INTRODUCTION ABOUT GLOBAL MARKETING STANDARDIZATION
Global marketing implies that a corporation is standardized with the marketing programs and truly coordinates across the market and practices different global integration. In current competitive business environment, there are several companies that have truly implemented the global marketing strategy and it is being characterized by an environment which is tremendously unpredictable (Fernando, 2011). There are several benefits that companies derive from global marketing strategies like a large market segment can be identified with better economies of scale so that a competitive edge can be acquired for global companies.
With the transfer of knowledge and experience across nations, an enhanced coordination and communication among companies is being acquired. By marketing the products globally, accessibility towards wider customer segment can be acquired with more of financial stability. In this context, one of the most important tools is planning that facilitates to associate with future and helps company to control its internal, external and customer environments (Keegan, 2006). Here, in this report a detailed analysis has been accomplished to understand the various attributes of global marketing. In this, a case of leading furniture IKEA has been discussed which is planning to enter into Indian market.
The company is headquartered in Sweden and was started in the year 1943 by Ingvar Kamprad Elamtaryd Agunnaryd. IKEA is famous for its modern furniture design and provides numerous types of appliances and furniture which is mostly associated with eco friendly attributes and company is known for its operational details, cost control and regular product development. IKEA has acquired growth tremendously and is now present in more than 30 countries with 140 stores (Jüttner, Christopher and Godsell, 2010). The main mission of the company is to develop enhanced skills among its workforce so that they become creative and provide a range of home furnishing goods at a reasonable price.
Micro and Macro Analysis
IKEA is precisely concerned towards serving needs of several people and the main design process starts with assessing the needs of consumers. The management in IKEA is consistently involved in market research in order to assess about customer's choice and their lifestyle as it benefits them to offer a range of household goods and meet needs of buyers. Here, in this respect a detailed micro and macro analysis has been undertaken, in micro segment a SWOT analysis has been carried out (Popkin, Adair and Ng, 2012). Prior to enter into Indian market, it is crucial for IKEA to assess its strengths and weakness plus different opportunities present in the market. A change has been seen among tastes and preferences of Indian consumers as they are now ready to spend on high end goods and do not hesitate to shop in retail outlets. The lifestyle of Indian customers have become quite busy where both male and female members of a family are working. In this situation, maximum of them prefer to shop from one stop so that all their requirements can be fulfilled. With all these transformation, IKEA needs to develop prominent competitive strategies so that it can lead ahead in Indian furniture market.
SWOT Analysis of IKEA
- Strengths – IKEA is one of the biggest retailers in furniture industry at global platform and the company possesses more than 600 million visitors in its stores and it attracts several people towards the business. Another prime strength of company is vivid concept that transforms a range of products into cost reduction and is then passed to consumers (Kirtiş and Karahan, 2011). The corporation consistently measures its strengths by using the tools of key performance indicators that helps to produce recyclable materials and maintain a long term relation with suppliers by leveraging efficiencies and managing economies of scale.
- Weaknesses – IKEA mainly faces weaknesses in the area of quality standards in the company as it has opened several stores around the world and maintaining quality has become a massive issue. There are several environmental issues in the operations unit of IKEA and management consistently faces challenges in communicating and managing its global environmental plans for consumers and other stakeholders. Other than this, IKEA requires a vast space to open its outlet in any nation and opening a store in India might bring this weakness in company.
- Opportunity – The company is famous for its diversification strategy as previously in many of its locations, IKEA has opened restaurants to cater to customers, this could be an opportunity for organization to attain benefits in Indian market (Gupta, 2015). Other than this, opportunity for IKEA exists with its low cost production strategy that could provide it favourable outcomes in India.
- Threats – IKEA is entering into Indian furniture market which is relatively matured and there are several local players who have already captured a large market segment in India. Other than this with the growth of online business, there are numerous companies offering products through online channels that is easy for customers, so it could be a threat for IKEA in India.
IKEA is having a strong brand name and need to make regular innovations and creativity so that global requirements can be accomplished. In order to achieve maximum benefit, it is important that company adopts global marketing strategies so that numerous consumers can be attracted as there is an increased demand of luxury goods so that significant benefits are acquired. Moreover, a macro analysis have been accomplished to understand the external environment for IKEA with the help of PESTLE analysis.
- Political factors – It incorporates strategies that are being framed by ruling political party of any nation with respect to foreign investment. IKEA has plans to enter into Indian market and need to manage several attributes and policies framed by political party (Shaikh, 2011). Currently, the government supports FDI and legislative policies are there that supports promotion of employment policies.
- Economic factors – This incorporate factors like economic growth, rate of inflation, interest rates, labour costs and nations GDP and GNP growth. Currently in India, the changing prices of commodity and raw material could lead to increased purchasing costs and for this company in order to acquire margin might send the cost to consumers (Hollensen, 2009). Moreover, furniture being fast moving consumer goods are long lasting and in the state of economic uncertainty, consumers might be not in a mood to change these sets. IKEA can also challenge due to increased competition from local players that mostly appeals to cost conscious consumers and for this, company may reduce its margins that will impact on overall profitability.
- Social factors – IKEA is planning to enter in Indian market that is less tapped and role of society is also massive. The nature of Asian customers are more of savers than spenders and might be consumers unwilling to spend on novel furniture and same time generally, would not like the products as it requires self assembly.
- Technological factors – In this aspect, company needs to give attention on implementation of novel technologies so that work can be accomplished efficiently. IKEA can attain range of technological benefits as Indian economy has made lot of technological developments. Company can move towards online business portal and ensure that its customers are satisfied (Kapur, 2009). Other than this, technological tools like ERP and REID can be implemented within the supply chain to manage issues.
- Environmental – It gives attention on ethical policies that a corporation needs to undertake in order to manage its social responsibilities. Environmental factors could act as a barrier for IKEA as maximum of furniture requires wood and important steps would be needed to manage this issue.
Marketing objectives and business strategies for launch of IKEA in India.
In the global market, IKEA tries to position itself as a unique corporation in terms of its designing and the basic message of company is to sell products at a reasonable price. IKEA's entrance into Indian market has awakened several corporate giants about the chances of growth in India. A portion of Indian population is well aware with the brand IKEA and earlier used to purchase the goods from online sources like Alibaba and Olx.com. IKEA has framed its goals to invest around 500 Crore in Indian market in the upcoming years (Murphy, 2010).
The company has been waiting since long to get the approval and a right location for its store and now company is opening its first store in Northern India location probably, Noida or Gurgaon. IKEA in its marketing objective has developed a long term plan to grow in India by opening 10 stores in the first phase launch which will be then followed with another 15 outlets in second phase. IKEA already sources numerous goods from India and plays an important role in enhancing the exports from India (Buzzell, 2000). However, maximum of products in company are made out of wood and India is not rich in production of natural wood, but might be the company will develop new non wood categories furniture. The five major marketing objectives of IKEA for Indian market are as stated below:
- Enhanced value for money that includes new design, quality and function at lower price.
- Exclusive goods are designed only by IKEA and have range of options.
- Better solutions for home furnishing.
- Ease in shopping so that customer enjoys their experience.
- Fun filled environment that includes restaurants, leave the children in play area to achieve customer satisfaction
Moreover, prior to enter into Indian market IKEA can develop probable marketing objectives in numerous areas as stated below:
- Company needs to undertake prominent promotional strategies so that long term goals can be achieved and sales level can be increased. It is crucial for companies to develop an organized marketing activity so that maximum benefit can be acquired.
- Indian buyers should be informed about the attributes of product that should include features of product so that general awareness can be enhanced among buyers (Glynn and Woodside, 2012).
- Company needs to keep a low pricing strategy in India as consumers are price sensitive and mostly seeks for goods that falls in affordable segment.
IKEA is a strong brand and understands the concept that rising globally requires much of innovations and creativity. IKEA needs to make prominent amount of changes so that the most suitable results can be acquired and brand promise can be fulfilled (Agarwal, Malhotra and Bolton, 2010). In India, company needs to pay attention on both traditional and non-traditional marketing strategies. Before that, organization needs to accomplish proper market research so that the most suitable strategies can be developed to manage the intense level of competition.
In the Indian market, company can attain probable benefits by applying the strategy of market penetration so that prices of products can be reduced and customer segment can be managed properly. One of the issues that company might face is with respect to the approach of the company that gives attention on self assembling of furnitures; as such problems might arise with respect to preference of this concept by Indians.
Detailed description regarding the these modes is being enumerated as below:
- Exporting: Exporting can be considered as one of the way that IKEA can use with regard to enter into the Indian market. In this respect, it can be said that exporting is the type of activity which allows manager of organization in terms of selling the produced goods and services of the enterprise in some other nation. For IKEA it is being considered as the effective method because by using the given tactic cited firm can entry into the Indian market with minimum amount of finance (Keegan and Green, 2010). In addition to this, by using the given method organization can minimize its risk relating to the investment. Such type of risk will be high if organization has achieved losses after carrying out significant investment in terms of forming and establishing the new venture in the new nation (Li-Hua, 2007).
- Franchising: It is being regarded as another mode of entry that IKEA can use while starting its operation in the Indian market. Franchising is the type of activity in which one party gives right o another party with regard to use its trade name and identity for the business purpose. For IKEA it is also being considered as effective strategy. This is because, by using the given tactic organization can save its different type of costs such as cost of purchasing the land in India, cost of recruiting and training the employees and cost of constructing building within the country etc (Kotler, 2008). Thus, it can be said that it is also being regarded as one of the most effective mode of entering into the new market in an effective way. Here, IKEA can give its franchise to that Indian company that possess recognized name in the market. Overall, it can be said that both are being regarded as the effective way of entering into the new market such as India.
Besides this, with an aim to support the given mode of entry different type of marketing tactics identified that the cited firm can use. In this respect, it can be said that with an aim to provide support to the exporting type of activity of IKEA marketing tactic like displaying advertisement in the social networking sites can be used with an aim to provide support to the exporting type of market entry mode of IKEA. By displaying ads in the given mean information regarding the presence of IKEA can be spread among the Indian customers. In addition to this, it is with help of given method only, assistance to the export related activity of IKEA can be carried out. In the similar way, relationship marketing type of strategy can be used by the cited firm with an aim to provide the support to the franchising type of market entry strategy. The given tactic will allow enterprise in terms of building strong relationship with the buyers. By building such type of relationship, the improvement in the sales of that particular organization will be carried to whom which IKEA has given its franchise. The given tactic will provide assistance to the firm in terms of improving the sales and profitability related condition of organization in an effectual way (Marshment, 2009). Overall, it can be said that both assessed tactics are effective if it is being used in an appropriate manner.
Discussing the implementation of planned marketing activity in the new market with time line
The implementation of the planned marketing activity in new market such as India with time line is being discussed. In order to implement the marketing activities following steps identified that needs to be followed by the organization while entering into the Indian market. These are all discussed as below:
- Analyzing the Indian market environment: In the first step, manager of IKEA has to direct its its efforts in terms of the analyzing the market environment of India in an effectual way. In this regard, varied environment protection framework related guidelines can be used by the organization. By scanning the environment varied information regarding the marketing tactic used by the other firm Indian in the given market can be assembled by the cited firm in an effective way. In order to perform the given task around 2 months time will be needed by the corporation (Tsai and Men, 2012).
- Developing the marketing mix: In the second step manager of IKEA has to develop an effective marketing mix for its product while entering into the Indian market. The marketing mix consists of following elements such as product, price, place and promotion. In order to develop this marketing mix around 1 month time will be needed by the firm.
- Selecting the marketing objective and assessing the target market for the firm: In the next step manager of the organization has to direct its efforts in terms of setting the marketing objective for the company. With respect to the marketing, given objective can be set by IKEA such as attracting the large number customers within the period of 2 months. With an aim to attain the given objective, following strategies can be used by the firm such as placing ads in the social networking sites like Facebook and Twitter and placing ads in the televisions channels etc. with the help of given means large number of Indian customers can be informed about the presence of brand in the Indian market (Chong, Shafaghi and Tan, 2011). After setting the marketing objective, in the next phase IKEA should have assess the specific target market customers for the firm. In the process of taking all thees type of decision around 3 months time will be needed by firm.
- Finally implementing the marketing plan: Finally, in the last step efforts will be taken by manager of IKEA in terms of implementing the framed marketing plan in an effective manner. For this activity, around 2 months time will be needed by firm.
From the undertaken study it can be stated that prior to enter into Indian market IKEA brand need to accomplish a comprehensive analysis so that best strategies can be implemented by meeting the changing needs of customer's. In the competitive business-environment company need to develop prominent marketing strategies so that global challenges can be managed. By consistently evolving and enhancing the traits and abilities IKEA can effectively utilize all its resources and develop core competencies.
- Quelch, A. J., and et.al., 2005. Marketing Management: Text and Cases. McGraw-Hill/Irwin.
- Hollensen., 2009. Global Marketing. 4th ed. Pearson Education India.
- Buzzell, D. R., 2000. Multinational Marketing Management: Cases and Readings. Addison-Wesley.
- Keegan, J. W., 2006. Global Marketing. 3rd ed. Cram101 Incorporated.
- Glynn, S. M. and Woodside, G. A., 2012. Business-to-business Marketing Management: Strategies, Cases and Solutions. Emerald Group Publishing.