Ikea Case

Answers to W5 weekly exercise
IKEA Case
PartI How does Ikea generate customer loyalty?
The facts are amazing that in 2008, 500 million visitors walked through IKEA store globally and 6000 people visited London store before it opened in 2005. All these achievement are thanks to the unique value proposition to consumers offered by IKEA which is a strategy of leading-edge Scandinavian design at extremely low prices. To look deeper, the reason why the prices are quite cheap is mainly because most items come boxed and the customers need to install by themselves at home which follows cheaper and easier transportation for IKEA as well as more efficient use of store shelf room.

Meanwhile, the version and mission of IKEA enables it runs operation according to customer-orientated purpose which adhere to the annually price reduction policy. Furthermore, its price cut benefits are partly due to the variety of supplies, namely, 1300 supplier from 53 countries rather than merely reply on handful business partners. This allows IKEA enjoy 10% margins and transfer the price saving to its consumers. Also, the remote locations from most city centres help IKEA to maintain a low land costs and reasonable tax expenses.  

Moreover, IKEA values customers’ special tastes so much that the IKEA executives visited many customers for first-hand information and try the best to cater for their demands. Examples can be found in many countries. One is in China where IKEA design “Year of Rooster” theme placemats and they are sold in the blink of eyes during the holidays. Similar example like IKEA managers visited US and Europe and found out their different styles of storing cloths which gave nice chances for different wardrobes which suit various tastes. Other cases can be observed via US’s larger glass cups, more comfortable dinning environment in California, etc.

To conclude, IKEA utilize various methods and strategies which involve consumer interactions, reward program and close...