Flat packs for life.

Ben Hafner: 900282113

IKEA commenced building a 155-million-dollar multifunction online distribution centre in Sydney’s west which is expected to be finished by the end of 2016. This solar powered, robotic driven building is expected to handle all of IKEA’s online sales, which have been tipped to increase annual takings from Australians to 1bn, with a predicted 1.8bn by 2020.

IKEA have always had a charm and level of humour around their marketing. I even think back to when they released the ‘Bookbook’ an hilarious viral video that simply mimicked Apple’s iPhone 6 launch.

IKEA is such an interesting company. They are: retailer, franchise, charity but most importantly they are a brand. This branding, the catalogues, all 216,000,000 sent out, highlighting  whats possible with their affordable flat pack furniture, their meatballs and $1 hotdogs is how they want us to remember. IKEA’s business model in its simplest is ‘to offer a wide range of home furnishings with good design and function at prices so low that as many people as possible will be able to afford them’.

…as many people as possible…

All this made me ask the question are IKEA that successful?  Lets look at the data.

Marketing metrics in short are a set of measures used to compare, contrast and interpret the reach of marketing performance they are needed to ensure markets are managing their targets (Sharp, 2010).

‘You can’t manage what you don’t measure’
– Iacobucci (2014)

Metrics should be clear, interpretable and provide useful actionable information that can impact the business. Business’ should be upfront knowing what they need from metrics. There is a common thought that marketing exists exclusively for financial gain. This thought is equally arguable to the need that Brand Equity is a valuable indicator to ensure brand placement is healthy. Ambler and Roberts (2008) argue that a single financial indicator  or ‘silver metric’ cannot provide an adequate report on performance, and that marketing is multidimensional and a diverse range of drivers and metrics can be utilised in order to establish a companies marketing mix Mints and Currims (2013) . Clark and Ambler (2011) further argue that there is no portfolio of metrics for any one company, and that a series of metrics in one single focus area is not beneficial to anyone.

For example in Figure 1, Mints and Currims (2013) populated what they believed to be a series of agreed upon possible metrics, that could fit under Marketing and Financial in order to give a baseline and possible decisions point.

file-3-10-16-2-24-00-pm

Figure 1: Conceptual Model

Above is just a possible concept, each company must choose what metrics and drivers they require in order to capture the outcomes of their chosen business strategy.

IKEA, obviously want to make profit, a business exists for this, but they want more then that they want you to only buy from them. IKEA Australia’s sales growth failed to match there profit growth last year due to the increase in franchise,costing to the parent company. Globally we just know that IKEA’s net profits increased by 5.5% last year, so it’s safe to assume that they have met their financial metrics.

IKEA’s strategy: ‘…as many as possible…’. IKEA is smart, they don’t just expand they research and plan. IKEA Australia published ‘Time to Live: Lifting the roof on Australian family life at home’ demonstrating they are tailoring to the family life mixed with small apartment open planning in mind. It’s clear that IKEA wants you to think flat packs and family when setting up your homes. They actually want you in the IKEA family it’s one of their ways to have you return providing discounts, events, specials and prizes. Pulling on consumer’s heartstrings is nothing new to IKEA they want you to take your family there.

Try not to cry.

If Aaker was available to comment I am sure he would say how impressed he was at Ikea’s Brand Equity,  they have loyal customers, a high level of awareness and an outstanding brand association to flat packs and hot dogs, among others of course.

So if we focus on a few points in marketing mix, IKEA so far:
Advertising – Traditional is strength with clever online digital / Social Media.B2C – there is only one way to buy the brand IKEA, its from the retail franchise IKEA.
Price Promotions – Sign up on IKEA.com and see what happens.
Product Development – 2000 new products developed each year.
Sales Force – 884,000,000 people visit 172,000 ‘co-workers’ globally. Expanding online.

So if we crassly look at the  mix, we see a company that made 33.8 billion dollars in sales, from 375 stores, after they distributed 216 million catalogues, and had 884 million people walk through their global 11 million square meters of show room space, receiving 1.9 billion views on their website. IKEA is looking to launch online sales in Australia, which the entire showroom is targeting Australians sales based on sales, feedback and research.

IKEA is clearly playing the long term game of global take over, with a very planned and strategically controlled expansion. On that note I think I might go get myself a $1 hotdog.


All references are hyperlinked or embedded with exception to the below.

Ambler, T. & Roberts, J. H., 2008. Assessing Marketing Performance: don’t settle for a silver metric. Journal of Marketing Management, 24(7-8), pp. 733-750.

Clark, B and Ambler, T (2011) Managing the marketing metrics portfolio. Marketing Management, 20 (3), 16-21.

Iacobucci, D., 2014 . Marketing Management (MM4). Mason: South-Western, Cengage Learning.

Mintz, O. & Currim, I. S., 2013. What Drives Managerial Use of Marketing and Financial Metrics and Does Metric Use Affect Performance of Marketing-Mix Activities?. Journal of Marketing, 77 (March), pp. 17-40.

Sharp, B. (2013) Meaningful Marketing Metrics Marketing: Theory, Evidence, Practice. Oxford University Press, Melbourne, Australia.

 

 

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