Description
Services marketing is a sub field of marketing, which can be split into the two main areas of goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables) and the marketing of services. Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional services.
Services Marketing-case Ikea Ikea vision-articulated by INGVAR KAMPARD IKEA should sell a basic product that is typically Swedish, wherever it ventures around the world.
BASIC FACTS ? Est.1950-as a mail order ? Turnover $12 bn.-2001 ? 150 stores in 29 countries ? 2/3 rds from EC, 1/3 rd from USA/ Asean ? new stores in Russia/China ? 10,000 products in one shop-specimen furnished house samples from 20 sq. mtrs-2000 sq. mtrs. CONCEPT o Ikea’s relationship with its customers o Customer drawn into its prodn. System-if customers agree to take on certain key tasks of mfr./retailer-ASSY/DELY-Ikea then offers well designed furniture at substantial discounts. o Shoppers often spend entire day at Ikea. o Clear long-term strategy. o Implementation skills. o Cheaper real estate-out-of town locations-with adequate car parking space. o Ikea design standards build savings into products-modular-cost advantage into basic designs. CKD kits for customers to take home, self assemble and show-off! CUSTOMER CO-CREATES HIS OWN SATISFACTION
INPUT CUSTOMER
PROCESS
OUTCOME CUSTOMER
EXTEND THE BOUNDARIES OF THE ORGANIZATTION TO INCLUDE CUSTOMER IN THE BUSINESS PROCESS
THE PROCESS o Ikea’s customers’ essential contributors to value, they create value by participating in the selection, mfg. and delivery activity. o Value creation process is an easy, fun & pleasant experience for customers. o Stores are a pleasure to shop in, free strollers, supervised child care, wheel chairs are provided. o Customer given catalog, tape measure, pens, pads & note paper to use as they select-sales and service staff functions. o After self-purchase decision, payment, they carry own flat packs to their cars, while renting or buying roof-racks-furniture loading and delivery functions. o At home customer takes the role of manufacturer in assembling own furniture following carefully illustrated instructions, accessible world wide written in 17 languages. Key success factors: 1. Recognise that customer is a part of the business system. 2. Customers perform roles they have never performed before. 3. Ikea clearly defines customers’ role, while making it fun, is the genius of the strategy. 4. Customer thus co-creates and contributes to his own satisfaction. [REFERENCING-1. www.ikea.com 2. Prof. Pherwani’s visit to UK in Nov. /2002, to IKEA PLC. Wembley & Ikea inc. Plainsboro, New Jersey, USA july/2001] 3. Harvard Business ReviewJuly/1993; 4. Global Finance, Oct/1998. Globalization experience of IKEA ? INGVAR KAMPARD-we shall offer a wide range of furnishing items of good design at prices so low that the majority of people can afford to buy them. ? Initial stores were only in Scandinavia, later they expanded into other continents. Rewards were higher, so were risks! ? 1980s were boom years, rapid growth followed by recession-changing customer attitude from status and designer labels to functionality. ? High Swedish taxes made them shift from Sweden to Denmark. Kampard was succeeded by Anders Morberg [ex-Nissan CEO], who copied his
predecessor’s style-informal dress, clock-in, economy class travel, modest hotels-ownership changed to Dutch Charitable trust Foundation, 65% of T/O reinvested –mostly own funds .purchase decisions were instant, not delayed. Logistics of operation [sourcing, stock control, design of store, product offered food served, layout, parking space, strong & secure internal financing. Experience built over years, work-sharing culture, co-productive arrangements,- force customers, suppliers to think of value in a different way-CUSTOMERS ARE ALSO SUPPLIERS-IKEA only provides goods, design, support, food, and even entertainment-AND MOREOVER CONVENIENCE. ? Unique elements of IKEA ’s winning business formula: 1. Simple high-quality Scandinavian designs 2. Global sourcing of components. 3. Furniture in kit format-easy to move. 4. Huge suburban store locations-plenty of space for parking, shopping, displays, cafés, restaurants, child care, ramps for wheel chairs. 5. A universal appeal crossing national boundaries. 6. Customer profile: different life style, new home seekers, business owners needing more office capacity-seeking well styled, good quality reasonable priced readily available, furniture. 7. All systems are designed to promote these concept-100display rooms, sales staff only when sought. 8. Buying office whet potential suppliers-mfr, fit. Vendors covet IKEA. They can access global volumes, receive technical assistance, lease of equipment, quality assistance, rigid supplier assessment program. 9. Ikea North American strategy Traditional international retailing rules: Tailor closely ?? host country tastes & preferences = international success Retailing concepts remained the same-remained primarily product-oriented [Swedish management, design, Group will decide what is to be made and then sell around the world-little research into what the public really want, emphasized Swedish origins into its advertising-even Swedish Blue + yellow on its stores. . 10 stores went up to 125. 1974-1994 it worked [revenue $210 m to $ 5 bn., now only 11 % from Sweden 29, 5 % Germany, 14, 2 % N. America]. RELATIONSHIPS- 2,700 in 67 countries. What do the suppliers get? What does IKEA get?
Big production runs contracts Long term contracts Technical advice Leased standardized equipment [7% ROI] Same product all over be passed on.
exclusive captive low prices [30% lower] timely deliveries huge economies of scale massive cost savings to Quality matched with
hi-cost rivals ADAPTATION to US tastes, physiques, Inch standards-everything BIG, king-sized, queen-sized beds, large Pizza dinner plates [15 inches], large water glasses [Americans put ice in everything they drink!]. They store sweaters stacked in cupboards, life styles, uniformity, coordinated, color harmony, aesthetics, value perception, shopping habits, 45% local content needs, and [in a way it is a good policy to hedge against currency movements]. It changed the way to service US market. The original business idea needed re-vamp [consistent product quality, design, store management, for local adaptation, different shopping experience]. Sales 1995 went 3X 1990. USA added to core product from local vendors, installed loading service bays, erect bollards to stop shopping trolleys to avoid them obstructing the massive car parking areas. CUSTOMIZATION-raises costs, loose economy of scale. How much to customize vs. how much to standardize? There are two pressures: 1. Pressure for cost reduction 2. pressure to be locally responsive This conflict has to be resolved. We need to drive down the experience curve. LEVITT SAYS-consumer demands for local customization are on the decline world wide. Globally different approaches were required for Japan, Australia, Hong Kong, local knowledge essential to fine tune long distance control, availability of managerial talent. MULTINATIONAL OPERATIONS need new competencies, skills, control systems, physical stock, high risks, right property acquisitions, number of people working in each location, estimates of resources, commitment, operational level decisions, geographic spread, marketing communication policies suited to different customer behaviors. Operation strategy must be in line with a strategy difficult to imitate.
Corporate level has to device policies, and consistent mission, to include good value in the offer. The operational level’s aim is to offer competitive advantage, local adaptation, SBU concept, to meet local client needs, and yet convey a consistent image. IT HAS TO BE A STRTEGIC BUSINESS ARCHITECHTURE!
doc_619941700.docx
Services marketing is a sub field of marketing, which can be split into the two main areas of goods marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables) and the marketing of services. Services marketing typically refers to both business to consumer (B2C) and business to business (B2B) services, and includes marketing of services like telecommunications services, financial services, all types of hospitality services, car rental services, air travel, health care services and professional services.
Services Marketing-case Ikea Ikea vision-articulated by INGVAR KAMPARD IKEA should sell a basic product that is typically Swedish, wherever it ventures around the world.
BASIC FACTS ? Est.1950-as a mail order ? Turnover $12 bn.-2001 ? 150 stores in 29 countries ? 2/3 rds from EC, 1/3 rd from USA/ Asean ? new stores in Russia/China ? 10,000 products in one shop-specimen furnished house samples from 20 sq. mtrs-2000 sq. mtrs. CONCEPT o Ikea’s relationship with its customers o Customer drawn into its prodn. System-if customers agree to take on certain key tasks of mfr./retailer-ASSY/DELY-Ikea then offers well designed furniture at substantial discounts. o Shoppers often spend entire day at Ikea. o Clear long-term strategy. o Implementation skills. o Cheaper real estate-out-of town locations-with adequate car parking space. o Ikea design standards build savings into products-modular-cost advantage into basic designs. CKD kits for customers to take home, self assemble and show-off! CUSTOMER CO-CREATES HIS OWN SATISFACTION
INPUT CUSTOMER
PROCESS
OUTCOME CUSTOMER
EXTEND THE BOUNDARIES OF THE ORGANIZATTION TO INCLUDE CUSTOMER IN THE BUSINESS PROCESS
THE PROCESS o Ikea’s customers’ essential contributors to value, they create value by participating in the selection, mfg. and delivery activity. o Value creation process is an easy, fun & pleasant experience for customers. o Stores are a pleasure to shop in, free strollers, supervised child care, wheel chairs are provided. o Customer given catalog, tape measure, pens, pads & note paper to use as they select-sales and service staff functions. o After self-purchase decision, payment, they carry own flat packs to their cars, while renting or buying roof-racks-furniture loading and delivery functions. o At home customer takes the role of manufacturer in assembling own furniture following carefully illustrated instructions, accessible world wide written in 17 languages. Key success factors: 1. Recognise that customer is a part of the business system. 2. Customers perform roles they have never performed before. 3. Ikea clearly defines customers’ role, while making it fun, is the genius of the strategy. 4. Customer thus co-creates and contributes to his own satisfaction. [REFERENCING-1. www.ikea.com 2. Prof. Pherwani’s visit to UK in Nov. /2002, to IKEA PLC. Wembley & Ikea inc. Plainsboro, New Jersey, USA july/2001] 3. Harvard Business ReviewJuly/1993; 4. Global Finance, Oct/1998. Globalization experience of IKEA ? INGVAR KAMPARD-we shall offer a wide range of furnishing items of good design at prices so low that the majority of people can afford to buy them. ? Initial stores were only in Scandinavia, later they expanded into other continents. Rewards were higher, so were risks! ? 1980s were boom years, rapid growth followed by recession-changing customer attitude from status and designer labels to functionality. ? High Swedish taxes made them shift from Sweden to Denmark. Kampard was succeeded by Anders Morberg [ex-Nissan CEO], who copied his
predecessor’s style-informal dress, clock-in, economy class travel, modest hotels-ownership changed to Dutch Charitable trust Foundation, 65% of T/O reinvested –mostly own funds .purchase decisions were instant, not delayed. Logistics of operation [sourcing, stock control, design of store, product offered food served, layout, parking space, strong & secure internal financing. Experience built over years, work-sharing culture, co-productive arrangements,- force customers, suppliers to think of value in a different way-CUSTOMERS ARE ALSO SUPPLIERS-IKEA only provides goods, design, support, food, and even entertainment-AND MOREOVER CONVENIENCE. ? Unique elements of IKEA ’s winning business formula: 1. Simple high-quality Scandinavian designs 2. Global sourcing of components. 3. Furniture in kit format-easy to move. 4. Huge suburban store locations-plenty of space for parking, shopping, displays, cafés, restaurants, child care, ramps for wheel chairs. 5. A universal appeal crossing national boundaries. 6. Customer profile: different life style, new home seekers, business owners needing more office capacity-seeking well styled, good quality reasonable priced readily available, furniture. 7. All systems are designed to promote these concept-100display rooms, sales staff only when sought. 8. Buying office whet potential suppliers-mfr, fit. Vendors covet IKEA. They can access global volumes, receive technical assistance, lease of equipment, quality assistance, rigid supplier assessment program. 9. Ikea North American strategy Traditional international retailing rules: Tailor closely ?? host country tastes & preferences = international success Retailing concepts remained the same-remained primarily product-oriented [Swedish management, design, Group will decide what is to be made and then sell around the world-little research into what the public really want, emphasized Swedish origins into its advertising-even Swedish Blue + yellow on its stores. . 10 stores went up to 125. 1974-1994 it worked [revenue $210 m to $ 5 bn., now only 11 % from Sweden 29, 5 % Germany, 14, 2 % N. America]. RELATIONSHIPS- 2,700 in 67 countries. What do the suppliers get? What does IKEA get?
Big production runs contracts Long term contracts Technical advice Leased standardized equipment [7% ROI] Same product all over be passed on.
exclusive captive low prices [30% lower] timely deliveries huge economies of scale massive cost savings to Quality matched with
hi-cost rivals ADAPTATION to US tastes, physiques, Inch standards-everything BIG, king-sized, queen-sized beds, large Pizza dinner plates [15 inches], large water glasses [Americans put ice in everything they drink!]. They store sweaters stacked in cupboards, life styles, uniformity, coordinated, color harmony, aesthetics, value perception, shopping habits, 45% local content needs, and [in a way it is a good policy to hedge against currency movements]. It changed the way to service US market. The original business idea needed re-vamp [consistent product quality, design, store management, for local adaptation, different shopping experience]. Sales 1995 went 3X 1990. USA added to core product from local vendors, installed loading service bays, erect bollards to stop shopping trolleys to avoid them obstructing the massive car parking areas. CUSTOMIZATION-raises costs, loose economy of scale. How much to customize vs. how much to standardize? There are two pressures: 1. Pressure for cost reduction 2. pressure to be locally responsive This conflict has to be resolved. We need to drive down the experience curve. LEVITT SAYS-consumer demands for local customization are on the decline world wide. Globally different approaches were required for Japan, Australia, Hong Kong, local knowledge essential to fine tune long distance control, availability of managerial talent. MULTINATIONAL OPERATIONS need new competencies, skills, control systems, physical stock, high risks, right property acquisitions, number of people working in each location, estimates of resources, commitment, operational level decisions, geographic spread, marketing communication policies suited to different customer behaviors. Operation strategy must be in line with a strategy difficult to imitate.
Corporate level has to device policies, and consistent mission, to include good value in the offer. The operational level’s aim is to offer competitive advantage, local adaptation, SBU concept, to meet local client needs, and yet convey a consistent image. IT HAS TO BE A STRTEGIC BUSINESS ARCHITECHTURE!
doc_619941700.docx