Marketing: Activity

Question:

Write an essay on Marketing.

Answer:

Introduction

Marketing is an essential activity for any organisation to seek success in a new market. Marketing activities involves planning of the marketing strategy and promoting the business and its products in the market. It is important for any business organisation to set its objectives, goals and target to set a direction to follow. It helps the employees of an organisation to focus on a particular target and ensure to make all necessary efforts to seek its objectives (Mattsson, 2008). The paper has been developed to analyse the marketing strategy of IKEA. In order to do so, the paper will discuss the principles of strategic marketing management. Along with that, the paper will discuss the tools that are used to set strategic marketing strategy. The paper will also present the appropriate marketing techniques that are used to grow in the international market. Furthermore, strategic marketing objectives will be set for IKEA for a specific market and report will be prepared on the effect of changes in the market environment on the marketing strategy.

IKEA is one of the leading furniture retailers in the international market. IKEA is known for its diversified workforce and localisation strategy that it implies to seek success in the global industry. It is a group of companies that manufactures and sells furniture, home accessories and appliances (Ikea.com, 2016). It has been found through report that IKEA was identified as the world largest furniture manufacturer and retailer. IKEA group was founded in Sweden in 1943 by Ingvar Kampard. At present, the CEO of the company is Peter Agnefjall. Further discussion has been made on the marketing strategy of IKEA through the paper.

The role of strategic marketing in IKEA

Strategic marketing is a fundamental concept for any business growth proposition. By understanding the valuable market customers, IKEA’s active management has developed significant marketing and communication tools to access the retail clients in a better way. The enterprise uses various channels to meet the demand of the target demographics. IKEA’s brand identity has been significantly utilised in strategic marketing to inspire the consumer’s purchasing behaviour (Berry and Abrahamsen, 2011). In the case of purposely marketing, IKEA has utilised many official advertisements, brochures, social media marketing tools and organisational public relation to informing the customers about new products and offers available in the stores. By developing public relations with the market, customers have always benefited the organisation to introduce significant product and service marketing concepts effective for sales (Milisavljevic, 2013). By identifying the changing purchasing behaviour of the consumers, the marketing team of the enterprise prepares IKEA catalogue to set up strong communication channels with the target demographics.  

By recognising core competency and concepts of the business framework of IKEA, the management has adopted customer-centric and competitively prevailing strategic marketing ideas for efficient business operations. By evaluating specific market segmentation and manufacturing goods positioning of IKEA’s products, the principles of strategic marketing management have helped the organisation to develop more prominent product distribution channels for a better experience of the customers (Baraldi, 2008). Also, the strategic marketing plans can design integrated marketing programmes identifying the potential risks and future probabilities associated with a marketplace. IKEA prefers significant strategic marketing on product designing, product pricing and delivery of goods to create a consequential customer value proposition. Such customer-centric strategic marketing concepts have delivered loyal customers who can play a vital role for sustainable business growth (Warnaby, 2009). Invariably, significant strategic marketing plans of IKEA has effectively monitored the customer’s need, purchasing behaviour and strengths and weaknesses of other market competitors for the better business proposition and market penetration. 

 The processes involved in implementing a marketing strategy

In order to implement a marketing strategy, IKEA’s management group has followed three precise phases such as planning, implementation and control. The process significantly provides successful marketing strategic moves effective for organisational benefits. In implementation phase of a marketing strategy, first of all, the organisational goals, objectives; mission and vision statements must be identified to connect the marketing strategy with the business procedure (Keesling and Kaynama, 2006). After evaluating the primary aim of the marketing strategy, the first thing is to do the design of marketing. The design of the marketing will help to understand the scheduling and execution section. IKEA has mainly put the emphasis on product innovation and better quality in any marketing programme directed towards the target demographics. Also, in implementing a marketing strategy, understanding of organisational policies and procedures, information system, product manufacturing, production line and communication with the human resources is a very critical aspect. 

The strategic map is also significant to identify the crucial ingredients and components sufficient for productive performance. In the next step, identifying the needs of the organisation from the marketing plan will be evident (Perks and Easton, 2010). By identifying the core business competencies and skills and knowledge resources of the subordinates, accurate management system planning has been introduced in the monthly meetings. In the marketing strategy implementation, some of the risks and potential market threats must be identified so that the marketing strategy cannot be wasted due to lack of communication or other issues. 

Links between corporate strategy and strategic marketing 

Corporate strategies and strategic marketing can often be presumed as overlapping due to some significant but common connections. The corporate marketing strategies primarily focus on the productivity and profitability margin of an organisation. Meanwhile, corporate strategies help to evaluate the most suitable organisational framework, financial components, debt status, economic scale and other segments essential for profit enhancing (Mamula, 2012). Therefore, based on the corporate strategies, management of an organisation needs to set up strategic marketing concepts to make the full utilisation of available market resources. In marketing strategies, companies mainly focus on 4Ps of marketing including price, promotion, product and place to implement the most effective marketing mix significant for profitability margin. As a result, it would become essential to find the meet point between corporate strategies and strategic marketing. For example, IKEA’s corporate strategy supports significant profitability margin without compromising the quality and pricing. Hence, the management needs to reduce the cost of production to make the best strategic marketing effective with corporate strategy (Quinton, 2013). Also, in order to increase the margin of profitability, sales of the products should be promoted without damaging consumer’s confidence in the products manufactured by the organisation. 

Therefore, it can be easily made out that corporate strategies are there to make an overview of profitability aspects attached to the business operations. On the other hand, strategic marketing determines how efficiently an organisation can achieve the corporate strategies by implementing significant practices. Invariably, strategic marketing ideas can eventually develop a brand strategy to fulfil the corporate strategy. Herein, digital media marketing, promotional activities and advertisements are the critical resources to create the brand strategy.

Key theoretical models in strategic marketing planning. 

In strategic marketing planning, there are some key theoretical models to be described herein such as the 7Ps of the marketing mix, the Ansoff Matrix, the Boston Consulting Group Matrix and Price-Quality-Strategy Model. 

The 7Ps of the marketing mix: The 7Ps of marketing mix model is one of the most sustainable marketing planning strategies to be taken into consideration. The 7Ps of marketing mix model includes product, promotion, price, place, people, process and physical evidence. By identifying the core elements of a market, product or service based enterprise business can opt for significant strategic marketing planning in product development, product promotion, product placement, product pricing and other marketing activities supportive for modern business marketing (Colbert, 2007). 

The Ansoff Matrix: Ansoff Matrix is a significant theoretical model to analyse existing market and new emerging markets and existing products with new products. Based on current business portfolio and market position of a business organisation, the enterprise can evaluate what strategic planning must be introduced to develop business growth in a target market. In some cases, market penetration can be an option for most of the cases (Wilson, 2006). For bigger business firms, emerging markets and product development can be new options for business expansion. 

The Boston Consulting Group Matrix: It is another successful theoretical model to categorise products and services based on their performance rating. In this way, successful marketing strategies can be promoted. In this particular growth share matrix, there are four definite quadrants such as Stars, Cash Cows, Dogs and Question Marks to define cash usage and cash generation. By identifying the star products and low growth products through BCG matrix, proficient marketing planning can be done for successful management of cash flow (Văleanu, Cosma and Sofică, 2012). 

Price-Quality-Strategy Model: Price-Quality-Strategy model is an innovative marketing planning strategy to make full utilisation of available set of target demographics. By identifying the potential financial level of consumers, manufacturers and service providers can deliver effective quality at a reasonable price range to get the maximum customers. 

Ways to implement strategic positioning using a range of marketing tactics 

In order to implement strategic positioning, IKEA has effectively utilised significant channels to inspire the purchasing behaviour of the target consumers. IKEA has created sustainable marketing advertisements using social media marketing tools to get the best response from the business clients. In the case of product and service promotions, IKEA has provided public advertisements to let the consumers know about latest products and offers on products. In the case of retail and online shopping, organisational executives have played a major role to implement strategic positioning of marketing ideas (Paulsen, 2010). The management of the group has identified the bargaining power and purchasing behaviour of target demographics to provide the best possible pricing and product delivery experience. The in-store subordinates have acted as a source of intermediate to select the products suitable to meet the need of the consumers. For regular consumers of IKEA, the enterprise has promoted customer feedback to review the products and services. 

Apart from the conventional marketing concepts, the digital marketing media tools have become a part and parcel of better outcome. With the help of modern SEO enterprises, IKEA has utilised the online presence of the customers to direct them to the official portal of IKEA. The organisation has put significant value on core business competencies to create a significant value proposition to the business (Arrigo, 2015). As far as a conceptual map of business is concerned, the furniture manufacturing group prefers to promote high quality at a low price in creating significant competitive advantage in the developed and emerging markets. As a business retailer, IKEA has identified the value of public relation for product marketing to improve the sales figure at a substantial point. 

Relationship marketing activities used by IKEA and the success of these activities 

Relationship marketing activities are very eminent to build up dynamic customer relationship. Meanwhile, IKEA combines both relationship marketing and transactional marketing to develop a strong customer-centric marketing approach.  In relationship marketing, IKEA promotes significant customer-centric practices to build and maintain sustainable customer relationship. By investing in relationship marketing programmes, IKEA has created a long-term relationship with the customers developing effective interaction (Ahmad and Buttle, 2011). The RM programmes offer to the target demographics includes latest designs, discounts, promotional offers, price reductions and trendy features. Such regular and intentional RM activities create positive returns as the purchasers have attracted towards the promotions. By understanding the benefits of public relations, IKEA has solely concentrated on building up customer’s contact portfolio to give them high-quality experience with the products and services (Palmer and Bejou, 2006). In the case of online interactions, IKEA’s official website offers the visitors to create a profile so that the organisation can improve the knowledge of the customer. In this way, such RM activities and programmes can encourage the customers to prefer IKEA before other home furnishing product manufacturers. 

The main benefits of RM activities and programmes are long-term customer relationship and customer loyalty to the brand. In the competitive market, relationship marketing can help to understand the diverse social culture and structures of society to form effective relationship strategy with the incoming customers (Gummesson, 2012). The offered relationship marketing of IKEA is massively successful in every part of the world. By identifying the diverse elements of relationship marketing, the product manufacturing company has satisfied not only its customers but also its partners, distributors and suppliers. The organisational culture of IKEA has significantly controlled the RM to make it business effective.  

Using an appropriate marketing technique to ascertain and justify growth opportunity for IKEA

Using an appropriate marketing technique is necessary to ascertain and justify a growth opportunity for IKEA. It is important to set objectives, goals and targets to have a particular direction in which the organisation can move. The company aims to have average sales between $10,000,000 and $12,500,000 per year in the new market. The company aims to have the marketing budget to be around 25% in the first year that will be reduced to 10% in the next three years. The appropriate marketing techniques to ascertain growth opportunities are discussed herein below:

Market Segmentation

Market segmentation has been identified as one of the important strategic marketing techniques that can be used to seek growth in the new market (Hong and Wang, 2009). It has been identified that the organisation will focus on unique cities and towns for the destination of the stores. Along with that, the target population will be differentiated into small segments to make the marketing process easier. The market segments that will be used to promote the business have been discussed herein below:

Business organisations: IKEA will target business organisations or new businesses to sell its products to them. It has been estimated that around 33% of the sales will be achieved from business organisations. 

Aged people: IKEA has developed a new range of products for the aged customers with customisation facilities according to their needs. The products will have automated facilities that will help the company to target the wealthy aged people.

Local residents: Local residents are people living in the area where the stores will be located. The company will target those customers by initiating different promotional techniques. The local customers will provide around 30% of the sales.

Newly couples: The Company will provide attractive offers for the newly married customers. This will help them to attract them to start their family with new accommodations and furniture.

Market profiling

Market profiling is another important strategic marketing technique. The market profiling technique has been discussed herein below:

Business community: These are the customers who will provide bulk orders. They are the main revenue providers for the company. Along with that, they will be the main target for IKEA to seek success in the new market.

Individual customers: Individual customers are the hard working people seeking for lavish and comfortable furniture. The company will target those customers to have regular sales of its products.

Aged customers: The new products developed for the aged customers will provide the company with extra revenue (Mochon, Norton and Ariely, 2012). This segment will provide the company with better reputation and good position in the market.

Suitable marketing strategy for a particular market

Porter’s Generic Strategy

Marketing strategy depends upon the business and the target market chosen for selling the products and services. Michael Porter has introduced five market forces that can be used to analyse the factors that influences the business of the organisation. On the basis of those five forces, two different strategies can be used to seek success in the new market. The strategies are named as Porter’s generic strategies that are discussed herein below:

Product Differentiation: Starting a business in a new competitive market needs the organisation to differentiate its products and services from the rivals already leading in the market (Sinha, Ahuja and Medury, 2011). IKEA has introduced customisation facilities for aged people and products on demand that provides the company with product differentiation in the market. Differentiating the product through customisation and meeting the requirements of the customers is highly needed to have a competitive advantage.

Cost leadership: Considering the high level of competition, the company needs to keep its price lower as compared to other retailers in the market. During the starting phase, IKEA needs to provide good quality products at lower prices using promotional techniques and providing attractive offers to the customers. Cost leadership is an essential strategy to seek growth in the selected market.

Strategic marketing objective and marketing mix to achieve this objective

The strategic marketing objective of IKEA is to create brand awareness in the new market and customer loyalty by providing good and unique products at best price (Taylor-West, Saker and Champion, 2013). Along with that, the company aims to provide its customers with good services, so that it can create a better brand positioning in the new market.

Marketing mix has been identified as an important marketing tool that is used to plan the strategy that will be used by IKEA in the new market. The 4 Ps of marketing mix includes Product, Promotion, Price and Place, which are discussed herein below:

Product: IKEA needs to introduce innovative products that will differentiate the company from its rivals. Along with that, the customisation of the products will provide the organisation with competitive advantage over its rivals. 

Price: At the beginning stage, the company needs to have a lower pricing policy that will provide it with competitive advantage (Sheth and Parvatiyar, 2012). Along with that, the competitive pricing policy will provide the company with a better image in the market.

Promotion: The Company will use different means of promotion that will help to increase the brand awareness. It will use social media advertising, television, hoardings and transport advertising to promote the brand in the new market. Along with that, the company will have a separate customer service department that will take care of the customer queries. IKEA can also provide discounts and seasonal offers to attract more customer traffic.

Place: Distribution channel and place plays an important role in the success of a business. The company will have its own stores in the core areas of the city to attract more people and grow its business.

Major changes that occurred in the external environment and the impact on the marketing strategy of IKEA

In order to analyse the major changes in the occurred in the external environment and assess the impact of these changes on the marketing strategy of IKEA, there is a need of PESTEL analysis that has been discussed herein below:

Political factor: It can be seen that IKEA faces problems due to political instability in different countries. The rate of taxes and changes in export and import policies impacts the business of IKEA in different markets.

Economic Factor: The downfall in the global economy due to financial crisis adversely impacts the business of IKEA. There is a need of better promotional strategy that can influence customers to buy products irrespective of economic downfall (Johns, 2012).

Socio-cultural Factor: The change in the taste of people due to globalisation and mixed cultural impacts on the buying behaviour, the company needs to implement changes in the marketing activities to grow in the international market.

Technological Factor: The development of technology and increased use of internet has made it mandatory for IKEA to implement digital marketing in place of contemporary marketing to seek success in the international market (Rask, Korsgaard and Lauring, 2010).

Environmental Factor: Increase concern of the people regards to the environment has made it difficult for the company to proceed with wooden furniture. Along with that, any sort of promotion related to wooden appliances has been banded in many countries. 

Legal Factor: The changes in the government rules and regulations regards to the promotional activities makes it difficult for the company to grow in the international market. Along with that, the company needs to maintain a particular level of price because of the government rules.

Current marketing strategy analysis and strengths and weaknesses of IKEA

Currently, IKEA has been concentrating on product differentiation to increase its market positioning. IKEA is well known for its marketing strategies that have provided it with a good brand reputation and success in the international market. Furthermore, IKEA is known for its premium range of products and customised products that attracts the customers towards the company. Along with that, the service quality of the sales executives as well as the after sale services also adds up to the strength of the company (Harpham, 2011). But, the price charged is quite higher than other companies because of the quality and uniqueness of the products. The strength and weaknesses of IKEA has been discussed herein below:

Strengths

Unique range of products: IKEA provides its customers with unique range of products that acts as strength of the company.

Customised products: The customised products with automatic facilities provide the customers with better satisfaction (Speed, 2013).

Global recognition: IKEA has a global recognition and is one of the leading furniture retailer brands in the world.

Good customer service: IKEA is known for its customer oriented strategies that help the company have a better customer loyalty and competitive advantage over its rivals.

Weaknesses

High price of products: The high price charged due to use of good quality materials and premium products act as weakness of the company.

Duplicate products: The products of IKEA are copied by other local companies that are provided at a cheaper price which acts as weakness of the company.

4.3 Key emerging themes that impacts IKEA’s marketing strategy and ways to fight them

The key emerging themes that affect IKEA’s marketing strategies and the responses to address these changes effectively are discussed herein below:

Political Environment: The political instability makes it difficult for IKEA to carry on with its present marketing activities. Due to the changes in the tax rates the company needs to change the pricing and promotional strategies according to the rules and regulations implemented by the government of each country (Jae-Woong Byun, 2011). There is a need of localisation strategy to seek success in the international market.

Threat of competition: The high level of competition makes it difficult for IKEA to carry on with its business with the present strategies. The company needs to concentrate on product differentiation and cost leadership to seek success in the international market. Different varieties of products with good pricing strategy can help the company to seek competitive advantage in the market.

Legal Reforms: The changes in the legal policies regard to import and export of wooden materials and furniture has made it difficult for the company to carry on its business in the international market. It has increased the costing of the company that impacts the pricing of the products (Han, 2015). Hence, the company needs to maintain these legal policies and keep the price low to carry on its success in the international market.

Conclusion

Understandably, it can be seen that strategic marketing is one of the most significant aspects for any business enterprise to secure successful business operations in a particular market. However, different organisations have adopted diverse marketing concepts to stay a step ahead of its competitors. In terms of IKEA’s business framework, the home furnishing product manufacturing company has developed evident marketing channels and planning supportive for growth strategies. By understanding the market opportunity, IKEA has utilised 7Ps of marketing mix model, Price-Quality-Strategy model and Ansoff matrix to take significant decisions on marketing planning. Also, the management of the group has effectively utilised digital marketing tools and publishing media to inform the customers about latest offers and product innovation status. The lucrative online and published advertisements of the goods and services and discount offers on a variety of the products have increased the sales to a certain point. Conclusively, IKEA’s management has appropriately analysed the target market to implement substantial digital marketing ideas and concepts according to the marketing criteria.

References

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