IKEA – Expanding Wings to India.

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Elaborate on the launch strategy of IKEA in India?

IKEA has been founded in 1943 in Sweden and is now 338 stores worldwide (26 countries), 776 millions customers visits. IKEA outsourced manufacturing at 100% and has more than 1,000 suppliers in the world.

The Indian market is attracting IKEA for a couple of reasons,

- 2nd World largest population

- World largest democracy

- Largest open market economy

- 400 MM people are in the middle class

- +7% annual growth rate

- By 2025, middle class will be world’s 5th largest consumer economy!

Those values are really attracting for international company as IKEA, but the even if India is a great opportunity for IKEA. The Sweden Company will have to face a couple of challenge to succeed.

IKEA Marketing strategy:

To succeed in India, IKEA should use 2 different type of marketing,

- The traditional marketing:

- Magazines

- Billboards

- TV ads

- Product placement in TV

- Non traditional Marketing:

- Digital Marketing

- Social Media Campaign

- Special Campaigns

The goal of using the traditional and non-traditional Marketing is to increase the brand awareness, communicate the value proposition, educate in the DIY concept and attract customers to the store.

Identify the opportunities and challenges for IKEA in India.

In India, there is no culture of “Do-it-yourself”, it means that when you are buying a table at IKEA. You have to build it by your own. It is generally very easy, and even funny (sometimes).

The “Do-it-yourself” is a strategy use by IKEA worldwide. And in my opinion IKEA will not change that strategy, the company will continue to sell “do-it-yourself” product, and also offer a service to build purchases for the consumer, for example, when a customer buy furnitures from a store and don’t want to build it by his own. IKEA has to propose the possibility to do it; it has to be not too expensive. The workforces are not expensive in INDIA it could be a good job for students, or part-time employees, and the opportunity for the company to hire more local people.

In INDIA, the rate of car ownership is very low. People are using motorcycles or the subway. It is not common to have a car. This is a real problem for IKEA. IKEA has the habit to build its store a little bit outside of a city and customers come by cars to carry theirs purchases. Do you imagine yourself with furniture on your scooter...

In difference than the US or the EU, India has a low Home and Garden expenditure. Not many people have a garden so IKEA has to take it in consideration and adapt their product range in their store. In a big city as Mumbai, stores has to get a smaller layout for garden furniture than a store outside a city, for example..

But instead of those points, why IKEA will succeed in India

- IKEA offers EVERYTHING under one roof

IKEA has all you need for your flat, home, garden, kitchen, bedroom etc…

- IKEA’s pre fabricated furniture and goods represent modern Indian Lifestyles

Workings Indian living in suburban metros, want shopping hubs that offer quick service, a reliable brand name, with a wide range of product under one roof and quick delivery.

- IKEA is a familiar brand name amongst urban Indians

IKEA has been made familiar to Indians because they keep appearing in the media, as Starbucks and Walmart do.

- IKEA’s CSR operations in India

IKEA supports UNICEF’s water and sanitation program and funds initiatives in the carpet and cotton regions in the country. “In the coming years, IKEA plans to spend in areas of women empowerment, education, health awareness and industry-based programs that aims to benefit about a 100 million women and children”.

“The prize of getting access to the wallets of the growing middle classes in places such as India and China is a big one for IKEA”

Richard Milne

Following the new INDIAN guidelines, foreign investors who own more than 51% of an Indian venture, should source 30% of the value of their products locally. On this point the company is well positioned thanks to that, Ikea has already sources a variety of products in India, like rugs, textiles, lighting articles and ceramics.

SWOT Analysis of furniture industry in India,

Strengths

- Big democracy; massive market and free media,

- Market diversity,

- Establishes branding,

- Highly educated, young, skilled, dynamic human resources

- Increasing demand in modern, clean and minimalist designs

Weakness

- Lack of trust in external organizations,

- Fear of sharing knowledge,

- Decreasing demand in traditional furniture,

- Lack of quality awareness,

Opportunity

- Massive potential market in design sector and emerging new market,

- Low costs in outsourcing,

- More efficient production,

- Need modernization of their infrastructure,

- No much competition in modern furniture,

- Research and development capability,

Threats