This week’s focus has been on Pricing and Integrated Marketing Communication (IMC). I have read the first chapter (Chap 8- Developing Channel & Logistics Strategy) for this week and am half way through with the next one (chap 9- Developing Marketing Communication and Influence Strategy). I have watched one of the Camtasia videos but have yet to watch the other video.
1. Reflect on a firm or product you like which you believe is highly effective in bringing all the elements of the Mix together to create beautiful symphony for their consumers.
I decided to pick IKEA (home products company) as my example. IKEA is effective in bringing all the four elements of the marketing mix together, namely, product, price, place and promotion. Another reason for picking IKEA is as it is fresh in my mind, after visiting the one in Bellevue, Washington yesterday J.
Product: Home items ranging from silverware to bed-frame and everything in between. The products at IKEA are catered well to the urban dwellers needs, not bulky, are useful, easy to assemble and last but not the least they satisfy the style quotient.
Price: One of the key factors favoring IKEA’s popularity is affordable prices. I agree the product quality is not stellar for some items, say wood furniture. But that’s the differentiating factor because IKEA is not trying to sell a product to last a lifetime. They market their products to fit needs for individuals who want a useful, stylish but most importantly affordable product and care less for product life.
Place: IKEA is not in every location, but they have built their brand image that people interested to buy are willing to travel the extra distance. For example, Columbus, IN does not have an IKEA (should not be surprising given the size of town), but neighboring city Cincinnati (1.5 hour from Columbus, IN) has an IKEA. The IKEA at Cincinnati caters for needs of several neighboring cities. From the company’s standpoint it does not make sense to open an IKEA in cities within 100 mile radius because they have come to realize the investment involved in opening in IKEA does not justify the return when they can get their customers to visit the nearest IKEA which is usually drivable distance.
Promotion: This is an interesting category to talk about in case of IKEA. I call their advertisement unique but still conservative in nature or at least I have not seen a lot of advertisements repeating periodically in popular media such as television. IKEA’s advertising typically is a very different advertisement on face book or a small banner such as ‘Good Design can Make Everyday life better’ on a postbox on a busy street. As a consumer I like the sparing but thought out promotions more than the run of the mill repeated logo advertising. IKEA often times opens stores in big cities near airports as a means of advertisement at high traffic areas. They have built a positive image through their simple, affordable and unique product offerings.
During our ‘window shopping’ (as put by hubby dear J) visit to IKEA yesterday, we bought 2 bed-side lamp shades, 2 comforter covers, 2 big and 2 small storage containers for $85. I consider that a bargain considering a decent comforter cover costs anywhere from $30 all the way to $150. I liked the products I picked up, as it full-filled my (consumer) needsà product is useful and has nice spring shades as that’s what I was looking for; price is competitive as I would not get the colors and quality I was looking for in the lamp shades and comforter covers elsewhere; place worked out well as we were visiting Seattle this week anyway; promotion was an interesting one as our visit to IKEA yesterday was driven by my sis-n-law suggesting to check out the comforter covers there since she had bought a few couple months back and liked it (even after machine wash).
2. Who are the target audience for the company's market offerings?
Target audience for IKEA’s market offerings are cost conscious buyers, primarily, young adults starting their careers, students, couples setting up their first home and international visitors looking to setup their home during their temporary stay in a new country.
3. What are the tangible products the company offers?
IKEA offers almost all kinds of home products, most of which are tangible in nature. These can range from kitchenware to home décor’ to bedroom setup to anything else of utility in the house.
4. How does the company utilize price, and place to enhance the value of its offerings and why do you think there choice work well together?
Ikea's mission statement states the company is in business to produce high quality products at a low cost. But what does that truly mean? Price for one consumer may not have the same significance as that for another consumer in the respective product category.
Identify the target audience; its’ needs; its location and work hard to satisfy its needs. IKEA has learnt to do this well. The company has adopted Michael Porters’ strategic model when defining its strategy. Achieve overall low-cost leadership in the industry; Market products that are differentiated; Focus on market segments for growth in cost and/or differentiation. The company has identified the space it wants to operate in and the right mix for that space, which has contributed towards its success.
5. Does the company have a unique approach to communications with their target audience? How is the approach well suited to the other elements of their mix?
IKEA is using Integrated Marketing Communication (IMC) to generate value in minds of its consumers. Price is definitely a competitive advantage for IKEA but price alone does not differentiate the chain from its competition. The product offerings along with unique ways to advertise are helping promote its brand well. IKEA’s promotional ways match up well with other elements of its marketing mix, product, price and place as few examples below highlight.
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