From its humble beginning as a small general retail store in a village situated in the south of Sweden, IKEA has grown into the world's largest furniture retailer with 279 stores in 36 countries today. The name IKEA is formed from the founder's initials I. K. (Ingvar Kamprad) plus the first letters of Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up. Specializing in furniture and home decoration, IKEA has an annual turnover of 19.8 billion euros (source: IKEA, www,ikea,com, accessed 25/03/2012). The IKEA catalogue is printed in 52 editions with 25 languages, with a global distribution in excess of 160 million copies. IKEA's success has been nothing short of a global phenomenon. Edvardsson and Edquist (2002) have accounted for the company's rise to global success following the timeline of three development phases. In phase one, IKEA's core concepts were formed as a result of adapting to the market circumstances. The important moments during this period were publishing the first IKEA catalogue in 1951, opening the first furniture showroom in Almhult in 1953, introducing flat packages in 1956 and finding the key to low cost production in Poland in the early 1960s. Phase two is characterized by the company's initial internationalization expansion when it reached out to its Scandinavian neighbours in the 1960s. Since the 1970s, the company began to expand farther into other European countries, Australia and Canada. In 1985, IKEA arrived at the world's largest consumer market-the United States where first experienced North America as a market very different from those in Europe. Armed with its international experience in Europe and North America, IKEA took the company into the third phase of its development by embarking on a major expa embarking on a major expansion into the Far East, in particular Japan and China.
1. Based on your analysis, what are the opportunities and challenges for IKEA in their market operations in (a) China; and (b) Japan?
2. Describe the market entry strategies that IKEA adopt in China and Japan respectively.
3. What are IKEA product, pricing, marketing communication and distribution decisions in the two Asian markets? To what extent these marketing mixes have been adapted to the preferences and needs of these markets?
4. For each of these markets, discuss and justify what, in your opinion, IKEA's marketing strategy should be in the near future to gain market shares and achieve higher profitability.