宜家高价问题的应对措施

[键入公司名称] Case Study on IKEA Analysis on its “High price” problem in China.

11152123 院琳娜

Clarify the problem As of October 2011, IKEA owns and operates 11 stores in China. At the end of 2012, China has become IKEA’s largest procurement market.

IKEA entered China in 1998 through a joint venture and started its first in Shanghai. From then on, purchases of IKEA in China has accounted for 18% of the total, ranked first in the IKEA purchasing countries. But unfortunately, the road of IKEA’s expanding in Chinese market is not goes like so smoothly. IKEA faced many challenges in terms of culture and business practices as well as socio-economic and political conditions in China.

As IKEA’s business idea goes like “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.” When IKEA first entered into China in 1998, it target market was the urban middle class people. Although IKEA’s furniture was considered affordable by people in Europe and North America, it was regarded as a luxury brand by consumers in China. Chinese people like the design and the high quality of its products, but a few of them can afford to buy them. The root cause analysis shows that it is because IKEA has a method which refers to “Unitive products, unitive prices”. In spite of IKEA actually has the standard price on the standard products, it is generally higher than Chinese consumption level.

Furthermore, there is also another problem which IKEA faced in Chinese market. Chinese customers are used to enjoy the services which the seller add to give them when they buy things. Obviously, IKEA do not have enough good after-sale service. Even though, they do not have home delivery service for those consumers who do have private cars to carry their goods home. According to my own experience when I went to IKEA several days ago, I had a question on select a lamp, but I turned around for such a long time, I found it was very hard to ask for clerk’s help. Chinese consumers like to surrounded by sellers when they purchasing, for they like to know the information for some products immediately from what the sellers told them. IKEA’s self selection model can’t accepted by most of Chinese people.

Last but not least, IKEA’s products always are labeled like “to provide the better everyday life to the most people”. So their production process focuses more on the artistic look and fashion for their products. They just ignore that Chinese people are more interested in the utility of the products.

The above limitations are shortening the advantages IKEA owns in other countries besides China. These differences all make IKEA lost its core competitiveness. So IKEA keep on searching new ways to adapt Chinese market. It is necessary for it to choose the Localization Strategy in China.

All in all, the main problem can be easily clarified as “High Price”. This is also the key reason for many Chinese people do not like to buy things in IKEA.

Measures

For solving the problem of “High price” of IKEA to suit their localization strategy to Chinese market, several measures were taken to put into action.

To meet the demands of its consumers in China and to satisfy the host country China’s special requirements, IKEA followed the method of “Do in Rome as Romans do” “Price”is a very complex and comprehensive conception, in business activities, it has a close relationship with other conceptions like: Products, Place, Promotion. So it is not a single work for IKEA to choose to solve their “High price” problem.

1. Product IKEA’s products are associated with the “warmest, most emotional furniture in the world.” It has more than 10000 articles, including three major series and hundreds of varieties selling in its stores.

IKEA maintains the quality control in every country where it has its outlets, the same in China. In order to make its product more acceptable by Chinese consumers, IKEA keeps on creating more useful than beautiful products.

To keep its core competitiveness in product design and to prevent its new design from copying by others, IKEA accelerate its speed of new products R&D. To satisfy the demand of Chinese consumers, IKEA absorb more consumers by providing diverse products, from the furniture used by babies to the working people.

IKEA also produce more environmental friendly products to absorb more consumers. With the improvement of environmental awareness, Chinese people prefer to buying green products.