IKEA is a large retail chain which deals with home furnishing. The company achieved its international popularity in three main phases. It accomplished its mission by offering a wide variety of products, good value, and terrific design for customers of all ages. The firm seems determined to maintain standardized products’ strategy. IKEA does not own any manufacturing facilities, but has its own designs and controls distribution of furniture. It exercises cost leadership concept via high level of production as well as standardized items.
What makes IKEA successful is the fact that it mainly focuses on customers and does not involve any intermediaries. This move enables the company to obtain direct feedback from consumers. According to Skaljak’s study (2009) the company has established appealing and universally accepted values. In any country that IKEA enters, there are already a considerable number of potential consumers who seem not to be tied to traditional furniture and want to explore new designs.
They prefer practicality, simplicity, exceptional value, and enjoy purchases spending time in the stage of assembling. Consumers need variety of available items in one and the same place. All these aspects together with as broad variety and fabulous designs are appealing to people in many countries. These factors also are tempting to similar consumer segment of markets in other countries, especially to young people segment. This concept can be also easily promoted globally, particularly with the help of catalogues. The identical layout with minimal regional differences contributes to already successful IKEA’s formula.
Progress of IKEA depends on flexibility of its concepts in various conditions of different countries. The company’s concepts could be slightly modified without altering the original formula. The focus will be anyway on the overall profitability rather than margins. The same products go at different prices in different countries in order to match similar consumers’ expectations. Decreasing margins per unit sold is justified by consolidated profitability of the regional IKEA outlets in a given country (Skaljak, 2009). This strategy, however, cannot be applied everywhere because differences in some countries can be greater and could not be accepted by the company.
The original formula can be successfully preserved in many countries. The global preservation was achieved with or without little modifications. The regional imbalance and differences play a considerable role in utilizing and preserving original IKEA’s concept. However, it could not be expected that this approach in a different market would be necessarily successful. It is limited to a variety of possible means that can be adapted to the concept without altering it. Presently, IKEA has successfully gained customers in different countries of the world.