Q1. How is IKEA’s mission related to the clients they serve around the world? Explain what clients mean for IKEA. IKEA? s mission statement: IKEA offers a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible can afford them” Considering the previous mission statement with a unique customer vision IKEA is clearly antagonistic with specific customers’ needs. That lack of adjustment to customer needs is the main reason for not getting the same results in China than in Northern Europe. IKEA? expansion in the late 50’s could have called for standardized products for a middle class standard market. That was Fords approach and many more international dominant companies. That approach might no longer be sustainable.
More so while trying to enter such culturally different markets like the Asian markets. As Dr. Marcos mentioned on lecture # 1 customers are looking for a unique experience and it seems like IKEA looks at customers as a uniform conglomerate of individuals. IKEA’s mission talks about customers in such a plural manner that one could imply a lack of market customization.The rest of the IKEA case talks more about ways in which IKEA addressed the lack of customization issue, but the mission statement itself points out the potential troubles of considering clients as homogeneous. Q2.
Find out one activity, service or innovation that IKEA has made in the last 3 years that supports its business mission statement related to serve their clients, explaining 3 reasons why you and your team consider it. IKEA? s started innovating 3 years ago with a new concept called “Boklok”.According to their website, Boklok is defined as “A groundbreaking concept to housing that involves providing space-saving, functional and high quality housing at a price that enables as many people as possible to afford a stylish and comfortable home” (BoKlok, 2009). We believe that Boklok is one of IKEA’s most popular products, since it was a huge success. It was so popular, that people started to make a line outside the stores for more than 2 days, just to buy a house.
This lead to IKEA, to implement a particular “sales system” by doing a raffle, where only the lucky winners would have the chance to buy their new home.The first relevant attribute of this product, is that it is 100% customer oriented. The BoKlok development initiate by analyzing the customer’s needs and understanding what they want. The idea, it’s about building an affordable place where families can pleasantly live without sacrificing functionality or quality. The second would be the price, since IKEA’s business mission is focused on getting as many people as possible, the BoKlok design principle is making a house that is affordable to most of their customers, and at the same time, providing them with a product that met their expectations in terms of quality, functionality and flexibility.
The third would be the technology used to build the houses. This is extremely important since IKEA is planning to replicate this model across different countries. Smart design, reusable materials like wood and natural illumination systems are being incorporated into the final product, which is benefit for the environment and helps the families to reduce their services fees and guarantees low energy consumption. Q3.
Explain 3 factors of customer centricity described in Chapter 1 of the textbook that can be applied to IKEA in order to improve their service to customers. a) Most important customer, We think that they need to improve their loyalty program called IKEA Family in order to reward their best customers because their program is general, it treats to each client in the same way, each client that have the loyalty card receives the same privileges.A loyalty program is one of the keys to start a Customer Relationship management, so we believe that IKEA could have a better loyalty program that let them to recognize their best clients, and to establish a one to one communication with these special customers. Maybe they didn’t wanted to use the traditional loyalty program based on rewards so they designed a different program but the result of this program is the generalization of the customers instead of the differentiation that is one of the key aspects that the clients are claiming now in all markets.
) Most important process, it is clear that IKEA most important process is the development of products, they have a huge catalog and you can find a new products section in their web page, so the development of new products must be relevant for them, but they must change their focus to the customer relationship process, like we mention in the last point, they must first improve their loyalty program and then use it in order to establish a virtuous cycle with their clients (sale – transaction analysis – reward – sale again).Also they could take some other parallel actions like implement a feedback section in their site to get the necessities of their clients. A small action like this could send a clear message to their clients that they are worried about them. The Customer relationship management must be in the future their most important process. ) Mental process, They have some interesting tools to help to the customers to design some furniture like entertainment centers (with all the possible combinations that they offer), these tools are good but are designed thinking in the number of uses or combinations that a product could offer, instead of thinking on the best combination of products that could be the best option for the client, the tool is not asking to the clients How much they can pay for the complete solution? How big is the space that they have for the furniture? , with this inputs, the tool could offer to the customers some better options for them, in conclusion they need to change their mental process to keep always present the idea to offer the best solution for the clients.
Q4. According to the information in the case and the information you can find about IKEA, use the strategy locator in Chapter 2 of the textbook to position IKEA in the customer continuum, and explain 3 reasons for the positioning selected.Make any supposition about IKEA that will help you to answer this question. The company’s global business strategy is clearly most focused on products, with significant efforts to recognize the client voice for each location and adapt to the requirements. According to the information in the case we believe IKEA is actually located on the upper of the medium scale, leaning strongly to the “scale and scope” axis.
The strategy locator chart looks as follow: Some of the reasons for that position are: )IKEA has a lot of different products to offer to its clients. The case mentions that the smallest stores offer about 7,500 of its 10,000 products catalog , so it makes it a big selection to its customers according to the scales in the strategy locator chart. b)IKEA’s strategy has always been offering stand-alone products to their customers, not focused on integrated solutions, and leaving to the customer the last part of the process of producing furniture (assembling) in order to lower costs.This represent an advantage on price by using the customer, but it does not provide the customer with any benefit since it looks like the customer pays for the difference with his/her assembly work.
c)Recently in China they have been exploring on home decoration and interior design as differentiators against copy and as a way to compete, with significant success, they also mention some efforts in other countries to adapt to the local market customs. We think those facts position IKEA somewhere in between point two and three.