BrandAudit of IKEA Company
IKEAis a group of companies that was composed of several multinationalcompanies in different continents including North America, Europe,Australia, Asia, and Russia among others. Ingvar Kamprad started IKEAaround the year 1943 in Sweden. IKEA presently functions in 43different countries having 328 stores spread across 28 countries. Thegroup of companies deals in various types of products ranging fromfood, dining furniture, living, kitchen, eating, bedroom, andbathroom among others (IKEA,2015).
RecentIKEA reports indicate that the company has developed about 9500products with a commitment to renewing and refreshing this range with2500 products annually. To further its competitive advantage, thecompany has put in place 15 in-house designers and approximately 200external designers on contract basis. INGKA Holding B.V.is consideredas the parent IKEA Group Company located in Netherlands. The companyoperates its stores under a franchise agreement with Inter IKEASystems B.V. and the universal IKEA franchisor (Inter IKEA SystemsB.V., 2016). The company also has 27 different trading offices, 15customer distribution services, and 33 distribution centers all aimedat marketing and distributing its brand of products (IKEA, 2014).
Thecompany has 43 operational production businesses in 11 countries with978 home furnishing suppliers in 50 countries. The brand has alsobeen promoted through the manufacture of catalogs in differentlanguages. Currently, the company has 213 million catalogs printed in32 different languages. The company financial reports have indicatedthat IKEA food section, which comprises of restaurants, IKEA Bistro,IKEA Swedish food market and coworker restaurant generates an annualturnover of €1.57 billion. Some of the products the company dealswith include outdoor textiles, baby tableware, baby toys, bathroomaccessories, washbasins, cots, and junior chairs, toys, and plays,cot mattresses among others (IKEA,2015).
IKEAhas been known as a value driven company with a tremendous passionfor life at home. This implies that it provides home appliances thatmake life comfortable for its clients. The company has a dream ofmaking a better daily life for the numerous people that it serves.The main principle that has resulted in the company`s continuedgrowth is that it is a believer of using its own resources forgrowth. This has made the company to create and sustain a major brandof its products since it has always acquired its money beforespending it. The company makes future long-term investments. IKEA hasalso created a culture of investing its proceeds in the existing aswell as new stores, product progress, in addition to sustainablesolutions that aim at lowering process for their customers (IKEAGroup, 2015).
Thecompany has also invested in high-quality products at low cost thathas been designed with their clients’ needs in mind. In a bid tosustain their brand name, the company has always created new productswith the idea of making home a better place to live (Tempor EiusmondInc., 2015).
Thisstudy will focus on the way IKEA brand has been built since itsinvention and the strategies that have made its products highlymarketable. The study audits the IKEA brand and suggestsrecommendations for improvement. The other objectives of this projectinclude learning how customers think, feel, as well as act towardsthe brands and the products of IKEA. The project also aims at helpingIKEA Company to make informed strategic positioning decisions. Thecompany may also make decisions on investing in new markets.
Abrand audit is regarded as a wide-ranging inspection of a brand todetermine its brand equity sources. A brand audit has also beendefined as an externally customer-focused workout to evaluate thecondition of the brand, expose its brand equity sources, as well aspropose ways to advance and influence its equity.
Abrand audit always involves the perspective of both the firm and theconsumer. From the perspective of the business, a brand audit focuseson what products as well as services are accessible to customers, andin what way they are marketed and branded by the company. From theviewpoint of the client, a brand audit aims at establishing whatintensely held discernments and philosophies form the real sense ofthe brands in addition to the products. This is important for thecompany because it helps develop the strengths of a brand, marketing,and product development.
Brandmanagement, on the other hand, has been defined as the process ofupholding, refining, and keeping a brand in order to establishpositive brand results. It involves the analysis of factors likecost, client fulfillment, in-store marketing, and competitionmanagement (Uncles,2011).Experts have noted that despite the fact that brand management iscreated on marketing concept, it has always focused on the brandrelevance and how it has always remained favorable to the customers(Kingston University London, n.d).
Studiesthat have been conducted on brand management by different companieshave indicated that a brand is one of the most valuable marketingtools for most businesses (Hampf & Lindberg-Repo, 2011). Theimplementation of brand audit findings has always resulted inincreased sales of the different related brand of products.
Theaudit of IKEA brand is also important as it aims at identifying newcustomers, the range of goods to sell and the way to sell them. Theaudit involved the evaluation of perception of respondents on levelsof IKEA Company, current customer’s perception about IKEA products,and the past and future customer’s perception. The study alsofocused on the understanding of IKEA competitors as well as the wayconsumers perceive products from their competitors.
Criticalanalysis of brand management theories
Threemajor theories have been used to describe brand management. Theseinclude brand loyalty, branding theory, as well as the value-basedtheory.
Thebrand loyalty theory
Thetheory highlights the relationship that exists between the customerpsychology and the company brand. The theory has been used to explainthe positive attitude of the customer towards a brand that alwaysresults from three different perspectives (Temporal, 2011). Theseinclude emotional attachment, brand evaluation, and behavioralaspects. The emotional attachment often results from the customerperception of the brand concerning his likes and dislike about it. Apositive emotional attachment of the customer to the brand means thathe/she will always buy the product and ignore others (Chitale &Gupta, 2013).
Thistheory explains the concepts of brand management, which includesspecific name assignment to a brand that portrays the businessstandard, creating awareness among the customers about it, trying toprovide what customers want and the establishment of a relationshipwith first clients (Fournier,Breazeale, & Fetscherin, 2012).The theory also explains the endless brand growth and trying to reachthe top without compromising the brand management roles(Rosenbaum-Elliott,Pervan, Percy & Elliott, 2015).
Valuebased brand theory
Thetheory presents the value-based products as well as the intent tobuild lasting client value. The attainment of the product isattributed to the worth that the brand brings to the client (Batey,2012).The theory backs the fact that the client is the eventual spiritedcontrivance to defeat the competitor and attribute the brand`s lifeforce to him. Studies conducted on these theories have indicated thatthe brand worth and products are some of the factors that affectsales and marketing of diverse companies (Chevalier& Mazzalovo, 2012).
Explanationof the application of these concepts in real-life
Brandequity has been used in the study of value created by the brand ofdifferent companies. IKEA brand, for example, has achieved high brandequity and established branding and marketing communication systems(Yohn,2015).A survey conducted on IKEA brand in U.S revealed that its awarenesswas at 99% with favorability standing at 66%. The concept of brandvalue and brand equity is thus important for any organization inevaluating the performance of its brand. Perception of the brand wasalso surveyed, and the results indicated that 66% of respondents hada positive impression while 11% showed a negative attitude. Acomputed 29% of respondents were however not sure about theirpreference for the brand (Moodie, 2015).
Theapplication of brand quality concept has also been used to gauge thequality of different companies’ products. Studies conducted on IKEAbrand indicated that its quality consistency was rated at 59%. Thestudy thus concluded that most people preferred shopping at IKEAbecause of the wide selection of products at low price. The brand hasalso achieved a popular cult-like experience among its customershence creating high-value brand equity (Bueno, 2012).
Criticalappraisal of the contribution of the points required in a brand auditof the company chosen
Abrief history of the brand
IngvarKamprad started IKEA brand in the year 1943 in Sweden. It has grownover time to be the largest multinational furniture store and highlyrecognized brand in the world. The founder was selling a randomassortment of products at low prices. IKEA adopted a brand designingprocess that begun with the determination of the price of theproduct. The brand has also been built through annual production anddistribution of free catalogs. The catalogs are produced in millions,printed in over 27 different languages, to reach a large population.The company has also been a key corporate donor to UNICEF (IKEA,2012).
Thename IKEA was invented from the identity of the founder IngvarKamprad (IK) as well as (EA) originated from Elmtaryd and Agunnaryd,which were the farm and village that the founder lived and grew uprespectively. It started by selling pens, wallets, pictures, framesand table runners among other products before growing into a largefurniture company. Through the founder focus on large-scale furniturebusiness, the IKEA brand was born and today is one of the largestcompanies in the world. The goal of IKEA right from the start was tomeet customer needs through the provision of products at reducedprice. Furniture was introduced into IKEA operations five yearslater, and this has undergone several design processes (IKEA, 2012).
Thebrand has enabled IKEA Company to record an annual 6% growth in itsoperations. The brand has also attracted a ranking from the Forbeswhere it was among the top 50 world most valuable brands (Forbes,2016). The brand has been promoted through a franchise structurethrough a franchise system. IKEA brand products that are sold in allstores and online have a single word name that makes it easier forits customers to remember these products. Children items have alsobeen named after animals like birds while kitchen utensils bareforeign words with different meanings like clever among others.
Thecompany has applied innovation to its marketing strategies to build astronger brand portfolio. The approach is based on storytelling,quality, and cost of the products with a philosophy of effective andefficient brand of goods. The company has also maintained its logowith the 1967 version remaining as the symbol of its operations. Thishas been conducted through a franchise agreement that binds all itsstores.
Brandinventory such as:
IKEAinitially had one single brand element that consisted ofstraightforward and bold typeface logo. Simplicity is a key aspect ofIKEA brand element and products. Customers have noted that the designis always simple but appealing hence making them prefer it to otherproducts from other manufacturers. Its trademark consists of yellowand blue colors that signify Sweden flag and is registered for theright to protection and use. The logo also has geometric shapes andtext but with no copyright protection.
Someof the factors that determined the single elements of IKEA brand thatthe audit has noted include its low price, sustainability, form,function, and quality of the brand products. The company has alwaysfocused on low price as an element to its product development (Jiwa,2016).
Thebrand has been built using contemporary products that have been veryaffordable and functional to the customers. These products aredesigned in an easy way with appealing appearance to the customers.The products are also simple to install hence eliminatinginstallation costs. For example, IKEA has made available two colorsof mugs sold at low prices. IKEA Company also focuses on homefurnishing products. IKEA products also include flat pack houses,home built mobile phones and food staffs among others. These productshave been organized into categories that are based on differentfunctions and uniqueness. The examples include living room categoryand individual preferred products.
IKEApricing strategy has always been to maintain good quality anddesigned products at low cost affordable to most people. The primaryfactors that determine IKEA pricing strategy includes recyclingability of its furniture products, in-house design cost that isrelatively affordable, economies of scale, and reduction of waste inits production process. The other factors include transportationcost, automatic selling strategy, strategic placement of its productsand stores and thriftiness of its operations. Also considered by IKEAin pricing is minimal packaging cost and impacts to the customers(Bauman, 2013).
Thispricing strategy of the company products also runs on a plan thatcost-conscious customers moves from products to customer aspects likelifestyle and preference. The act of visiting customers’ homes hasbeen reported to have resulted in increased sales in IKEA resultingin double market share as well as tripled sales from $600 million to$1.7 billion within a period of 1997 to 2005 (IKEA, 2014).
Thebrand and its related products have been distributed through IKEAworldwide stores and distributors. The company also adopted afranchise structure that helps in the distribution and sale of itsproducts. The company currently runs 375 stores spread across 47countries. A recorded 70% of its stores are located in Europe withits best stores found in Germany, USA, China, and France.
Thecompany is credited with opening several showrooms with the firstbeing opened in Philadelphia in the U.S. The opening of IKEA childrenand IKEA e-commerce to support IKEA operations followed this. Afterthat, the IKEA food labels consisting of 150 food range products wasfounded to help in the distribution and sale of food. Thedistribution strategy of IKEA is focused on connecting its suppliersand customers and brand distribution channels (Monllos, 2014).
IKEAbrand has been communicated through catalog printed in 27 differentlanguages. The brand has also been availed through social media andnewspapers worldwide. The brand is also delivered through web andapps and in millions of homes via home visits. The catalogs have alsobeen made with augmented reality. IKEAs marketing communication isalso based on fundamental communication principles that aim atbuilding linkage with customers and establishing an understanding ofhow the company can meet the customers’ needs and expectations(Morskate, n.d).
Thecompany has applied design philosophy in brand design to promote itsbrand to consumers, and it acts as a marketing and culture creationstrategy. Humility and willpower have promoted the brand amongemployees and customers of the company hence eliminating anon-bureaucratic culture. The customers of IKEA have also played acritical role in the democratic design process that is practiced bythe corporation. These include assembly of flat pack products,promoting life positive approach and participating in brand surveys.
Studiesconducted on IKEA brand also revealed that most respondents attributethe brand to cheap starter furniture for young people. Economistshave however argued that this perception is not perfect for brandsthat have been built on the quality design and low price. As aresult, they have suggested that the company should focus on thebrand youthful of its product design and customers perception onthese commodities (The Economist, 2011).
Brandexploratory such as
Thecompany has concentrated on the design of its brand with the clientinvolvement to create awareness about the brand and products. In mostcases, the priority has always been based on design and not thedesigners of the brand. The brand functions both as a family andcompany brand. Consumer knowledge of the brand was focused onhighlighting the truth about the brand.
Theseinclude pricing, design, and durability of the furniture. Thecustomers have also been informed about the brand that is associatedwith straightforward and whimsical products. The customers are alsoprovided with incentives to attend the stores in order to counter theeffects of e-commerce in the marketing and sales arena.
IKEAhas also created a corporation with consumers and retailers toenforce a culture of cheap product with high quality and efficientlydesigned. Studies on the customer knowledge and perception about thebrand have indicated that customer knowledge about the brandpreference is at 99% (Walgrove, 2014).
Thecompany deviated from outdated outlets for furniture making andfocused on discovering the seamless fit between manufacturer,product, as well as price. For instance, in their manufacture ofchair arms, they have always used ski manufacturers. IKEA has beencredited as the leading international retailer of well-designed,economical, and practical home furniture. The customers` focus hasalways been driven by localized state and taste of its designedproducts.
Thelow pricing of IKEA brand at higher quality has made the company toremain competitive with product development starting with a pricetarget. The company does this through the provision of goods that areaffordable to many people through the combination of quality,function, design, and value. About 85% of customers have also ratedthe brand as being excellent among others. The company has includedfunctionality in the design of its products to increase understandingof the client’s preference.
Aroundthe year 1953, IKEA experienced a stiff competition from itscompetitors since both the companies had decided to lower theirprices. As a result, IEA had to focus on the quality of its productsthrough functional approach. This enabled people to choose IKEAproducts, which were of high quality and valuable at a low price.
Pressurefrom competitors made suppliers boycott IKEA products hence makingthe company start designing its furniture. This led to innovativefurniture at a lower price and improved functionality. The company isin the process of applying brand based and market-based competitivemethod that aims at eliminating negative band association andbridging perceived quality gaps (Baines, 2014).
Strategicrecommendations such as
IKEAbrand has been described as having a unique positioning that isremarkable and not easily compared to other brands. It has createdunique aspects of the brand positioning that other companies havealways desired to achieve. This has always been achieved through highquality at cheaper production and affordable products that attracthigh customer rating and hence conquering a significant marketposition.
IKEAbelieves that the best product does not exist, and so theirs willalways be the best in the market. They have achieved this through thebalance of factors involved in product design and brand management.The company always questions its customers about the status of theirproduct and which product they consider as the best in the market.
Thecompany has also focused on ensuring that its employees are committedto their customer satisfaction. They always assemble the client’sproducts at their customer’s home making them feel the sense ofbelonging and appreciation. IKEA has also positioned its brand to thepoint of its clients influencing its products. This has been achievedthrough creating pride among its customers especially when IKEApersonnel are assembling their products (Fawkers, 2014).
Thecompany has also created a cult around its IKEA brand that hasenabled customers to refer other buyers to IKEA stores. The companyhas also positioned itself through the delivery of most affordableand enough furniture. They have tried to balance identity and marketperception of their brand, which has positioned them in the openplayground area in the market. Their position at the end of thespectrum has also enabled them to exceed expectations of theircustomers easily.
Itis worth noting that just like other brands, IKEA brand relationshipwith the clients is strong and focuses on customer’s perception ofimprovement. IKEA vision, business idea, and market position hasalways provided it with a framework for marketing and communicatingits products worldwide.
IKEAhas also become an aspiration business that sells to its customer’sproducts, which has enabled them to point it that it is a story theyall want to believe. Most customers say that the brand understandsthem since it knows how they live in their homes. The brand just likeother brands tells the customers the truth by highlighting itsdurability versus cost, affordability, and quality. The brand hasalso adopted customer’s language that is common to most brands forease of clients understanding.
Thecompany brand management focuses on design, which is different fromits competitors` traditional furniture design. The company has alsogone to the extent of offering free shuttle services to helpcustomers travel to and from IKEA stores. IKEA also works alongsidecustomers in designing their stores to help capture customer’spreference. This was evidenced when IKEA was constructing its newstore in Chicago.
Thecompany also uses anthropologically based consumer insight toadvocate for its vision of being the leader of life at home andproviding the leading and high-quality brand. The difference betweentheir brand management and that of their competitors is that theyregularly visit their customers’ homes where they observe and takepictures to be used in the production and publication of thequarterly company reports. IKEA ignores the name brand designers andinstead encourages developers to come up with existing and newproducts. This approach promotes real creativity, inspiration, andinnovation among individual designers and the company at large.
Theactivity of visiting customers’ homes regularly to market theirbrands has positioned them in a better understanding of the clientand uncovering of new routines, food habits, and consumer preferencesas well as perceptions of their brand. IKEA has also been creditedfor its largest market share that is always reflected in its annualsales. The brand has conquered 23% of Germany market and 11% in theUSA furniture market. The brand is also capturing the new emergingmarkets like China with its housewares products (Lutz, 2015).
Recommendationsfor future brand expansion
Theaudit recommends that the definition of IKEA brand properties be doneand the brand aligned with the company strategic direction. The otherrecommendations for future IKEA brand development include thedefinition of how the brand creates value for customers. The auditalso recommends the definition of the company brand in terms of thenewly developed and designed company products. Definition of thecompany brand value may be achieved through a workshop and structuredcompany process. The audit also recommends the company to create anew race in market positioning to provide the customer with newchoices for selection.
Theaudit report has indicated that IKEA brand is one of the largest thathave developed a market position in most regions. The brand has alsoconquered a greater share of the market due to its low price andhigh-quality products. The audit thus proposes some recommendationsfor the improvement of IKEA brand, which include creating a new raceof goods to increase customer’s preferences.
Theother proposals involve the application of e-commerce shipping withthe promotion of discount on shipping rates. Also recommended is thesigning of free loyalty programs that will enable the company toobtain free shipping opportunity. The audit also suggests a change ofcomplicated product names in order to fit the current market. Theimplementation of localization and globalization of its productscould also lead to increase in the sales of IKEA products.
Despitethe high ranking of IKEA brand, a number of brand equity threats wereidentified. These included possible changes in internal corporateculture, aging of the middle-class target markets, small expedienturban store sites, growth, as well as competition that has thepossibility of resulting in the forfeiture of high design in additionto low-cost image of IKEA.
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