assembly by customer ? Does not ship products to customer ? Blatantly manipulative store layout ? Failed to establish a large chain of North American
suppliers
? Opportunities
? Average fill-rate target of 75%
? Grow its stores worldwide ? Untapped Asian Market
? Threats:
? Initial appeal of offerings may fade with time ? Belief of customers’ wants being same at different
locations ? New markets may not subscribe to company’s philosophy
? Designing and Manufacturing Strategy
? Pricing first step of design process
? All decisions with price in mind ? Cheap but not cheapo products ? Use of light and cheap pigment ? Environment friendly products ? Design attributes to reduce in transportation cost ? Recycling transportation packaging
? Suppliers Strategy
? Strong backward integration
? Long term relationship with reliable suppliers ? Suppliers as manufacturers ? Help suppliers develop and meet quality standards
? Selling Strategy
? Customer purchase without aid of salesman ? Assembly and Shipping by Customer
? Highlight low prices
? Store layout that aids customer decision making
? Expand network to cover the lucrative Asian Market
? Carefully study and understand the customer psychic
in these markets ? Existing business model may not suit certain markets
doc_500454669.ppt