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ikea’s market segmentation and targeting

In addition, it has a website for consumers to search the details of their products. (B&Q, 2010a) Its selling point is a variety of products for home decoration. The differences in 4Ps between IKEA and B&Q were also discussed in the paper. to psychographic factors like attitude, interest, values, etc. Furthermore, B&Q offers installment payment service, which is another effective promotion strategy. Copyright © 2000-2020. For reaching the strategic requirement, IKEA improved its competitive capability and enhanced resources such as w... This type of segmentation is the easiest but it was actually used in the last decade where the industries were new and the reach was less. Race 7. You can view samples of our professional work here. Wells Fargo Bank. Presently, there are above 60 stores around the world, among which, the largest one in Beijing. 2. 3. Thus, many companies use geographic segmentation as a basis for market segmentation.. As the biggest competitor of IKEA, B&Q is a leading company in home decoration and gardening in Europe. Visions and Values. The positioning testimony of IKEA opens up a partnership with its customers is to arrive at the desired effects perceived by their clients and by the store performing their part in the development. However, IKEA’s consumers do not need to pay extra charges for assistance and transportation, which is a quite attracting policy. Riggs, C. (2014). To continue their success, Lowe’s must specifically focus on marketing, logistics, and human resource management strategies. Interbrand and Forbes estimate IKEA brand value as USD 17,46 billion and USD 15,30 billion respectively. The customer spending pattern was also similar across countries. Similarly in cold countries, the same company might be marketing for heaters wheresa in hot countries, the same company might be targeting air conditioners. 2. The marketing managers who may consider using target marketing will usually break the market down into groups and to target the most profitable segments. Furthermore, B&Q has professional teams to help customers designing and decorating in their own styles. Asses the benefits of IKEA segmenting its Market..... Market Segmentation involves dividing the market into identifiable sections specific to the business’ needs. According to many surveys, Segmentation, Targeting and positioning (STP) is one of the best considered marketing strategy model of modern days after SWOT. Market segmentation is classifying consumers into groups according to their characteristics (Hall et al, 2008) and set certain groups as targets. For example… Any subject. No plagiarism, guaranteed! IKEA targets young and fashionable people as its main consumers; in particular those love modern furniture and accessories. 1. In this article, we'll look at the Segmentation, Targeting and Positioning (STP) Model*, an approach that you can use to identify your most valuable market segments, and then sell to them successfully with carefully targeted products and marketing. In addition, the emphasis of this report is how these two companies differentiate products to different targeted segments, as well as how they combine market segmentation with marketing mix to make profits. VAT Registration No: 842417633. Therefore, product is more than physical stuffs sold by stores (Hall et al, 2008). IKEA's Billy bookcase, Lack side table and Ivar storage system were best-sellers worldwide. In order to fulfill their social duties, they both have actions in making contribution to the society. To some extent, advocating environmental products is also a useful promotion skill of B&Q. It treated them as targeted customer group and then design and generates products for this market. Our academic experts are ready and waiting to assist with any writing project you may have. Sales Strategy The prices of B&Q products are a little lower than IKEA’s. Moreover, the two companies have websites to offer online shopping. What factors do you see as critical to competitive success in the furniture industry? Although both of these two companies have large sales volumes, it is still a necessity to enhance marketing mix, for their installation service charges are slightly higher than people’s expectation. The difference between customer segmentation and target markets can be explained by the below: Best practice is to firstly understand the customer segments. IKEA’s major products are furniture, such as kitchen modules, bathroom facilities, lighting equipment, sofas and textiles. Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. This marketing strategy is called, “merchandise”, the product range and the prices of the products (Waller, 2014). From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. Communication strategy advertises the appropriate ads using the right media to target the chosen consumer group. Gender 2. (Hall et al, 2008). Accessible:Each segment must be accessible to your team and the segment must be able to receive yo… In order to use this core competency to gain a competitive advantage, the company has focused on key functional strategies. If the market is small, it may make it smaller. Now, with digital marketing and segmentation tools like Google Adwords to filter out the masses, you can hone-in on exactly who you want and how. As the business achievements of IKEA have been increasing and well-developed, it adopted a particular strategy, which is “To offer a wide range of well designed, functional home furnishing products at cheap price”. (Hall et al, 2008). The meaning of adopting a customer orientation will be discussed thoroughly while highlighting the implications by featuring an organization in the said industry. It is important in marketing strategy, with a goal of satisfying consumers’ needs. How to Apply Segmentation Targeting Positioning “STP” to a Business. (B&Q, 2010 b). IKEA is not only one of the world's most successful retailers, growing nearly 6% in its most recent fiscal year -- it's also a powerful brand, ranking among … IKEA markets itself as a store established for the people, such that they are open to being the people 's companions for an improved life. Education 6. Moreover, B&Q has professional teams to help personalized designing. Market Segmentation will allow IKEA to differentiate their products and to market them more effectively. Market segmentation takes place when a company decides to identify the specific customer type for their product or service, while the identification of the target market takes place when the company identifies which customers have the ability to buy the product. The segment of making individuals who are looking for convenient security for their house and family, the message is focused on the expec... In conclusion, both IKEA and B&Q are successful furniture sales enterprises. IKEA’s segmentation, targeting and positioning of its target audience involve a set of connected marketing decisions that constitute the core of the company’s marketing strategy. All work is written to order. Category: Business; Subcategory: Marketing, Corporation; Topic: Brand Management, Marketing Management, Nike; Pages: 2; Words: 987; Published: 08 August 2019; Downloads: 1312; Download Print. Ikea employs market segmentation strategy where the products are towards a particular target market. (Guangzhou IKEA, 2010), B&Q fixes most commodities with appropriate prices for the average consumer. Pricing strategy involves appealing to either price-sensitive or price-insensitive segments. In addition, IKE fixes the products’ prices at a lower level, which is quite attracting for the average consumers, such as white-collars. (IKEA, 2010 a). Marital status 5. This is not an example of the work produced by our Essay Writing Service. Market Segmentation IKEA targets young and fashionable people as its main consumers; in particular those love modern furniture and accessories. These bases range from age, gender, etc. With no market segmentation, it’s like shooting in the dark instead of targeting the ideal customers. ... middle of paper ... This paper will begin by discussing the marketing concept of customer orientation towards the success of a business. 123Helpme.com. IKEA employs about 208000 people globally and its portfolio comprises more than 9500 products. Increased ROI . (2012). The list below refers to what’s needed to evaluate the potential and commercial attractiveness of each segment. It was founded by Richard Block and David Quayle in Portswood, Southampton in 1969. Free resources to assist you with your university studies! Do you have a 2:1 degree or higher? There are around 330 IKEA stores in 38 countries. However, a most significant difference between them is that, IKEA only sells finished products, whereas B&Q provides raw materials as well. Get help with writing. Further, there are floor pained arrows to lead consumers quickly find the items they need. Forsman & Bodenfors, Ikea’s Swedish agency, has turned to boxed themes to support the distribution of the retail giant’s latest catalogue (pun intended). Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. (B&Q, nd). Afteridentifying segmentation few segments are selected to reach target customers. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. They divide their consumers into groups in accordance with types of market segmentation: demographics, psychographics and behavioral. Strategies are the process of creating product, pricing, communication, and customer management strategies. Religion Demographic segmentation is usually the most important criterion for identifying target markets, which means that knowledge of demographic information is crucial for many businesses. Targeting and positioning strategies consist of analyzing and identifying segments within a given product-market, choosing which segment or segments to target, and developing and implementing a positioning strategy for each targeted segment (Cravens & Piercy, 2009). Reference this, In 1958, Ingvar Kamprad founded the first IKEA store in Almhult, Sweden. B&Q’s most frequently used promotional measure is discounting, while IKEA publicizes its products by free catalogue. Figure 3: Marketing Framework (Source: Iacobucci 2015) This blog focuses on Segmentation Targeting and Positioning of a company’s products/services using McDonalds as an example. (B&Q, 2010 c). On the other hand, one of the differences is their operating modes. A market is segmented using age, gender, income, education, lifecycle, social status, social class and many more. IKEA appeals to a Last accessed 27 March 2014. Retrieved from online.wsj.com/news/articles/SB10001424127887323527004579081244169280978 The first theme will be discussed on … (IKEA, 2010 b), Different from IKEA, B&Q is specialized in one stop shopping, in which, customers can buy most decorations and accessaries they want in one store. Besides, they both open stores in areas with large population. 4. It adopts innovative manufacturing techniques to products at a lower cost. Three main and most valuable marketing strategies include Segmentation Targeting positioning also known as STP. As a “total concept”, product refers to all merchandises and services provided by a business. Besides, they both have various promotional skills, such as discounting and installation service. Key Competitors Platform / Material / Household Appliance Simplified / Good Taste / Grocery Local / Cheap / Convenient Experience Owned Brand Relationship and Attitude Media & Marketing Activity Usage and Attitude Annual Advertiser of the 2011 Cannes Lions Festival Style: humor, So, this is the key difference between market segmentation and target market. Pssst… we can write an original essay just for you. Discount is an effective promotion B&Q uses to attract consumers. Didem ŞAHİN Ahmet OCUK 2. Segmenting is dividing a group into subgroups according to some set ‘basis’. Registered Data Controller No: Z1821391. Segmentation refers to dividing population into groups on the basis of their common traits and characteristics. References Both IKEA and B&Q construct their own websites to introduce their commodities and offer consumers with e-shopping service. According to statistical data, there are over three million customers walking into B&Q per week. Target Market Segmentation IKEA's main consumers are classified as young, middle class, and upwardly mobile, who prefer low-priced but trendy furniture and household products (Hill & Jones, 2005). So far, IKEA is the largest and most international furniture emporium, globally. However, like the popular Ikea Hacks generated by its loyal fans, Ikea’s new marketing effort has combined standard reality TV and sitcom themes to create innovative and captivating YouTube videos targeting Millennials. Lowe’s grew through strategic choice by heavily focusing on key functional areas involving research and development (R&D), marketing, and logistics. (B&Q, 2010 a). IKEA’s Business IKEA is an international home product company that designs and sells ready to assemble furniture appliances and home accessories IKEA’s Vision IKEA’s vision … For example, all the products for a room are shown visually by being placed a single model room. Market segmentation consists of four types, including geographic, demographic, psychographic and behavioral type. Although their promotional measures are different, they have the same purpose to create more profits. Therefore, its products are more colorful and novel. Difference:Measurable differences must exist between segments. Precise and Personalised Targeting. In this case, IKEA was transformed from a small mail order company to a popular international furniture retailer. The basic promotional tool of IKEA is its free catalogue with a list of its products. Age 3. IKEA generated retail sales of EUR 38,8 billion during financial year 2018 and it has a healthy profit margin, as well as, strong cash reserves. Positioning implies the selection of the marketing … Company Registration No: 4964706. Study for free with our range of university lectures! (B&Q, 2010 c). Targeting involves choosing specific groups identified as a result of segmentation as consumers for the brand. As for B&Q, there are 371 stores in total, with 41 stores in China. They may adapt their marketing … This process of evaluating and selecting market segments is known as market targeting. The IKEA Catalogue includes commodities’ details, such as colors, sizes and prices. In contrast, the B&Q stores are the GMS (General Merchandise Store) mode. However, customers are able to buy raw materials from B&Q and make any product. (IKEA, 2010 b), B&Q stores supply with around 40,000 products for home fittings, such as lights, door handles and lawnmowers. Therefore, its products are more colorful and novel. Demographic grouping is based on measurable statistics, such as: 1. (IKEA, 2010 b) It has outstanding quality and a special name to every product, and offers a wide range of home furnishings with best aesthetic designs and functions at reasonable prices. The aim of this service is to provide convenience for customers who do not have much time to deal with decoration. A retail business develops a strategy to reach their target market and communicate their message in a meaningful way that consumers can relate too. Strickland, T., Gamble, J., Peteraf, M., (2012).Charting a Company’s Direction: Chapter 2, Vision and Mission, McGraw-Hill, Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0078112729/898107/Chapter02.pdf Segmentation, targeting, positioning in the Marketing strategy of IKEA – Demographic , psychographic & geographic segmentation is used by the company to segment the market to cater to the changing market dynamics of home furnishing, Kitchenware & appliances industry. Market segmentation is a process, in which groups of buyers within a market are divided and profiled according to a range of variables, which determine the market characteristics and tendencies. An analysis of the strength, weaknesses, opportunities and threats (S.W.O.T) gives a retailer perspective about the market and their own business allowing them to capitalize on the conditions. Second, IKEA had focused on young buyers. Lowe’s important R&D investments included the creation of two prototype stores. (IKEA, 2010 f). On the other hand, it is suggested that B&Q’s products could be more fashionable and colorful in order to attract younger consumers. A retail sales strategy must develop a thorough, well-integrated plan, in order to gain a competitive advantage in the market. IKEA targets consumers who are looking to benefit from the value of the furniture. (2014). Market Segmentation, Market Target and Market Positioning of Nike Company. Prior to communicating with consumers, retailers must assess market conditions and determine if their product or service will meet market needs. Another concept concerned with market segmentation is marketing mix. Besides, it also offers discount to attract consumers. a. Any type of essay. 1. (Guangzhou IKEA, 2010) Besides entity stores, IKEA also allows consumers to do e-shopping on its website with an easy reviewing of the details of the products. Promotion is to propagandize products through all measures available (Hall et al, 2008). Market Segmentation, Targeting and Positioning Introduction 1. The company has a core competency in helping customers meet their home improvement needs at a low price. IKEA further segments the market through benefit segmentation. IKEA’s marketing strategy enables the company to be a successful player in the global market, evaluate how the innovation in IKEA’s marketing mix elements are … Both of two companies sell products mainly in stores. See our earning section to learn more about SWOT and all other business strategies. An example of a vision statement is: Walmart “Saving People Money So They Can Live Better” (Strickland, Gamble, Peteraf, 2012) In this segment of discussion, there are 4 segmentation themes in the target market: (1) Geographical, (2) Demographic, (3) Psychographic and (4) Behavioral segmentations. IKEA’s marketing strategy consists of market segmentation, targeting, positioning and the marketing mix. Strategies to achieve success in the market by integrating and responding to the market’s demand will be addressed thorough out this paper. Retrieved from blogs.wellsfargo.com/guidedbyhistory The products of Both B&Q and IKEA are complementary. (IKEA, 2010 e) It is worthy to mention that, IKEA also established a group named Social Initiative, aiming at strengthening the relationship between IKEA and the society. To succeed in today’s competitive marketplace, companies must be customer-centered, wining customers from competitors and keeping them by delivering greater value. There are basic steps in the STP model which are very useful in analyzing the products or services being offered along with the way in which the value and benefits of the offering are conveyed to target groups. This permits the company to serve the large middle and low income earning groups as they are able to secure furniture affordably. It is also recommended that the two companies perform routine market research so as to know well of consumers’ feedbacks. A liquor vendor, for instance, might want to target its marketing efforts based on the results of Gallup po… The sales volume could be better if they can reduce the price to some extent. *You can also browse our support articles here >. MARKETING MIX IKEA has been so successful because of its unique marketing mix. However, IKEA’s founders realized that this left a market opportunity for those younger generations that were just starting to move into their own homes and apartments, but did not have the financial resources or stable lifestyle that support an investment in high-end furniture. Similar to IKEA, B&Q also has policies to show its social responsibility. SmartThings message is turning your home into a Smart House in other to make a living better. Ingvar Kamprad believes that a company's "identity", company guidelines, profile, selection, quantity, quality and price are critical to the success a company will have in the furniture business. Moreover, although the IKEA products’ prices are higher than B&Q, their products and locations are similar. This group works together with UNICEF and Save the Children, with the purpose of giving all children a better life. Cognitive view of consumers portrays consumers as a thinking problem solver. The statement communicates the leaderships view about the club’s long term direction. Ikea marketing management presentation 1. The last view of consumers is a cognitive view. 4. b. (B&Q, 2010a) Moreover, B&Q’s operating system is GMS (General Merchandise Store), thus all products in B&Q are placed on shelves for consumers to choose freely. The IKEA stores have scientifically classified all products so that consumers can quickly and easily find what they need. The prices of IKEA’s products are set reasonably. Wells Fargo team member handbook – January 2014. Target market segmentation is the process of categorizing the market into different groups, according to demographic, geographic, behavioral and psychographic traits. Part o... Anthony Reuben. ... and strive to be you will have three solid statements for your organization that can be used as a guide for a successful business. In marketing, segmenting, targeting and positioning (STP) is a broad framework that summarizes and simplifies the process of market segmentation. Examples of Targeting in Marketing. Consumers’ choosing, assembling and transporting products by themselves can reduce the price. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. Criteria Size:The market must be large enough to justify segmenting. Marketing It is also recognized as the 4Ps, consisting of product, price, place and promotion. In comparison, IKEA’s targets are mainly young people who love innovative items, while B&Q focuses on one stop shopping with people who have not much spare time as its major consumers. Segmentation Segmentation is the dividing of a populations into groups according to certain characteristics. IKEA helped shape the postwar household by offering new furniture styles at a very reasonable price. They focus on the processes by which consumers seem and evaluate information about the brands. They provide a full range of products, as well as professional designers. Income level 4. The relation between customer orientation and resulting in customer value creation and increasing brand awareness will be pointed out. Tesco new-look stores to appeal to gadget enthusiasts. (IKEA, 2010d) For all of them, the products are displayed in a clear and scientific classification. This means that the products in Ikea aims to attract a particular market segment than the mass market (Steenkamp & Ter Hofstede, 2002). To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! IKEA conceptualizes and assembles goods and products that are designed to be practical, while at the same time possess tasteful designs and accessible at a low cost (IKEA, 2016). (OPPAPERS, 2010) One method IKEA uses is mantissa pricing, fixing the prices with 9s, such as 299, 699 and 799 yuan, giving customers an impression of cheapness. Customers greatly benefit from the value of the furniture because it is decent quality furniture for a very low price. IKEA segmentation, targeting and positioning involves a set of consequent marketing decisions that constitute the core of company’s marketing strategy. According to IKEA, the company's target market was the global middle class which shared buying habits. ... middle of paper ... Money:Anticipated profits must exceed the costs of additional marketing plans and other changes. Market segmentation and target marketing both serve as a very useful technique in saving time, money, and efforts engaged in the marketing of the product/services as targeted marketing focuses on targeting the consumers or audience as per different consumer habits. Ikea Segmentation Targeting Positioning. Ocean to eocean. The target market is the market segment that the business is focusing on for a specific product or marketing campaign. ...hat a consumers is submissive to self-serving interests and promotional efforts. One of the bases of segmentation is to market the product sustainability. This means that the product is built in a manner so that the product is able to meet the needs and demands of that market … Furthermore, the IKEA products are mostly shown as models, which are fixed and limited. We're here to answer any questions you have about our services. With low costs came a new innovative style and a comfortable atmosphere to shop in. Disclaimer: This work has been submitted by a university student. Looking for a flexible role? If you need assistance with writing your essay, our professional essay writing service is here to help! ... middle of paper ... IKEA: Target Market and Positioning Strategy. IKEA’S Segmentations & Target Market Segments. In contrast, B&Q has more beneficial services such as discounting and installment payment. Tearle, R. (n.d.). 1st Jan 1970 (Gluck, S., 2014). (B&Q, 2010 e). It is done by offering products at different price levels or by only making expensive products available first. It may allow them to find a niche in the market which will allow them to gain a competitive edge and possibly gain more market share (in the … The price is simply the amount of money that consumers pay to gain the benefits of the product (Hall et al, 2008). As for this, B&Q makes great efforts on environment protection in the procedures of product design, packaging and the use of materials. The objective of this report is to analyze how IKEA and B&Q deal with marketing mix and marketing segmentation. Segmentation is the means to divide the population into groups based on their common traits and characteristics such as old and young people. Sound marketing requires a careful, deliberate analysis of consumers. Product strategy aims to extract the most value out of customers. Available: http://www.bbc.com/news/business-19810924. Since companies cannot satisfy all consumers in a given market, … According to OPPAPERS (2010) and B&Q (2010c), both of them set the prices of their products reasonable and appropriate. Academia.edu is a platform for academics to share research papers. All rights reserved. Finally, It will then show how the strategies correlate with the effectiveness of the organization’s overall success. It guides the employee’s and management to reduce risk in decision making and leads them into the future. Products is also recognized as the 4Ps, consisting of product, price, place and.! To the market is the dividing of a business target and market positioning of Nike.! The effectiveness of the bases of segmentation as consumers for the brand their!, 2010d ) for all of them, the largest one in Beijing many companies use geographic segmentation ikea’s market segmentation and targeting! Fixed and limited from age, gender, etc and B & Q ’ s and management to reduce in! 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