Mar6815 - IKEA Marketing Plan by Matthew Rodgers

Marketing Plan Prepared for Dr. Solomon University of South Florida MAR 6815 Spring, 2015

Thanh Nguyen • Matthew P. Rodgers • Kasidit Tanaphantaruk • Anh Tran

Table of Contents: Executive Summary Situation Analysis

• Current Market • Competitive Brief • Service & Sales segmentation • Company • Financial Report • Marketing Summary

Macro Situation

• Economic • Technology - Digital Media - Science & Engineering • Political/Legal • Social/Cultural • Demographics - U.S. - Tampa/Orlando - Hispanic Population • Ecology

SWOT Analysis

• Strengths • Weaknesses • Opportunities • Threats • SWOT Issues

Strategic Position • Competitive Analysis • Target Market Analysis - Primary Target Market: Millennials - Secondary Target Markets: Baby Boomers and Hispanics

Action Plans Marketing Time-line Marketing Budget References

Executive Summary Founded in Sweden in 1934, IKEA group is an international furniture retailer with a network of more than 345 stores in 42 countries (2013), including 38 stores in United States. In 2013, The group recorded revenues of approximately $37,280.1 million during the financial year ended August 2013 (FY2013), an increase of 3.2% over FY2012. North America accounted for 16% of the total revenues in FY2013. Revenues from North America reached approximately $5,964.9 million in FY2013, an increase of 3.2% over FY2012 Âš. There were a number of factors that distinguished IKEA from other furniture retailers- its stores were strictly self-service and featured such amenities as playrooms for children and Swedish cafĂŠ, all of its furniture came unassembled (let customer put together the furniture on their own). In 2012, IKEA developed People & Planet Positive Strategy which focuses on three areas: inspire and enable millions of customers to live a more sustainable life at home; strive for resource and energy independence; take a lead in creating a better life for the people and communities impacted by our business. Â˛ In the future, IKEA continues to creating long-term growth with current successful franchising concepts, broadening more stores in many countries including United States, innovating technology and create revolution for home and office furniture. This marketing plan focus on identifying key target segments in which we intend to market IKEA group to in the United States, specifically Tampa and Orlando stores. We will evaluate the strengths and weakness, opportunities and threats in order to find out areas which can be improved to reach our target markets. We will initiate action plans to implement our marketing strategies and procedures in a timely and cost controlled method as a means of providing solutions to the Issues at hand.

References: 1. http://clients1.ibisworld.com.ezproxy.lib.usf.edu/reports/us/industry/default.aspx?entid=1016 2. http://www.iKEA.com

Situation Analysis Current market ³ Ashley Furniture leads the current market in furniture sales. They are the largest furniture retail store in North America. IKEA follows closely behind at 5.2%, and has gained an increased number of sales in the previous years.

6.8% Ashley

5.2%

IKEA

4.4% Rooms to Go

3.4%

1.2%

% of Market share Competitors

William Sonomoma

Ethan Allen

Competitive Brief • Competition in this industry is high and the trend is steady • Internal competition: industry operators compete on the basis of customer service, delivery time, quality and price. • External competition: A level of rivalry exists between specialized furniture retailers and other industries like department stores, mass merchandiser and warehouse stores. For example, Walmart and Costco. Other Retail Competition • Walmart, Amazon.com, Furniture USA, Stanley Furniture, John Lewis Partnership, Argos Limited. References: 3. http://advantage.marketline.com.ezproxy.lib.usf.edu/Product?pid=6878C795-4BCB-4C85-A319-6F33C508FD80

Situation Analysis IKEA Services & Sales Segmentation Sales Percentage

38%

12%

17%

Furniture Type

33%

Features: • Market is in the mature phase of its life cycle because of its market acceptance, product saturation, • low rate of technological change and slow growth. • Product lifespan for the industry is between 5 and 10 years, so replacement purchases are frequently needed. • Households and individual consumers make up 93.7% of the market, followed by businesses, government, restaurants and hotels and all other. Barrier to entry : low and steady • Regulation and industry policy is light and steady. • Technological change has been low. • The main barriers for new entrants are start-up costs product saturation and established distribution networks. Product and service Wide variety in functionality, style, and range. Suitable to many demands. Cost effective design for quality furniture. Unique perspective, for creating solutions for living conditions Good design aesthetics with simplicity in mind Flat packing saves shipping cost

Situation Analysis Company ⁴ Key facts (8/2014) Head office: IKEA Group Olof Palmestraat 1 NL 2616 LN Delft NLD Phone: 31 15 215 3815 Web: http://www.iKEA.com Revenue of all market: 28,506 EU Employees: 135000

Main location: Europe: 28 locations North America: 2 locations with 54 stores Middle East: 7 locations Asia Pacific: 10 locations Caribbean: 1 locations

Financial report ⁵ Revenue by segment In FY 2013, the sale of furniture goods segment recorded revenues of $ 37,280.1 million, increase 3.2% over FY 2012.

Revenue by geography • Europe, IKEA’s largest geographic market, accounted for 69% of the total revenues in FY2013. Revenues from Europe reached approximately $25,723.2 million in FY2013, an increase of 1.7% over FY2012. • North America accounted for 16% of the total revenues in FY2013. Revenues from North America reached approximately $5,964.9 million in FY2013, an increase of 3.2% over FY2012. Asia and Australia accounted for 8% of the total revenues in FY2013. Revenues from Asia and Australia reached E2,280.5 million (approximately $2,982.4 million) in FY2013, an increase of 3.2% over FY2012. • Asia and Australia accounted for 8% of the total revenues in FY2013. Revenues from Asia and Australia reached E2,280.5 million (approximately $2,982.4 million) in FY2013, an increase of 3.2% over FY2012. • Russia accounted for 7% of the total revenues in FY2013. Revenues from Russia reached E1,995.4

million (approximately $2,609.6 million) in FY2013, an increase of 20.4% over FY2012. References: 4. http://clients1.ibisworld.com.ezproxy.lib.usf.edu/reports/us/industry/default.aspx?entid=1016 5. http://advantage.marketline.com.ezproxy.lib.usf.edu/Product?pid=6878C795-4BCB-4C85-A319-6F33C508FD80

Situation Analysis Marketing Summary

IKEA demonstrates many diverse types of marketing strategies. The implied notion is that IKEA is set out to appeal to an audience primarily of 20-35 year olds who live in small spaces (Cook, 2003). IKEA claims that it’s focus is reaching as many people as possible, who want affordable furniture. IKEA also states that they are attempting to reach the minds of everyone as an affordable alternative.

BUSINESS CONCEPT Vision and business idea for IKEA

“To create a better everyday life for the many people”, this is the IKEA vision. Our business idea is “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”. We work hard to achieve quality at affordable prices for our customers through optimizing our entire value chain, by building long-term supplier relationships, investing in highly automated production and producing large volumes. Our vision also goes beyond home furnishing. We want to create a better everyday for all people impacted by our business. Source: http://www.iKEA.com/ms/en_JP/about-the-ikea-group/company-information/

IKEA has used many different forms of advertising. Here we will specifically focus on the most innovative ones. These vary from Sales & Promotions, Direct-Marketing, Advertising through comedic and entertaining commercials, public demonstrations, and even go as far to directly engage its customers with live home makeover projects.

Situation Analysis Marketing Summary The Human Coupon Concept:

IKEA launched a successful campaign in 2013, showcasing their creative sense of humor by essentially turning people in to Sales Promotion objects. Opening a new store in Richmond, B.C. they had a target of 10,000 customers to visit the store on opening day. IKEA launched this idea, and it received much public attention as well. It was an innovative way to use turn coupon clipping from ordinary to extraordinary

Situation Analysis Marketing Summary IKEA asks, who is the messiest? IKEA cleverly engaged the public in Australia, to find out who is the messiest. They generalized many different stereotypical groups together in a head to head competition. The campaign was hugely successful, and lead to the launch of a competition site â&#x20AC;&#x153;whoisthemessiest.comâ&#x20AC;?, which also provided customers with solutions for cleaning up their spaces.

Source: http://theinspirationroom.com/daily/2008/ikea-asks-who-is-the-messiest/

Situation Analysis Marketing Summary WIN AN IKEA HOME MAKE-OVER IKEA is currently traveling down the East-Coast launching a home make-over contest, where customers have the opportunity to have their houses furnished with IKEA products. The IKEA design team focuses on Aesthetics, Functionality, and Space Efficiency.

This campaign is demonstrated on many media channels, and the series can even be found on their Youtube channel. Home Make-over shows are popular on network television, and IKEA has found a way to bridge the connection between itâ&#x20AC;&#x2122;s store and entertainment in a way that enriches peoples lives.

Situation Analysis Marketing Summary Public Take-over IKEA has launched several public demonstrations depicting not-so-ordinary uses for IKEA furniture. In a unique method of advertising, they have decided to put a little fun in to the every-day and ordinary. This concept illustrations â&#x20AC;&#x153;transformationâ&#x20AC;? with public demonstrations.

Situation Analysis Marketing Summary Long Live Diversity

Long Live Diversity campaign was a way to demonstrate IKEA as being a not-so-boring, think outside the box company. This campaign is suggesting that within any individual, IKEA can provide a variety of furniture solutions to accommodate any needs. The billboards are more than just of various people - the small squares of the graphic are all IKEA products.

Situation Analysis Marketing Summary IKEA’s Assembly Service This illustrates IKEA’s sense of humor towards those who would be in need of assembly service. Even with the simple instructions IKEA offers, there are still challenges.

Conclusion IKEA advertises in a very unique and powerful way. These advertisements provide the opportunity to reach people on more than an informational level. These really connect with people, and IKEA starts to demonstrate a lot of personality with their advertising. Advertising in this way is very useful for IKEA, so they aren’t seen as this rigid, boring company.

Macro Situation Economic One of a crucial factor which is effect directly to sale volume and profit of every company is economic. There are much information to consider but, generally, focus on GDP rate, unemployment rate and household income. Firstly, we will look at the GDP of national and Florida growth.

As you can see from the above graph, both GDP of Florida and the US are recovering from a recession during Hamburgerâ&#x20AC;&#x2122;s crisis in 2008. GDP of Florida trend are rising from â&#x20AC;&#x201C; 6.2% to 2.2% in 2012 and keep this level in 2013. It stands a little above of national GDP which mean Florida State has a better economy growth than nationwide. Also, they expected that it will grow at least 2.2 % in year 2014 as well. By the way, it still has a chance to keep grow and hit the ceiling at 6.7% as same as year 2005. The GDP was rose for 8% in 4 years. So, we might expect to rise another 4% to reach the highest level in 2018.GDP trend.

Macro Situation Economic Furthermore, when the trend of GDP is growing, we can expect that the economy is good and the unemployment rate is decrease also. Considering from next graph, the unemployment rate of Florida is decreasing almost one-half since 2010 from around 11.5% to 6% in 2014. It is a good sign and we can predict that the unemployment will reduce by half in the next few years which are related to the GDP trend.

Next, we will consider the median household income. Normally, an income will follow the trend of economic and inflation rate. Look at the below graph, an income is slowly increasing and has an uptrend since 1960â&#x20AC;&#x2122;s except a recession period. At the end of year 2013, the median household income of nationwide is around $ 52,000. However, Hispanic people have lower income at around $41,000 when comparing to the nation.

Then, it is leading to the next figure of comparing graph between national and Florida median household income. You will see that Florida income always below the national income. In some possible way, this fact might be a reason that why Florida income is lower than the national income because of there are significant numbers of Hispanic population who live in Florida pulled the median income down.

Macro Situation Economic Real median household incomes: Florida, National

In addition, free income the rate might be the certain factor also.

National Tax Rates

Macro Situation Economic

Household trends in U.S.

Macro Situation Technology Today, Technology is playing a big part in a modern business model. It creates a distinctive and advantages for company. IKEA focus on media and hardware technologies to put them into leading position. Firstly, in media section, we divided into four platforms which aim on similar direction. Secondly, the hardware technology is focused into material green tech product, storage management, packaging and energy sustainable which are all linked to each other.

Digital Media What is it: Official IKEA Website Where to find: www.IKEA.com

Smart phone app IOS & android shop

IKEA Catalog IOS & android shop

Created Purpose: Provide all information to customer Online Shopping and service Express vision and brand

Update News and Promotion On-line catalog

IKEAâ&#x20AC;&#x2122;s Benefit: Expand market to E-commerce Get feedback from customer Reduce cost of human operate Enhance brand value

Reduce cost of gaining millennials, & Enriches promotion campaign

Customerâ&#x20AC;&#x2122;s Benefit Save time to buy product More windows to contact

Portable data base, and shopping list. Save time to buy products

Macro Situation Digital Media What is it: 3D Space planning Where to find: www.iKEA.com local stores

Created Purpose: Give planning idea’s and provide more products to customers. IKEA’s Benefit: Gain creative customer interest, improve design idea from customer increase quality of product per buy Customer’s Benefit More realistic idea image, more options for product control budget.

Social Media Various: Facebook, Twitter, Instagram, Youtube, Pinterests

Update News and promotions, create social interest. Get feedback from customer, Gain interest from millennials. Enrich promotion campaign.

Portable data base Portable shopping list.

Media Analysis IKEA use multiple media platform but mainly aim at similar goals. There are persuading customer to buy product, expressing necessary information and offering something that customer needs for future expansion. Website is a window that every single firm must have. Application in smart phone is a convenient tool to every user. However, 2 apps which quite identical can make confusion and features inside is need to be improved. A 3D planning is good feather but a lot of user might face difficulties to use if they do not familiar with it. So, it can be a two side sword. In addition, as you can see, IKEA has almost the entire main social network site. So, their target is for millennial who’s a new customer target group. Also, the network makes IKEA easier to expand community and receive ideas and feedback.

Macro Situation Science & Engineering Section: Product Packaging Concept: Easy to keep and transport Technology Implement: Recycled Paper Product design Packaging design Benefit: Reduce packaging cost Increase storage area Reduce wood usage and paper waste Easy to carry, reduce shipping cost

Section: Storage and Warehouse Control Concept: Maximize Efficiency, minimize labor Technology Implement: Automation ASRS, Conveyors High bay palette rack, bar code scanning Conventional pallet rack, High/Low flow Benefit: Reduce work time and energy Reduce manpower and human error Increases storage area

Macro Situation Science & Engineering Section: Energy Sustainability Concept: People and Planet Positive Technology Implement: Solar cell Wind turbine LED bulbs Benefit: Reduce electricity cost Create clean energy Reduce outsource energy Reduce waste

Section: Product Material Concept: Green technology and sustainability. IKEA focuses on many product materials for development. Technology Implement: X-Wood Benefit: This product is made of recycled honeycomb material which is covered between two layers of thick paper. It light weight but rigidity and easy to shape up. X-Board was created to be a light option to medium density fiberboard.

Macro Situation Science & Engineering

This is a new design for LED bulb with a unique technology call â&#x20AC;&#x153;light tilesâ&#x20AC;? It is LEDs implanted into clear resins and films. The tiles are exceptional as they are thin, flexible and low cost and can be flawlessly joined together.

Technology Implement: DyeCoo Textile system It is an invention technology where come from Netherlands. This machine can dye fabric without using water. It uses recycled carbon dioxide to imbue fabric with dye.

Macro Situation Science & Engineering

Technology Sustainability: FSC Wood IKEA consume 1 percent of global wood. They began to use a FSC certify woods for many year. These wood come from only well forest management However, with this size of consumption, IKEA can only mange to use FSC wood for 41% of total product. The following table is the IKEAâ&#x20AC;&#x2122;s target about energy and product sustain abilities.

Technology Implement: Alelion Batteries. A new kind was invented by Sweden Company. It was made of lithium iron phosphate batteries. It characteristics when compare to standard battery are lighter, smaller, more durable, and less wasteful. This product is applied to a wireless lamp and can apply to vehicle within facilities.

Macro Situation Science & Engineering IKEA spent heavy investment on technology development to become world leader in their industry and reduce cost in long term. Packaging and warehouse management are their advantage for a long time. The new thing is about green technology and energy sustainability. The new product like LED and waterless dye fabric can turn the shape of competition. Furthermore, IKEA has report the energy sustainability progression every year and it seem going well. However, a big problem is about the FSC wood. In Feb 2014, IKEA was suspended a FSC certificates because of took the wood from the preserve forest in Russia. A huge amount of global wood consumption can be a great threat to them in future.

Macro Situation Political/Legal Beyond the successful business as a furniture giant IKEA joined a growing list of brands, IKEA face many political and legal issues regarding to alleged force labor, environment, food suppliers, trade competitiveness and wood consumptions. When entering the US market in 1985, IKEA has solid preparation for this stringent market. According to Kulish and Werdigier’s report (2012), IKEA face a political issue when the company is accused to benefit from forced labor in the former East Germany to manufacture its products in the 1980s. In fact, there are some evidence to put pressure on IKEA’s responsibility when they exploit the labor force from prisoners to involve in making components of IKEA furniture. This is a publicity disaster for IKEA that with its familiar blue and yellow logo seems like a cultural ambassador for Sweden. IKEA also faced the food scandal in Europe that its signature Swedish meatballs contain traces of horse meat (Higgins and Castle, 2013). The recall of meatballs, which are consumed in huge quantities in IKEA cafeterias and in selling for consumption at home, dent the homely Scandinavian image of IKEA, one of Sweden’s best-known companies. Source: http://www.iKEA.com/ms/en_JP/about-the-ikea-group/company-information/

Macro Situation Political/Legal Moreover, IKEA chain founder Ingvar Kamprad faced further questions for a Swedish Nazi group, according to author Elisabeth Asbrink, BBC reports (2011). In this issues, image of IKEA is seriously affected by the ownership of Ike, but some believe that behind complicated legal arrangements, it is still effectively his company. In a noble issue, IKEA face obstacles in company’s commitment to gender equality when IKEA deleted images of women from the Saudi version of its catalog, raising questions about the company’s commitment to women rights, according to The Huffington Post (2014). Plenty of critics would argue that IKEA, the world’s third largest consumer of wood, behind Home Depot and Lowes, is the large wood consumptions, according to Apartment Therapy. To deal with the issue, IKEA seems pretty committed to sourcing its materials sustainably and ensures that the wood is legally sourced (Kelsey, 2013) To conclude, as the largest furniture retailer, IKEA accumulate many experience to overcome the problems regarding to political and legal issues which are considers as a part of business operation in today market. IKEA has successfully settle their problems and sustainably develop its operations.

Source: http://www.iKEA.com/ms/en_JP/about-the-ikea-group/company-information/

Macro Situation Social/Cultural The culture has certainly contributed to IKEA becoming one of the most successful retailers in the world, and they have experienced in their efforts to expand internationally avoiding some of the severe problems companies such as Walmart, Carrefour and Tesco. In the IKEA vision, the founder of corporation, Ingvar Kamprad desires to integrate social value into his business operation which has strongly influenced the IKEA. As he stated, “What is good for our customers is also good for us in the long run.” IKEA’s objective lead company vision to create a better everyday life for the community. The vision is realized by offering a wide range of functional and well-designed home furnishing items whose prices are low for the majority of customers affordable to buy them. The US community is the diversity of culture where present for many cultures in the world. The diversity is opportunities and challenges for IKEA which have a long history of development and experience in the global market. In fact, the US society and culture will affect IKEA operation and marketing strategies. The need of the US demand market is a challenge for IKEA to achieve their goal. Indeed, the US culture is embed in innovative designs and products which IKEA influence a lot a consumers who may approach IKEA products with cheap price, good quality and modern design. It is proved that IKEA brings their culture to the US and it is affected by the US culture. IKEA partially adapted to the local culture which people like to move around the country in their life. IKEA proved to a good adaption to US culture which most of their products are flat-packing and removable. Moreover, the American culture will be a key term that support for IKEA business because it is fully consistent with the strategic business development of IKEA in the world. IKEA had faced problems in the United States that followed previous expansion drives when IKEA entered in the 1990s. The company initially tried to recreate its business model and products to adapt with the US market needs. In fact, IKEA had to customize its products based on local needs. The cultural misstep – along with others such as mattresses that were too hard and measured in centimeters, not king or queen size – was corrected. American customers demanded bigger beds and bigger closets and IKEA had to make a number of changes to its marketing strategy in the US. Furthermore, IKEA US was surprised by the number of vases they were selling. Because Americans

Macro Situation bought them to drink not to put flowers, then the European-style glasses IKEA stocked were just too small for US. In the upcoming event, IKEA coming to Las Vegas in 2016 will be a big addition to local economy. Undoubtedly, citizens in Las Vegas are non-stop population fluctuations, and people think that IKEA would have jumped on the opportunity when they plan their business here. Nevada citizens are familiar with IKEA surrounding them, but the proposed 351,000 square-foot IKEA store would bring closer to their customers and will bring Sweden to Nevada. People think Las Vegas is a city for gambling, but IKEA will be an example for many other retailers and large corporations who want to expand the business at this famous city. IKEA opening in Las Vegas positively impacts the local economy and the community. Notably, the IKEA Foundation is a part of the community. The association aims to improve opportunities for children and youth in the world’s poorest communities by funding holistic, longterm programs. For more than 10 years, the IKEA Foundation has been a key partner and supporter of UNICEF’s work. Since 2001, the IKEA Foundation has donated and pledged more than $200 million to UNICEF, and today the IKEA Foundation is UNICEF’s largest corporate donor. In another event, an innovative collaboration in 2013, the IKEA Foundation donated IKEA toys to UNICEF’s Early Childhood Development (ECD) kits to help the most vulnerable young children in the world.

Macro Situation Demographics of United States Population: 316 million Male 49.2% Female 50.8%

Average age 36.1 Average age 38.8

Median Income: $51,915 Homeowner Ship rates: 64.9% Apartment rates: 26.0% Average persons per household 2.63 # of Households 115,610,216 * 84.9% Have not relocated within the past year

Median Income by Age 15-24 years: $34,311 25-34 years: $52,702 35-44 years: $64,973 45-54 years: $67,141 55-64 years: $57,538 65+ years: $35,611

U.S. Population by Generation

Generation Name Generation Z (2005-Present ) Millennials (1982-2004) Generation X (1965-1981) Baby Boomers (1942-1964) Silent Generation (1925-1942) Greatest Generation (1901-1924)

% of total population 10.29% 29.4 % 23.60% 26.81% 8.22% 1.07%

Macro Situation Demographics of United States

Education by Age Group Age Group 18-24

Population 30,054

HS or Less 45,69%

Some College 43.84%

Bachelors 9.72%

Advan. Degree 0.76%

25-29

21,486

35.69%

30.27%

26.47%

7.57%

30-34

20,980

36.33%

27.04%

23.21%

13.41%

35-39

19,411

37.15%

27.36%

21.82%

13.66%

40-44

20,379

36.30%

27.38%

23.22%

13.09%

45-49

20,665

40.12%

26.29%

22.03%

11.57%

50-54

22,233

41.64%

27.67%

19.62%

11.08%

55-59

21,156

42.70%

27.97%

17.78%

11.55%

60-64

18,470

41.17%

26.90%

18.57%

13.35%

65-69

14,931

43.08%

26.56%

16.64%

13.72%

70-74

10,811

49.12%

22.70%

15.44%

12.75%

75+

18,766

57.91%

19.99%

13.17%

8.93%

Analysis: There is a growing trend in the younger generations obtaining more bachelorsâ&#x20AC;&#x2122; degrees, or at least having some college experience behind them, than with previous generations. Typically, this means a higher population of people who go to college, and live in smaller spaces such as Dorm rooms, or apartments.

Macro Situation Demographics of Tampa, Florida Population: 335,715 (2010) US. Census Male: 48.9% Female: 51.1% Median Age: 43 years People Living in the same house 1+ years: High School Graduate or Higher 25+ years: Bachelor’s Degree or Higher 25+ Years: Housing Units: Homeownership Rate: Housing units in multi-unit structures Median Value of Owner Occupied Housing Households Persons Per household Per Capita Income Persons below poverty level

78.1% 85.9% 33.1% 157,130 50.9% 37.7% $162,800 138,589 2.40 $29,009 21.4%

Demographics of Orlando, Florida

Notes

Population: 255,483 (2010) US. Census Male: 48.9% Female: 51.1% Median Age: 33 years People Living in the same house 1+ years: High School Graduate or Higher 25+ years: Bachelor’s Degree or Higher 25+ Years: Housing Units: Homeownership Rate: Housing units in multi-unit structures Median Value of Owner Occupied Housing Households Persons Per household Per Capita Income Persons below poverty level

78.1% 85.9% 33.1% 157,130 50.9% 37.7% $162,800 138,589 2.40 $29,009 21.4%

- Housing costs in Tampa/Orlando are lower than US average. - Home-owning rates in Tampa/Orlando lower than US average. - Apartment rates higher, more people live in “small spaces”. - Median Age higher than US, which would imply that IKEA needs to extend past Millennials base in order to take lead in the U.S. market. - Millennials, highest population in U.S. have surpassed baby boomers. -Baby Boomers is 2nd largest, and Ashley furniture’s primary market.

Macro Situation Demographics of Tampa, Florida Here we look at some individual statistics and graphs for Tampa Bay. These graphs will illustrate how many people are born in-state, average salaries, living conditions, marital status, and age/gender.

People born by geographical location

Income Breakdown

Marital status in Tampa, Florida

Spoken languages in Tampa, Florida

Age and Gender Breakdown, Tampa Florida

Macro Situation Demographics of Orlando, Florida Here we look at some individual statistics and graphs for Orlando, Florida. These graphs will illustrate how many people are born instate, average salaries, living conditions, marital status, and age/gender. People born by geographical location

Income Breakdown

Marital status in Orlando, Florida

Spoken languages in Orlando, Florida

Age and Gender Breakdown, Orlando Florida

Macro Situation Hispanic Population With approximately 53 million Hispanics, making up 16.3% of the total population in the United States, Hispanicsâ&#x20AC;&#x2122; purchasing power is strong and growing, and expected to hit the high profitability in the next decade (Census, 2010). The largest growth potential is in younger Hispanics and second- and third-generation Hispanics. In addition, the Hispanic population also accounted for most of the nationâ&#x20AC;&#x2122;s growth that increased 56% from 2000 to 2010. An increase in the proportion of Hispanic population in the racial and ethnic composition of the U.S. population is expected to change the share of the population. Prior to 2050, the Hispanic population will grow quickly in both numbers and proportions in the US generally and Florida particularly. This changing racial structure of the population will affect business trend and society trend. Moreover, the 2010 Census counted Hispanic population that accounted for 14.2% of the adult population, compared with 11% and 23 million people in 2000. Also, racial and ethnic population made for 91.7% of the U.S. population growth over the decade.

Notes Hispanics is the largest growing demographic group in the country. With a significant increase expected by the year 2030. This creates a substantial need to provide quality furniture at affordable prices, as the average income for Hispanic populations is lower than the national average. IKEA could benefit greatly from appealing to this particular demographic group.

Macro Situation Hispanic Population (States)

Florida is one of 22 states where Hispanics were the largest minority group. According to population Estimates of U.S. Census Bureau (2013), Hispanic accounts for 23.6% (or 4,619,316) in Florida and 17.1% in US. Also, the median age of Hispanics in Florida is the highest of any state in the country. Moreover, 55% the percentage of all the Hispanic population that lived in California, Florida and Texas as of July 1, 2013. Surprisingly, Miami-Dade County in Florida had the largest numeric increase of Hispanics, which is more 50,000 Hispanics from 2012 to 2013.

Florida State Demographics 2011

Macro Situation Hispanic Population (States) According to American Immigration Council (2014), purchasing power of Hispanic in Florida reached nearly $127.2 billionâ&#x20AC;&#x201D;an increase of 544.2% since 1990. Moreover, 22.4 % the percentage of businesses in Florida in 2007 that were Hispanic-owned, which led all states.

Macro Situation Hispanic Population Families and Children According to Census 2013, the number of Hispanic family households was 11.9 million in the United States. Also, 62.4% Hispanic family households were married-couple and they accounted for 73.2 percent in the total married-couple population in the U.S. 65.1% of Hispanic children living with parents (2013), whereas nationwide it was 68.5 percent. Characteristics Hispanics born in the U.S. can be grouped into two distinct marketing segments: • The young “millennial” Hispanic, children, teens, and young adults born to immigrant parents: they know how to live in both cultures and enjoy doing so. • “Traditional Hispanic” or those born to Latino families that have been U.S. citizens for two or more generations: They may be far removed from the Latino culture or identity as Hispanics can be much more traditional and stronger than expected. Millennial Hispanic Lifestyle Hispanic lifestyle is various and it is strongly influenced by Latino traditional culture. There are a few key characteristics with in this cultural group, to note. • They are hardworking and have less time for personal life than other group. • Religion and church is a crucial part of the Hispanic population. Sunday service, followed by family bonding time, turns Sundays into family holidays. • They use of on-line communities for communications grew. • Millennial Hispanic are 211% more likely to download things from the Internet than the general population. Over 60% of Hispanic Millennial are on-line. • Enabled by technology, Hispanic lifestyle is characterized by instant text messaging, mobile, and virtual social networking. • They love to shop • Involving a dream of some kind – the wish for something better. • Family is an essential part of their society. Their extended families spend a lot of time together, celebrating, embracing, and strengthening traditions. • They have less time for friends and spending most of their time for working and family.

Macro Situation Hispanic Population

Conclusion Hispanic market is a key strategy for IKEA to apply market segmentation strategies and tactics. Hispanic population is proved to have and potential growth and purchasing power. When marketing to the Florida Hispanic segment, we consider the influences of Hispanic market by demographics, psychographics, situational factors and individual behavior to do the segmentation strategies. Additionally, we investigate some variable values such as ethnicity, country of birth, lifestyles and Hispanic tradition to create the reasonable strategy to gain the market share for this potential market.

Macro Situation Ecology IKEA has an ecology policy which mainly aim on their product raw material, energy saving and recycling product. It begin the process with product design, package design, selecting raw material, production process, distribution and selling procedure. This program of IKEA is called â&#x20AC;&#x153;the sustainable life at home. Raw material: The most raw materials which IKEA use are wood and cotton.

Macro Situation Ecology We will begin with the wood. IKEA consume 1% of entire world woods consumption, huge. So, they begin to use the wood from sustainable sources. This wood source is certificated by FSC.

Macro Situation Ecology As you can see from the graph, they have a positive progress to use the certificated wood. Also, they try to control and expand the campaign to their supplier.

This is â&#x20AC;&#x153;Bookbookâ&#x20AC;? the new IKEA catalog for 2015. 100 % - FSC wood product. 217 Million copy 0 % energy for using

Macro Situation Ecology About the cotton, IKEA use raw material that come from sustainable sources too. Most of the origin of material is from south Asia, India and Pakistan. Interesting statistics about Cotton $ 1.53 million of investment 110,000 farmer involving 178,000 tons of production

Macro Situation Ecology

In addition, this is an example of plastic product. It is called “SKARPÖ CHAIR” which made of 100% recycle plastic. This chair illustrates IKEA’s conscious efforts to reduce the carbon footprint, and help promoting sustainability in a global imitative.

As you can see, IKEA is making a conscious effort to increase the amount of renewable materials in their main products. This is a major concern for large companies, such as IKEA, who in previous years has received a lot of criticism for the environmental effects they’ve had.

Macro Situation Ecology Energy Conservation is an important environmental factor for IKEA. They focus on using LED bulbs to reduce customer energy consumption. New technologies have been created to make IKEA more efficient.

Also, IKEA implements the concept â&#x20AC;&#x153;Resource and energy independenceâ&#x20AC;? which focus to reduce waste and pollution emission, reduce energy consumption,also, including increase own facility clean energy generation.

CO2 is the main factor that cause the greenhouse effect which lead to global warming. So, IKEA have a policy to reduce CO2 (carbon dioxide) emission to environment from the all of the product process and product life cycle.

Macro Situation Ecology

Macro Situation Ecology This graph indicated that IKEA is on track to reduce a harmful CO2 emission to environment.

The reduction of energy occur from using LED bulb in all facility and start an inside energy saving campaign.

Macro Situation Ecology IKEA use a clean and renewable energy which generate by their own facilities. The next table will show how much IKEA use and direction of improvement.

Conclusion: IKEA show a quality of improvement in using of renewable energy. They can generate more energy in year. Currently, 700,000 solar panels and 224 wind turbines is already installed and implemented. By the year of 2020, next 5 years target, a hundred percent of energy they use will come from their own sources.

S.W.O.T. Strengths • Become known worldwide for its innovative and stylish designs • Wide variety of in-store selections • The same business model through over 200 IKEA stores in worldwide • Improve the quality of human life • Cost-effective design and affordable prices • Stand out as an efficient environmental leader through innovative energy processes and production processes. • Creative long-term networking with all suppliers to achieve volume commitments. • Using multiple supply chains to lower costs via bidding the contract • Going from supplier straight to distribution reduces costs • Innovative and stylish designs based on offering a wide range of well designed, functional products at low prices • IKEA’s human resources policy is to provide co-workers with opportunities to grow as individuals and professionals. • Competitive advantages with large portion in the global market share • Flat packing reduce shipping cost, and ease • Pragmatic cost savings • Brand reputation • Utilize technology and have responsibility with society • Furniture is portable • IKEA represents an affordable way for people to have nice furniture • Adaptable for small spaces

S.W.O.T. Weaknesses • Large environmental and social responsibility, due to company size • As a giant size and scale of global business, IKEA faces challenges to control standards and quality for supply chains. • Cannot keep working conditions for employees the same for every countries • Need for low cost products and labor • Basic and minimalist design • Product and style selection in limited • Shipping fee in Tampa too high • Ashley furniture has more US Market share than IKEA

• International company faces challenges to understand local customers in every different markets. • A marketable identity that doesn’t appeal to its strongest base • Ashley furniture has more US Market share than IKEA • IKEA doesn’t appeal to baby boomers, the 2nd largest demographic group

S.W.O.T. Opportunities • IKEA can adopt a more sustainability strategy with environmental and social issues • Appeal to Millennials through creativity, innovation, technology, and ecology • Appeal to Floridians, who has a smaller budgets, house size, and more apartment dwellers than the U.S. average. • IKEA has opportunity to engage the largest, millennials generation consisting of Millennials, and ensure long-term customer value. • Target Millennials, and segmented Baby Boomers as a strategy to surpass Ashley Furniture as leading brand in U.S. furniture sales. • Attract those who have lost faith in the economy, and become more price conscious. • Target Baby Boomers in Tampa/Orlando, who live in smaller spaces: Retirement centers, or have low-medium retirement income. • Market IKEA as a not so-boring, out of the box company to appeal to Millennials • Portable furniture concept can be marketed to millennials, who relocate more frequently in their careers than any other generation. • Offer a fun and affordable solution to Ashley furniture • Showcase Swedish culture to U.S. Market • Opportunity to become a leader in an environmentally conscious world. • Inspire and shape lives of millions of customers to live a more sustainable life at home • Pursue aggressive and creative marketing strategies • In store restaurants as avenues to appeal to targeted markets • IKEA has opportunity to demonstrate creative/innovative solutions for small space living, which has become increasingly popular due to economic downturns. • IKEA has the opportunity to engage the large amount of students and universities located in Tampa/Orlando

S.W.O.T. Threats • Labor union. IKEA have some struggles with their payments for staff. • Environmental responsibility and social issues. • Global recession is a factor change consumer behavior while people save their expenditure • Housing market is slowing down, particularly for first time buyers which is IKEA’s core market segment • Market forces more competitors entering the market. • Lots of existing competition. • Discount retailers sell on basic price -> How to stay profitable?

S.W.O.T. SWOT Issues • How can IKEA attract more Millennials (segments) • How can IKEA become leader in U.S. furniture market • How can IKEA appeal to local culture; Universities, Fast-growing Hispanic population • How can IKEA expand through cultural demonstrations • How can IKEA increase customer loyalty • How can IKEA grab more market share from its major competitor Ashley? • How to increase on-line sales/activity? ( How to reduce shipping cost?) • How to attract more millennials and broaden potential customer? • How can IKEA increase in-store sales/activity? • How can IKEA demonstrate more sustainable living? • How to expand IKEA and Swedish culture? • How to attract more Baby Boomers and older markets • How can IKEA keep competitive advantage with pricing strategy?

Strategic Position Competitive Analysis (overview)

Overview of Ashley Furniture: Ashley furniture industries is a privately-held company manufacturing furniture. With slogan: “We want to be the best furniture company”, Ashley offers one of the industry’s broadest product assortments to retail partners in 123 countries. Especially, Ashley licenses its name to more than 400 Ashley Furniture Home Stores in the United States, Canada, Mexico, Central America and Japan. These stores are independently owned and sell only Ashley Furniture-branded products. The company provide from design, through fulfillment of furniture for living rooms, dining rooms, bedrooms, entertainment centers, home offices and related home accessories. Target Market: From a retail store to a small furniture company, Ashley has now more than 40 stores nationwide. The company’s manufacturing plants are scattered across the United States and Asia. It now boasts hundreds of designs for its different furniture pieces, which are targeted mostly to the middle income consumers. The company does not only offer furniture for different rooms in your house, but also for your office. Ashley also manufactures accent pieces, Inter IKEA Systems BV 5.2%

Others 88% Source:www.ibisworld.com

Ashley Furniture Industries Inc. 6.8%

Strategic Position Competitive Analysis (overview) cont.

rugs and lamps. Their furniture collections are categorized by style and collection to make it easier for consumers to look for what they desire. The furniture styles they have include contemporary, modern, Old World, traditional, and vintage. Thus, no matter what the design of your interior, you can find what you want from their wide range of styles. One of their most popular lines is the Millenium, which has earned positive furniture reviews for Ashleyâ&#x20AC;&#x2122;s. Ashley Furniture is an appealing company for shoppers who do not want to go the route of upscale furniture design. However, they are a step above promotional or lower-end furniture companies. Their target audience is not geared toward the high-income shopper who is looking to appoint their living spaces with furniture from upper echelon designers and firms who have a niche specialization of high-end interior design, or to fill an entire house with coordinating furniture in a very selective manner. So within these income categories, Ashley Furniture recognizes price sensitivity in its customers. But it is not a weakness that Ashley Furniture misses certain segments of the furniture buying public. With how their furniture is manufactured and marketed, they would not want to have it any other way. Ashley Furniture continues to be a brand that borders on being a convenience brand that relies on many stores. To sum up, target customers of Ashley is similar to IKEA, and they really take advantages in design and they also pursuit price strategies. IKEA have to keep their current market share in millennials niche market. Besides, IKEA should create a Hip advertising campaign that bridges the generational gap to focus on elderly people niche. It is something that gets the best out of the psychology of cool parents or grandchildren who want to spend the best for their children or grandchildren.

Strategic Position Competitive Analysis (Financial) ¹ Ashley Furniture’s Worldwide Headquarters in Arcadia, Wisconsin continues to be the core manufacturing and distribution center for the Ashley Companies. Founded by Carlyle Weinberger in 1945, the company started as a sales organization with branches in Chicago and Goshen, Indiana. In 1970, Ashley invested in the Wisconsin-based Arcadia Furniture. The Wisconsin factory encompassed 35,000 square feet and had 35 employees. At first the two companies maintained their separate identities, with Arcadia focusing on production and Ashley on sales. But they eventually merged. By 1982, the merged company’s annual sales reached $12 million and it had moved its corporate headquarters from Chicago to Arcadia. By the mid-1980s, Ashley offered a line of roughly 350 different furniture products, and had turned its design and manufacturing away from “heirloom pieces” toward products aimed at middle-income buyers. Ashley Furniture sells home furnishings and accessories available through two distribution channels: independent furniture dealers and more than 400 Ashley Furniture Home Stores which are independently owned and operated by licensees in the United States, Canada, Mexico, Central America, and Japan. Ashley Furniture has 16,300 employees.

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Cable Advertisements

vs.

References: 1.http://www.mediamonitors.com/company/news/2011-10-17#tab_Faceoff

source: www.mediamonitors.com

Strategic Position Competitive Analysis (Financial)

Strategic Position Competitive Analysis Strengths of Ashley is disadvantages of IKEA • Ashley is national company, therefore they easy to sustain its leading position because they know exactly who its customer is. • The company has its own in-house designing, manufacturing and delivery activities. Ashley’s in- house design team works on creating furniture designs and these designs are then passed on to the manufacturing units. • Although the company’s furniture products are sold in several countries, its operations are concentrated in North America geographic concentration • The good things about Ashley furniture is the wide range of style and price. If you have the penchant for the vintage or contemporary style, they have separate collections for these types of furniture. And if you’re worried about your budget, you can always find something within your range, whether it is a $300 table set or a $4000 bedroom collection. Weakness of Ashley One of the disadvantages most often see in furniture reviews of Ashley’s is the different level of quality between the local-made furniture and those that have been made offshore. It seems that furniture manufactured in their factories abroad are less durable than the ones made in the US.

Strategic Position Competitive Analysis

ASHLEY vs IKEA

1. Strategic positioning

Target

Ashley It now boasts hundreds of

IKEA IKEA'S Business idea is to offer a

Audience

designs

wide

for

its

different

range

well

home

designed,

furniture pieces, which are

functional

furnishing

targeted mostly to the middle

products at a low price. The target

income consumers.

market is very broad. They are aiming to appeal to people of all ages, sexes, geographic locations, all

who

have

one

thing

common: Price preference. Use

Faceboo k

page:

- Facebook

page:

IKEA-

social

inactive, little information,

USA (active, advertisements,

media

previouly active

IKEA in the news)

Twitter: national and

- Twitter: Individual stores,

stores (national is inactive,

IKEA-USA had no tweets

some stores were active)

- Mobile website available

Messaging

No mobile website “We want to be the best

“Deliver

strategies

furniture store”

furnishings to its customers”

Characteristics:

Quality,

affordable

home

- Characteristics: Price, innovation

Brand

innovation - High-end brand

- Friendly ( according to Forbes

assessment

- Building image by focusing

magazine, IKEA is one of the 10

on many donated activities

happinest reatilers to work for in 2014) - Developing sustainably

2. Marketing segments - The Census Bureau projects that the Millennial population was 74.8 million in 2014. By 2015 Millennials will increase in size to 75.3 million and become the biggest group.

Strategic Position Target Market analysis Millennials

Born Between 1982 - 2002 Key Characteristics • Born during the inception of the information age. Tech-savy group with worlds of knowledge at their fingertips. • Creative group that thrives for self-expression, as opposed to “group” think • More likely to research before making purchases, and more likely to listen to recommendations from friends and on-line sources. • High sense of entitlement, adapt environment to their comfort • Foreign to the concept of Employer Loyalty, will relocate several times in their careers • Has concern for Environmental issues, and sustainability

Segmentation Markets to target • Low-Medium Income Millennials living in small spaces College students, young professionals who relocate for careers, 1st time home buyers, young couples • Innovative/Creative thinkers who want self-expression/more choices.

Millennials Potential market in Tampa 31%

Total Market

Millennials Potential market in Orlando

39%

Total Market

Millennials make up a huge portion of our market. With the number of millennials surpassing Baby Boomers, it is clear that IKEA must focus it’s strategies towards this group, to ensure long term customer value and profitability. While Ashley furniture targets Generation X, and Baby Boomers, IKEA has the potential to pass Ashley furniture, as the leading U.S. in furniture sales. Millennials are more likely to change careers and thus, have a need for relocating. IKEA’s mobile furniture is a perfect solution for this group. There are an extremely high number of millennials in Orlando, and a relatively high number in Tampa. This would suggest IKEA select millennials as their primary target market, and find ways in which to appeal to this particular demographic. As baby boomer demographic dissipates, investing in millennials will be an investment for the future success of IKEA.

Strategic Position Target Market analysis Baby Boomers

Born Between 1946 - 1965 Key Characteristics • Most have saved for financial security, or through social security have some kind of financial safety. • Non-Conformist groups, rebellious attitudes •Recognition of rights and privileges are important •Had more discretionary income than other generations, and could afford luxuries, as opposed to the basic necessities •Invention of new products such as; televisions, wash-mashines, dish-washers made for an easier life. •Increased productivity in US at this time, lead to a great sense of pride in American workforce

Segmentation Markets to target • Low-Medium Income Baby Boomers Economically conscious, Living in small spaces • Baby Boomers with relationship to Millennials: Parents, Grandparents ect.

Baby Boomers Potential market in Tampa

Baby Boomers Potential market in Orlando 16%

33%

Total Market

The second largest generational demographic is baby boomers. This is the group that makes up the primary target market for Ashley furniture. As part of our strategy, we will look at ways in which to obtain a portion of this demographic group. This number is higher in Florida than other places in the U.S. and we would like to focus on many Baby Boomers who live in retirement villages, communities, apartments, or smaller houses. By shifting this demographic, IKEA has the opportunity to increase sales almost immediately, and appeal to a group that has a relationship with our other largest demographic, millennials.

Strategic Position Target Market analysis Hispanic Population Key Characteristics • Generally have lower income than other ethnic categorized groups • Has had the most population increase in the U.S. than any other demographic • Their lives involve a dream of some kind - the wish for something better • Focused on traditions, cultural values, beliefs, religion and family • Spend more time working on average • Live in and adapt to smaller spaces, have a need for furniture to satisfy • High use of social media and on-line interaction

Segmentation Markets to target • Low-Medium Income Hispanic Families living in small spaces Millennial Hispanic College students, young professionals who relocate for careers, 1st time home buyers, young couples • Hispanic families who have rich traditional and cultural values

Hispanic Potential market in Tampa

Hispanic Potential market in Orlando 33%

30% Total Market Total Market

With a large growing Hispanic population in Florida, IKEA should focus it’s marketing efforts in appealing to this particular demographic group. IKEA has a unique opportunity to appeal to this particular group due to their economic needs, spatial needs, and values. Demonstrating these core qualities will allow IKEA to engage this demographic, and create customer loyalty. This particular demographic is a crucial strategy to help IKEA become the leader in furniture sales in the U.S. With lower than average incomes, smaller living conditions, and large family orientation.... Hispanic population is a necessary demographic for IKEA to appeal to.

Action Plan Action #1

Mobile Marketing: Marketing Objective: • Increase on-line sales appealing to tech-savy millennials, and others SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How to increase on-line sales/activity? ( How to reduce shipping cost?) • How to attract more millennials and broaden potential customer? Target Market: • Baby Boomers, Millennials, Hispanics population • Segment: On-line Shoppers Description: • Secret sending text message of promotion to customers with applied code for them to shopping on-line. Budget: • Low budget to implement. ( $100,000) Timing: • 6 months to 1 year, if it works, implementing in long term Measurement Tactic: • Collect data from orders on-line, the quantity people shopping on-line Communication Mix(es): • Word of mouth • Sales Promotion Intended Channels: • Personal Communication Creative Strategy: • Transformation Strategy Focus: • Differentiation through price

Action Plan Action #2

Premium Delivery: Marketing Objective: • Increase customer sales, and loyalty SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How to increase on-line sales/activity? ( How to reduce shipping cost?) • How to attract more millennials and broaden potential customer? Target Market: • Baby Boomers, Millennials, Hispanic population • Segment: Online Shoppers Description: • Offer expedited delivery, and free shipping for order over 500$ Budget: • This action plan will take money to implement. However, it will help us to get more customers and their loyalty. Timing: • 1 year for testing and remain in long term Measurement Tactic: • Collect data from orders on-line, the quantity people shopping on-line • People come back to shopping and use delivery service or not? Communication Mix(es): • Advertising on the official website, as well as google, firefox ect.. Intended Channels: • Massive Communication Creative Strategy: • Transformation • Possible celebrity sales pitch • Emotional, Comedic Strategy Focus: • Demonstrate IKEA’s extended efforts in service

Action Plan Action #3

Bridging the generational gap between Millennials, and Baby Boomers: Marketing Objective: • Increase sales amongst baby boomer demographic with low-medium income SWOT Issues: • How can IKEA attract more millennials and broaden potential customer? • How can IKEA grab more market share from its major competitor Ashley? • How to attract more baby boomers and older markets Target Market: • Baby Boomers, and Millennials • Segment: Generational, Low-Medium income Description: • Launching an advertising campaign focusing on the relationship between Millennials, and Baby boomers. Budget: • 1 million dollars Timing: • 6 months to 1 year, if it works, implementing in long term Measurement Tactic: • Survey, Data evaluation of customer base Communication Mix(es): • Advertising through television • Sales Promotion Intended Channels: • Massive Communication Creative Strategy: • Transformation • Possible celebrity sales pitch • Emotional, Comedic Strategy Focus: • Differentiation through pricing strategy • Emotional bond between the two segments • Satisfy a variety of needs and wants

Action Plan Action #4

Coupons and special promotions for valued customers Marketing Objective: • Increase sales and loyalty amongst our valued customers SWOT Issues: • How can IKEA become leader in U.S. furniture market • How can IKEA grab more market share from its major competitor Ashley? • How to increase on-line sales/activity? ( How to reduce shipping cost?) • How can IKEA maintain it’s customer base, while attracting new demographic groups? Target Market: • Baby Boomers, Millennials, and Hispanics • Segment: Generational, Low-Medium income, loyal customers Description: • IKEA releases monthly coupons to stimulate shoppers with incentives to spend more money on IKEA products. Budget: • $100,000 Timing: • Monthly probation period for 1 year. Implement long term if successful. Measurement Tactic: • Survey, Data evaluation of customer base Communication Mix(es): • Advertising through media • Sales Promotion Intended Channels: • Massive & Personal Communication Creative Strategy: • Inform Strategy Focus: • Differentiation through price • Create excitement • Satisfy a variety of needs and wants

Action Plan Action #5

Social Media based design demonstrations Marketing Objective: • Capture millennial market base with interactive marketing to increase on-line sales/activity. SWOT Issues: • How can IKEA attract more millennials and broaden potential customer? • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase on-line sales/activity? Target Market: • Millennials, and Innovative/Creative thinkers • Segment: Low-Medium income Description: • Link an interactive avenue of social media to the IKEA website. This will allow users the opportunity to demonstrate their unique creative abilities with IKEA furniture as the base of their “designs”, and promote idea exchanges. Budget: • 1 million dollars Timing: • 6 months to 1 year, if it works, implementing in long term Measurement Tactic: • Collect data from orders on-line, the quantity people shopping on-line Communication Mix(es): • Advertising, Events & Experience, Public Relations • Sales Promotion, Inter-active market Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Transformation appealing to Innovators, Tech savy and creative types • Inform appealing to builders, and enthusiasts • Powerful, Empowering Strategy Focus: • Demonstrate the endless possibilities with IKEA furniture • Appeal to millennials “individualistic and self-expressive” thinking • Customizable furniture is within your reach

Action Plan Action #6

Public demonstrations: Art exhibits Marketing Objective: • Increase Medium-High income market, create “mega-trend” SWOT Issues: • How can IKEA attract more millennials and broaden potential customer? • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase in-store sales/activity? Target Market: • Millennials, Baby Boomers, Hispanics • Segments: Creative/Innovative thinkers, Social/Cultural Description: • Launch a series of public displays that exhibit IKEA furniture as a form of “rebel art”. Display these exhibits in stores, and increase food/beverage/wine sales. Budget: • 1 million dollars Timing: • 6 months to 1 year, if it works, implementing in long term Measurement Tactic: • Data analysis Communication Mix(es): • Advertising, Events & Experience, Public Relations • Sales Promotion, Direct-marketing Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Transformation appealing to Innovators, Distinguished, Cultured • Inform appealing to builders, and enthusiasts • Compelling, Intriguing Strategy Focus: • Demonstrate the endless possibilities with IKEA furniture • Appeal to millennials “individualistic and self-expressive” thinking • Customizable furniture is within your reach • Adding a cultural aspect to IKEA’s modern approach

Action Plan Action #7

Public Demonstrations: Small Space Design Solutions Marketing Objective: • Increase sales amongst segments living in small spaces and fixed budgets. SWOT Issues: • How can IKEA expand through cultural demonstrations? • How can IKEA attract more millennials and broaden potential customer? • Opportunity to demonstrate a more sustainable way of living? • How can IKEA appeal to local culture Target Market: • Millennials, Baby boomers • Segment: Low-Medium, small space living Description: • Launch a series of public displays that illustrate the economical spatial qualities of IKEA furniture products. Budget: • 1 million dollars Timing: • 6 months to 1 year, if it works, implementing in long term Measurement Tactic: • Surveys Communication Mix(es): • Advertising, Events & Experience, Public Relations • Sales Promotion, Inter-active market Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Transformation: showcase comfort, practicality • Inform: practicality • Possible Celebrity sales pitch Strategy Focus: • Demonstrate the endless possibilities with IKEA furniture • Appeal to millennials “individualistic and self-expressive” thinking • IKEA is broad scoped company with many avenues to satisfy needs

Action Plan Action #8

Furniture and room planning design competition Marketing Objective: • Receive new inspirations for new furniture design and product • Increase sales volume, Customer loyalty and product selection SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How to attract more millennials and broaden potential customer? • How to gain customer loyalty? Target Market: • Millennials • Segment: Behavioral - Innovative/Creative thinkers who want small space solutions Description: • An inter-active customer based creative design competition. Provides customers the opportunity to demonstrate their creativity, by using IKEA furniture as a base of self-expression. Budget: • $200,000 Timing: • Three Months • Continue Annually Measurement Tactic: • Collect data of revenue and gross profit, and purchases • Collect data of participants, and number of producible designs submitted Communication Mix(es): • Public Relations, Events & Experiences, Word of Mouth Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informative • Transformation/Innovation Strategy Focus: • Innovative designs, and unique customer experience differentiation • Creative customers who think differently, self-expressive

Action Plan Action #9

Swedish Tour Concept Marketing Objective: • Increase sales volume, and customer loyalty •Show unique Swedish culture SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How to attract more millennials and broaden potential customer? • How to expand IKEA and Swedish culture? • How to gain customer loyalty? Target Market: • Millennials, Baby boomers • Segment: any Description: • A promotion campaign that is advertised through the IKEA official website. It will offer customers coupons, to redeem points in which they could be eligible for a Swedish Tour. Budget: • 1 million dollars Timing: • 5 months, 1 week for travel period • Continue annually Measurement Tactics: • Survey, Data evaluation of customer base Communication Mix(es): • Word of mouth, Events & Experience • Sales Promotion Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Transformation: showcase life-changing opportunity to experience Swedish culture Strategy Focus: • Introduce product • :showcase life-changing opportunity to experience Swedish culture

Action Plan Action #10

Special Delivery and assembly for seniors Marketing Objective: • Increase sales and loyalty amongst baby boomers and older SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How to attract more baby boomers and older markets • How to gain customer loyalty? Target Market: • Baby boomers and above • Segment: any Description: • An incentive program for seniors who spend $500 or more annually, to receive a specialty member card providing them special delivery and assembly options. Budget: • $200,000 Timing: • one year Measurement Tactic: • Collect data of revenue and gross profit from senior member • Collect data and comparatively analyze repeat customers Communication Mix(es): • Public Relations • Direct Market Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informative • Celebrity spokesperson Strategy Focus: • Differentiation through Superior customer service

Action Plan Action #11

Special offer for Inbound moving citizens Marketing Objective: • Gain sales volume from inbound citizens •Increase on-line sales, and overall customer loyalty SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How to attract more millennials and broaden potential customer? • How to increase on-line sales/activity? • How to gain customer loyalty? Target Market: • Millennials, inbound moving shoppers • Segment: Relocating young professionals, first time home buyers, and newly weds Description: • Offer 10% discount for every pre-order item on-line, and provide free delivery to inbound citizens relocating who spend 800$ or more in store. Proof of new residency required. Budget: • $250,000 Timing: • 1 year trial Measurement Tactics: • Survey, Data evaluation of customer base of inbound moving customers Communication Mix(es): • Personal Sell, Direct Market • Sales Promotion Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Transformation • Informational Strategy Focus: • Introduce product and promotional information • Differentiate Superior Customer Service

Action Plan Action #12

Hispanic Heritage Month Marketing Objective: • Building IKEA brand positioning, and improve social responsibility contingent on Hispanics population. • Increase sales volume, Customer loyalty and product selection SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase customer loyalty • How can IKEA become leader in U.S. furniture market • How can IKEA maintain it’s customer base, while attracting new demographic groups? Target Market:

• Hispanic population

• Segment: Families, and tradition orientated Description: • Celebrate Hispanic heritage and culture from September 15th - October 15th in Tampa/Orlando markets. We will launch promotions, and interactive demonstrations targeting Hispanics. Budget: • $250,000/store Timing: • One selected week during Hispanic Heritage Month. Measurement Tactic: • Collect data of revenue and gross profit, and purchases Communication Mix(es): • Public Relations, Events & Experiences, Direct-Market • Sales promotion Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informative • Transformation Strategy Focus: • Celebrate IKEA unique furniture solutions to Hispanic population • Cultured and focused on traditions for Hispanic populations

Action Plan Action #13

Spanish language tags and displays in IKEA stores Marketing Objective: • Gain sales and customer loyalty from Hispanic population SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase customer loyalty • How can IKEA become leader in U.S. furniture market • How can IKEA maintain it’s customer base, while attracting new demographic groups? Target Market:

• Hispanic population

• Segment: Millennials, Families, and tradition orientated Description: • Provide convenience and enhance shopping experience for Hispanic population by removing the language barrier that exists. Budget: • $100,000 Timing: • Start in 1 week, and proceed for the next 3 months Measurement Tactics: • Survey, Data evaluation of customer base Communication Mix(es): • Personal Sell, Direct Market • Sales Promotion, Advertising Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informational Strategy Focus: • Introduce product and promotional information • Differentiate Superior Customer Service

Action Plan Action #14

Discount for joining IKEA customer membership group Marketing Objective: • Provide incentive for new customers and expand IKEA membership network SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase customer loyalty • How can IKEA become leader in U.S. furniture market • How can IKEA maintain it’s customer base, while attracting new demographic groups? • How to increase on-line sales? ( How to reduce shipping cost?) • How can IKEA keep competitive advantage with pricing strategy? Target Market: • Hispanic population, Millennials, Baby Boomers, others • Segment: Any Description: • Promotional item to expand customer network and market share. Targeting potential customers with an incentive to become loyal to IKEA. Budget: • $50,000/store Timing: • Annually Measurement Tactic: • Collect data of new memberships and sales Communication Mix(es): • Public Relations, Events & Experiences, Direct-Market • Sales promotion Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informative • Transformation Strategy Focus: • Differentiation through pricing strategy • Offer IKEA as an affordable alternative versus it’s competition

Action Plan Action #15

Offer ikeafamilylivemagazine.com website in Spanish language Marketing Objective: • Gain sales and customer loyalty from Hispanic population SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase customer loyalty • How can IKEA become leader in U.S. furniture market • How can IKEA maintain it’s customer base, while attracting new demographic groups? • How to increase on-line sale? ( How to reduce shipping cost?) Target Market:

• Hispanic population

• Segment: any Description: • Provide Spanish language to ikeafamilylivemagazine website, increasing Hispanic market who are very family orientated, Budget: • First allocation: $200,000 Timing: • 1 year Measurement Tactics: • Data evaluation of customer base for on-line shoppers Communication Mix(es): • Personal Sell, Direct Market • Sales Promotion, Advertising Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informational Strategy Focus: • Introduce product and promotional information easily accessible to Hispanic population • Differentiate Superior Customer Service

Action Plan Action #16

Provide public service to local Hispanic community Marketing Objective: • Give back to the local Hispanic community through fundraising, and community involvement/improvement events and activities. SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase customer loyalty • How can IKEA become leader in U.S. furniture market • How can IKEA maintain it’s customer base, while attracting new demographic groups? Target Market: • Hispanic population, Millennials, Baby Boomers, others • Segment: Any Description: • Develop brand identity to local community, raising funds and charitable contributions to Hispanics. Increase public relations through social media. Budget: • $1,000,000 Timing: • Annually Measurement Tactic: • Survey Communication Mix(es): • Public Relations, Events & Experiences Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informative • Transformation Strategy Focus: • Demonstrate IKEA’s extended efforts in service • Emotional: providing opportunities, giving back • Embrace Hispanic culture, tradition, and community

Action Plan Action #17

Launch sustainability living campaign Marketing Objective: • To further demonstrate IKEA’s efforts in leading a global campaign of more sustainable living SWOT Issues: • How can IKEA grab more market share from its major competitor Ashley? • How can IKEA increase customer loyalty • How can IKEA become leader in U.S. furniture market • How can IKEA maintain it’s customer base, while attracting new demographic groups? • How can IKEA demonstrate more sustainable living? Target Market:

• Millennials, Baby Boomers, Hispanic population

• Segment: Behavioral, environmentally conscious, sustainable Description: • Launching demonstrational campaign that adds value to IKEA brand through public relations Budget: • First allocation: $250,000 Timing: • 1 week per month Measurement Tactics: • Data evaluation of customer base Communication Mix(es): • Personal Sell, Direct Market • Sales Promotion, Advertising Intended Channels: • Massive Communication & Personal Communication Creative Strategy: • Informational • Transformational • Possible Celebrity spokesperson Strategy Focus: • Establish IKEA as a leader in an environmentally conscious world • Differentiate Superior Customer Service and care

Time-line Marketing Timeline NO.

Action Plan

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

> 1.5 Year

Mobile Marketing

Premium Delivery

Bridging the generational gap between Millenials, and Baby Boomers

Coupons and special promotions for valued customers

Social Media based design demonstrations

Public demonstrations: Art exhibits

Public Demonstrations: Small Space Design Solutions

Furniture and room planning design Competition

Sweden tour concept

Special delivery and assemble for senior

offer for Inbound moving citizens

Hispanic Heritage Month

Spanish language tags and displays in IKEA stores

NO.

Action Plan

X X (tour)

> 1.5

planning design Competition

Sweden tour concept

Special delivery and assemble for senior

offer for Inbound moving citizens

Hispanic Heritage Month

Spanish language tags and displays in IKEA stores

NO.

Action Plan

X (tour)

Time-line

> 1.5

2015

2016

Year

Discount for joining IKEA customer membership group

Offer ikeafamilylivemagazine .com website in spanish language

Provide public service to local hispanic community

Launch sustainability living campaign

Budget Marketing Budget NO.

Action Plan

Budget

Mobile Marketing

$ 100,000

Premium Delivery

Base on customer

Bridging the generational gap between Millenials, and Baby $ 1,000,000 Boomers

Coupons and special promotions for valued customers

$ 100,000

Social Media based design demonstrations

$ 1,000,000

Public demonstrations: Art exhibits

$ 1,000,000

Public Demonstrations: Small Space Design Solutions

$ 1,000,000

Furniture and room planning design Competition

$ 200,000

Swedish Tour Concept

$ 1,000,000

Special Delivery and assembly for seniors

$ 200,000

offer for Inbound moving citizens

$ 250,000

Hispanic Heritage Month

$ 500,000

Spanish language tags and displays in IKEA stores

$ 100,000

Discount for joining IKEA customer membership group

$ 100,000

Offer ikeafamilylivemagazine.com website in Spanish language

$ 200,000

Provide public service to local Hispanic community

$ 1,000,000

Launch sustainability living campaign

$ 250,000

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