Thursday, October 31, 2013

Marketing Plan report for IKEA Australia

Marketing Plan report for IKEA Australia I. Executive Summary
The marketing goal of IKEA Australia is to significantly increase the market share of the firm in the face of the increasing competition. The goals and the objectives are consistent with the mission and the vision as well as the core values that are being explored. The revenues of the firm are increasing and they stood at €27.6 billion in 2012. The net income stood at €3.2 billion over the same period. The firm has great stability as the key executives of the firm still hold their positions. The current and potential customers of the firm are people aged between 18 years and 65 years old. The basic benefit of the products is the functionality of the furniture as well as the durability of the products. The products are mostly purchased during the festivities when there are offers that are provided by the firm. The potential customers do not purchase the products of the firm due to the requirements that are not yet met and the lack of the awareness about the products. The main competitors of IKEA Australia include Seamens, B&Q, John Lewis and Argos. The country is also experiencing robust growth that has seen a significant reduction in the unemployment levels. The advocacy groups are also against the use of child labor as well as the provision of living wage as opposed to the government set minimum wage which is lower. The increased use of the information technology has led to the increase in the efficiency as the e-commerce is used to help the customers be able to access the products that are offered in the market. Operational excellence will be achieved through the focus on the high quality customer services The strategic focus of the marketing plan is to ensure increase in the market share in the face of increasing competition


II. Situational analysis
A. Internal Environment
Review of the marketing goals and objectives
The marketing goal of IKEA Australia is to significantly increase the market share of the firm in the face of the increasing competition. There are a number of other furniture houses that are found in the market. The objectives that are currently being explored by the firm include the need to ensure an increase in the profitability levels as well as the good customer services and good customer experience. The above aims and objectives that are being explored by the firm will be achieved through the focus on the cost reduction thus ensuring that the profitability levels of the firm are increased even in the face of stagnant market share. The cost reduction will be achieved through the focus on the improvement of the levels of the efficiency amongst the employees of the firm as well as the efficiency of the operations that are found in the firm. The good customer experience is being achieved through the focus on the proper training of the customer’s service employees of the firm as well as through the affordable prices for the diverse products that are found in the market (Interbrand, 2012).
The goals and the objectives are consistent with the mission and the vision as well as the core values that are being explored. The vision of the firm is to create a better everyday life for many people (IKEA, 2013). The element of the cost reduction and the increase in the market share for the firm all fall into the vision of the firm as they will allow the customers to acquire the products at the low costs while also ensuring that the firm benefits from the market share to be able to further reduce the costs that are incurred by the firm.
Review of the current marketing strategy and performance

The current marketing strategy of the firm will be considered based on the elements of the marketing mix of the firm. First, the firm offers a wide variety of furniture and home furnishing products that are acquired by the different people. The range of the products allows the firm to be able to gain high customer numbers as the different customers can be able to get the products that suit their needs. Secondly, there is the element of the place or dirtictuion as the products of the firm are sold in the stores and also online from where the products will be delivered to the appointed locations where the customers want to have them. There is also the pricing which is low pricing to ensure that the products that are being offered are affordable to the diverse customers (IKEA, 2013).
Finally, there is the element of the promotion. The firm mostly makes use of the mass media for instance TV adverts and the Radio announcement about the sales. There are elements of the marketing strategy that are currently working well; the pricing strategy and the product strategies of the firm are working fine. The only elements that are not working properly are related to the issues of the distribution as there is low efficiency in the home delivery strategies that are currently used in Australia. The promotion should also make use of social media to a greater extent for instance through the focus on the formation of communities that can act to review the products and thus help the firm in the design of the different products that are offered in the market.
The firm’s current performance will consider the operation of the IKEA globe and not just the operations of IKEA Australia. This is based on the availability of the data. The revenues of the firm are increasing and they stood at €27.6 billion in 2012. The net income stood at €3.2 billion over the same period. The sales of the firm have also increased in all the markets. The furniture retail industry in Australia is registering growth in due to the improving economic situation in the country as well as the favorable demographic situation in the country. The total sales of IKEA Australia increased by 7 per cent in the last two years and the market share of the firm also increased relative to that of the competitors (IKEA, 2013). The above is due to the increase in the quality of the products and the lowering of the pricing for the customers.


Review of current and anticipated organizational resources
The firm has a steady flow of revenues for instance over €22 billion in 2012. The firm has experience in the development of the furniture thus the quality. The management of the firm ensures respect and thus all the people in the firm work towards the achievement of the goals. There is also the element of the human resources that are very skilled in the design as well as the production of the furniture and the furnishings (Kurtz, 2008). The firm also has the stores as well as the equipment that are important in the process of the production. The firm has a good relationship with the customers due to the low costs and the quality of the products. The relationship with the suppliers of the firm is also good thus ensuring lower costs of the raw materials. The changes in the economic situation may affect the costs of the production thus affecting the relationships with the customers (IKEA, 2013). The focus is therefore on the ways through which the firm can be able to leverage the costs through better relationships with the suppliers and the increase in the efficiency of the operations. Review of current and anticipated cultural and structural issues
The firm has great stability as the key executives of the firm still hold their positions. The firm is still very focused on the benefits that the customers will receive from the firm. The current structure of the firm is supportive of the marketing strategy that is currently used in the firm.
B. The customer Environment

The current and potential customers of the firm The current and potential customers of the firm are people aged between 18 years and 65 years old. The customers of the firm are those who old jobs and are able to afford the low priced furniture and the furnishings. They are also people who are in their careers thus are ready to move from one city to another (IKEA, 2013). The location of the customers is the cities and the urban areas found in Australia. The customers value quality and are heavy users of the products. The players who are important in the purchase process are the customer and the sales representatives

What customers do with the firm’s products?
The basic benefit of the products is the functionality of the furniture as well as the durability of the products. The element of the quality of the products is very important to the consumers (Kurtz, 2010). The products of the firm are purchased in combinations for instance seats, carpet and bathroom fittings etc. Where the customers purchase the products

The products of the form are purchased from the stores that are operated by IKEA Australia as well as through the catalog retailers and the e-commerce site of the firm. The products that are ordered through the e-commerce are delivered to the appointed location (Kurtz, 2010).
When do customers purchase the products of the firm?

The products are mostly purchased during the festivities when there are offers that are provided by the firm. The seasonal demand thus plays an important role in the purchase decisions that are made by the customers of the firm (Kurtz, 2010).

Why and how customers select the products of the firm

The selections of the products of the firm are based on the quality and the ability to be able to satisfy the needs of the customers as well as the element of the price relative to those of the competitor firms. Why potential customers do not purchase the products of the firm The potential customers do not purchase the products of the firm due to the requirements that are not yet met and the lack of the awareness about the products. Some of the potential customers are not aware of the advantages, features and the benefits that the products of the firm have over the other products that are offered.
C. External Environment

Competition
The main competitors of IKEA Australia include Seamens, B&Q, John Lewis and Argos. Majority of the firms compete in terms of the quality thus some of the firms such as John Lewis focus on the premium pricing to be able to support the quality preposition (IKEA, 2013). The firms also offer ranges of the products that can be used for the different functions.

Economic growth and stability
Australia has recovered from the global financial crisis of 2008 and thus the income levels of the country have been significant. The country is also experiencing robust growth that has seen a significant reduction in the unemployment levels (Kurtz, 2010). The costs of the raw materials in the industry have been increasing while the sales trends in the industry are also on the spike.

Political trends
The main focus is on the reduction of the carbon footprints thus the firm needs to be able to consider the logistics of operations to ensure that the levels of the emissions are reduced considerably (Kurtz, 2010). The advocacy groups are also against the use of child labor as well as the provision of living wage as opposed to the government set minimum wage which is lower. The above significantly increase the costs that are incurred by IKEA.
Legal and Regulatory Issues

The changes in the global agreements have led to the reduction of the costs that are incurred by the firm due to the opening up of the raw material sourcing areas that were not accessible to the people in the past (Kurtz, 2010).

Technological Advancements
The increased use of the information technology has led to the increase in the efficiency as the e-commerce is used to help the customers be able to access the products that are offered in the market. The customers have accepted the e-commerce due to the cost reduction and the efficiency of the products (Kurtz, 2010). The customers are aware of the safety and privacy measures that are taken into consideration thus they have accepted the online purchase of the products due to the convenience.

Sociocultural Trends
The customers are mostly focused on the quality of the products thus the need to be able to acquire such quality. There is an increase in the number of people between the ages of 18 and 65 thus there is the need to ensure efficiency and convenience of the operations (Kurtz, 2010).
III. SWOT analysis

A. Strengths
The firm has a number of strengths for instance the knowledge of the customers, the innovations that are driving the costs down, the integration of the supply chain, the market presence and the brand reputation and the diversified product portfolios (IKEA, 2013).
B. Weaknesses
There are a number of weaknesses of the firm for instance the standardization of the products, the decrease in the quality of the products and the negative publicity especially with regards to the stand of the firm in terms of the labor (IKEA, 2013).
C. Opportunities
There are a number of opportunities that are available to the firm for instance the growth in the online sales and the opportunity to expand into the developing economies as well as the expansion into the growing grocery market of the firm (IKEA, 2013). The trend of healthy eating has caught on thus there is the need of the firm to be able to take advantage of the situation.
D. Threats
There are two main threats that are faced by the firm. The growth in the income will act to the disadvantage of the firm as the customers may choose to buy the premium products. Secondly, there is the intense competition from the many low cost retailers that have entered into the niche where IKEA previously operated. E. SWOT Matrix
Strengths:
• Knowledge of the customers • The innovations that are driving the costs down • The integration of the supply chain • The market presence and the brand reputation • The diversified product portfolios Opportunities: • Growth in the online sales • Expand into the developing economies • The expansion into the growing grocery market of the firm.
Weaknesses:
• The standardization of the products • The decrease in the quality of the products • The negative publicity Threats: • The growth in the income • Intense competition F. Developing Competitive advantages
Operational excellence will be achieved through the focus on the high quality customer services as well as the continued training of the workforce of the firm (Lorat, 2009). The firm can also focus on the customization of the products thus ensuring greater customer intimacy. The threat of the increase in the income will be converted into an opportunity through the aforesaid customer intimacy as the customers will be offered customized products according to their individual tastes.

G. Developing strategic focus
The strategic focus of the marketing plan is to ensure increase in the market share in the face of increasing competition (The Times 100, 2012). The focus will be on the diversification of the products that are offered especially through the customization of the products that are offered in the market. The focus will be on needs of the customers to be able to offer them the products that they will need.

IV. Marketing goals
A. Marketing Goal A: Better customer service
Objective A1: To achieve a 5 per cent increase in the customer retention by 2014 Objective A2: To increase the market share of the firm by 10 per cent in the next 5 years. B. Marketing goal B: To achieve massive cost reduction Objective B1: To reduce the costs that are incurred by the firm by 4 per cent by the end of 2 years Objective B2: To increase the profit levels by 15 per cent by the end of 5 years V. Marketing strategy
A. Primary (and secondary) Target market
The primary target market of the firm are the people in their 30s to 50s due to the the high income that will support the premium prices that will be as a result of the product customization (Pride, Hughes, & Kapoor, 2011). The secondary target market is the low income earners who will still support the mass standardization measures that were used by the firm.
B. Product strategy
The packaging that will be used by the firm will be high quality and the IKEA brand name will be displayed. The focus will be on the customization of the feature that is required by the customers (Craig & Doughlas, 1996). C. Pricing strategy

The pricing will be premium for the primary target customers based on the increase in the income levels and the need for high quality.
D. Distribution
The focus will be on the use of diverse channels for instance the e-commerce as well as the in store (Kotabe & Helsen, 2010). The firm will also make use of sales intermediaries to increase the access of the products. E. Integrated marketing communication strategy The focus will be on the use of the mix of advertising methods such as social media and the mass media. The personal selling will also be applied as well as the attendance of trade promotions. VI. Marketing Implementation
The firm will continue using the current structures that are found in the firm. The marketing executive of the firm will focus more on the use of both pull and push strategies to be able to capture the customers in the highly competitive market (Aaker, & McLoughlin, 2010). The employees of the firm will be trained to be able to support the required customer service levels that will be found in the firm.