IKEA: A Strategic

Marketing Analysis You are expected to write up a case study into why an organisation of

your choice should undertake marketing planning using a recognised

framework. You are expected to analyse the current strategic marketing

planning process in the organisation and if there is a good relationship

between this and tactical planning.

Anthony Boyd ULSTER UNIVERSITY B00667777

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CONTENTS

Executive Summary Page 2

Introduction and Company Background Page 3

Philosophy behind Strategic Marketing

Planning

Page 4-5

Strategic Marketing Process Page 6-7

The Framework Page 8

Critical Appraisal of the Strategic Marketing

Plan

Page 8-10

Evaluation Page 10

References Page 11

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Phillip Kotler (2011) famously stated that “marketing takes a day to learn and a lifetime to

master.” At IKEA a strategic marketing plan has been implemented from day one through

‘the IKEA Concept’. The company has flourished by having a great relationship between

tactical and strategical goals. There are problems when it comes to implementing a

strategic marketing plan as will be outlined in this document; however when it is done with

the enthusiasm that is demonstrated by IKEA it will reap rewards that will far outweigh any

difficulty in implementing the plan. IKEA is about creating a better every day, that is the

mission and that is the starting point. If IKEA is to continue to grow in the long term then it is

essential that IKEA works within the limits of the planet. Instead of just reducing the harmful

impact of the business IKEA will go further. IKEA will make a positive difference for the

customers, the suppliers, and the planet. Without a successfully implemented strategic

marketing plan then this would all be talk but due to the fantastic marketing ethos

throughout the company they are now the world leader in home furnishings.

Executive Summary

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Every company periodically faces vital strategic marketing issues that can affect the

company for the foreseeable future. Sue Elms, head of Global Brands (2011) states that “the

secret to successful communication is about saying the right thing in the right way in the right

place and moment. However, the opportunities to do it right (and wrong) increase

dramatically in the more complex and individualistic world.” This statement reinforces the

importance of having a long-term strategic marketing plan that will aid the decision making

process in order to set out the right tactics to reach long-term strategic goals rather than

hinder the organisation

IKEA was founded in Almhult, Sweden in 1943 by 17 year old Ingvar Kamprad. The name IKEA

is taken from the initials of the founder (IK), the farm he was born on (Elmtayrd) and the area

he was from (Agunnaryd). The success of IKEA has been based upon ‘The IKEA Concept’

which is the idea of providing various home furnishing products that are affording to the

many and not just the few. They do this by combining ‘function, quality, design and value’

(The IKEA concept, 1983). The place Kamprad is from has a massive role in the IKEA Concept.

It is not a land of great wealth but it is known for having a hard-working and frugal populace.

Consumers are looking for ways to improve their lives but are often restricted by tight

budgets. IKEA pledges to create a “better everyday life for the many people” and aim to do

this by providing stylish, affordable furnishing and educating when it comes to helping the

environment and cutting energy usage.

Coming from humble beginnings, the company has flourished exponentially which is

shown by sales revenue of €28.7 billion in 2014, an increase of 5.9% on the previous year (IKEA

Group FY14 Yearly Summary, 2014). This is down to IKEA possessing a world renowned team of

marketers and advertisers which is showcased by recent awards listed below:

Advertiser of the Year at Cannes Lions International Festival of Creativity in 2011

Campaign of the Year 2014 – ‘The Wonderful Everyday’ campaign

Introduction and Company Background

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George Day (2008) perceived market-driven organisations as excelling in 3 distinct ways:

market sensing, customer linking and channel bonding. In relation to market sensing he

believes that opportunities and threats that can change the face of an organisation often

being as “weak signals from the periphery” of a business. The development of a strategic

marketing plan would build what Day (2008) describes as a “vigilant organisation” capable

of developing peripheral vision and a company attuned to the changes in the environment.

Kotler and Keller (2011) lay out the three core competencies behind Strategic Marketing

Planning which aids clarification of the organisations value proposition:

1. Source of competitive advantage

2. Has application in a variety of markets

3. Is difficult for competitors to imitate

Therefore IKEA’s core competency is their focus on creating great quality, affordable

furniture. These 3 core competencies allow the company to separate themselves from the

rest of the market by creating a unique selling point which combats a potential problem of

an organization struggling to find its identity in the market.

Having a poorly developed and poorly implemented approach to planning has mass

implications for an organisation as articulated by Michael de Kare-Silver (1997) who stated

that many companies have lost “the art of strategy making” and do not give enough time to

planning their future. He cites the results of a survey of 100 chief executives of the top 100

companies based in the United Kingdom and USA in which only 14 CEOs put strategy at the

top of their list of priorities. Piercy (2002, p. 586) states that the strategic marketing planning

process is comprised of 3 dimensions:

1. An analytical dimension – techniques, procedures, systems and planning models

2. A behavioural dimension – the nature and extent of participation, motivation and

commitment from the management team

3. An organisational dimension – concerned with information flows, structures,

processes, management style and culture.

The Philosophy behind Strategic Marketing Planning

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The effectiveness of the planning process hinges on the how these three dimensions are

managed. Gilligan and Wilson (2012) articulate this by stating “Where there is a culture in

which there is little openness, creativity or involvement from staff across marketing and other

parts of the business, the value of any analysis and planning is likely to be reduced

dramatically. Equally, if the organisational dimension inhibits information flows and/or an

emphasis upon implementation, again the value of the planning process and the plan is

reduced.”

Professor Malcolm McDonald (1989) identified 10 barriers to strategic market

planning:

1. Confusion between tactics and strategy.

2. Isolating the marketing function from operations.

3. Confusion between the marketing function and the marketing concept.

4. Organisational barriers.

5. Lack of in-depth analysis.

6. Confusion between process and output.

7. Lack of knowledge and skills

8. Lack of a systematic approach to marketing planning.

9. Failure to prioritise objectives.

10. Hostile corporate cultures.

However the benefits to strategic marketing planning make overcoming these barriers worth

it. One of these barriers is that strategic marketing planning encourages managers to think

ahead and creates the scenario whereas as the environment develops; identification of

opportunities and threats becomes simpler. In addition to this, the planning process allows

managers to think in detail about organisational capabilities, priorities, objectives and

policies. The objectives that emerge from this will then provide the basis for the development

of performance standards and effective organisational control, if they are realistically

developed. Plan augmentation should lead to a better co-ordination of company efforts

and better utilisation of assets. Ultimately, strategic marketing planning leads to the

management being better prepared for any unexpected developments. (Gilligan and

Wilson, 2012.)

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A strategic marketing plan operates at two levels: strategic and tactical. Tactical planning is

set and altered on a monthly basis which allows operational objectives to be met. It is here

that the marketing audit and marketing mix are prominent. They work in order to reach long

term strategic goals which are set in accordance with environmental analysis based on the

market orientation of the business. Without this the business will lack direction however there

is no one size fits all plan and will be different depending on the current situation of the

company.

Kotler and Keller (2011) states that corporate level management undertake 4 planning

activities:

1. Defining the corporate mission – an organisation exists for a purpose. IKEA’s purpose is

to create affordable, stylish furnishing but also with a strong emphasis on corporate

responsibility with the goal of educating customers into making better lifestyle

courses. Kotler and Keller (2011) emphasise the importance of mission statements

stating that they have 5 major characteristics

a. They focus on a limited number of goals

b. They stress the company’s major policies and values

c. They define the major competitive areas within the company will operate

d. They take a long term view

e. They are as short, memorable and meaningful as possible

IKEA’s mission statement is as follows “creating a better every-day” which directly

adheres to 4 of the 5 characteristics with the exception of the 3rd one however this is

addressed in their vision which is “At IKEA our vision is to create a better everyday life

for the many people. Our business idea supports this vision by offering 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.”

2. Establishing strategic business units – an SBU is based upon the level of operation as a

single business; the number of competitors to the SBU and the management and

organisational structure responsible for the SBU.

3. Assigning resources to each strategic business unit

4. Assessing growth opportunities

These planning activities have a knock on effect for the rest of the business and allow the

marketers more control and a greater sense of co-operation within the rest of the business.

The Strategic Marketing Process

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However Pirecy (2002, pp. 583-585) states that “in reality…the planning process is often

managed relatively badly” which is not the case at IKEA with this issue being particularly

addressed on p.10 under ‘Control’.

There are 3 commonly accepted formats for the marketing process (Kotler and Keller, 2011)

with each formats relevance being dependent on the size, nature and complexity of an

organisation. For example an organisation such as IKEA would be more likely to utilise the

more complex Christopher & Doyle (1995) model due to the emphasis it places on forecasts

and budgets particularly because IKEA pride themselves upon the affordable price of their

products.

Models of Strategic Planning

Kotler & Keller (2013) Doyle & Stern (2006) Christopher & McDonald

(1995)

Situational Analysis Background Situation Mission Statement

Market Growth Analysis Marketing Objectives Financial Summary

Marketing Strategy Marketing Strategy Market Overview

Financial Marketing Mix SWOT Analysis

Control Action Plan Assumptions

Budget Marketing Objectives and

Strategies

Organisational Implications Programmes (with forecasts

and budgets)

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The aforementioned is one of the most recognisable Strategic Marketing Planning

frameworks available to an organisation. It is a model utilised by some of the biggest names

in business such as Microsoft. With Phillip Kotler [no date] stating “SOSTAC® is a system for

going through the steps and building a marketing plan”. It was developed by PR Smith. It

involves 6 key steps

1. Situation - Where are we now?: this section involves a marketing and financial audit;

analysis of the macro and micro environment; SWOT analysis and summary of

opportunity

2. Objectives - Where do we want to be?

3. Strategy - How do we get there?: Segmentation, targeting and positioning

4. Tactics - How exactly do we get there?: Marketing mix; details of contact strategy

5. Action - Who does what and when?: Responsibilities and Structures

6. Control - How do we know we’ve arrived?: Key Performance Indicators

One hindrance this can bring to an organisation is finding the time and resources to

implement it which will be a point made by those with in an organisation who are set in their

ways due to a general conservative mind-set which comes under “hostile corporate culture”

(McDonald, 1989.)

Kotler and Keller (2011) describe IKEA as master marketers and they do follow a set marketing

framework in accordance with SOSTAC. This is known because Paul Smith gave an interview

in April 2015 to the Financial Times stating this. Therefore appraisal of the application of their

marketing plan will be carried out by divulging how well they implemented and followed the

SOSTAC framework.

The Framework

Critical Appraisal and Application of Strategic Marketing Planning

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Situation analysis: This is where IKEA would utilise a SWOT report. Through completion

of a SWOT report IKEA discovered that there was an opportunity to recreate the

brand image as being eco-friendly in order to be at the forefront of the consumers

mind when they think of an environmentally friendly brand which has great

importance in the growing eco-aware societies throughout the world. Along with

selling eco-friendly furniture IKEA pledged to only sell energy-saving light bulbs by

September 2015 (Vaughan, 2015)in order to aid this brand repositioning.

Objectives and Strategy: IKEA traditionally segmented their market to look particularly

at young families and new home owners who would be interested in style but would

also have cost at the forefront of their thinking. However at the turn of the century

there was a new focus on sustainability so IKEA had to move with the times so now

those who are interested in eco-friendliness are also targeted by IKEA. IKEA’s long

term strategic direction is best summed up in below table:

These are long term strategic objectives which can only be reached if they meet their

annual tactical goals that include “Share of customers that view IKEA as a company that

takes social and environmental responsibility” and “Share of wood used in IKEA products

from more sustainable sources” (IKEA Group Sustainability Report, 2014). This highlights great

implementation of a strategic marketing plan with management and all other staff working

in tandem to reach these goals and to make sure they don’t fall foul of setting targets that

prove to be unreachable which can potentially undermine the marketing effort.

Tactics and Actions: the previous paragraph touched on how the tactics are

formulated in order to reach strategic objectives. Evidence of IKEA putting this into

action is found in the statistics released in the IKEA Group Sustainability Report (2014).

Figure 1: IKEA Group Sustainability Report, 2014

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IKEA get 41% of their wood from sustainable sources. The IKEA catalogue is the largest

print publication ever to be printed on 100% Forest Stewardship Council certified

paper. They halved the price of their most popular energy efficient LED bulbs and

increased the sales in products that they say will lead to a more sustainable life at

home by 58%. This shows the evidence of the tactics being utilised in order to create

an eco-friendly image throughout the organisation.

Control: Evidence of control is also found in the IKEA Group Sustainability Report and

particularly in the below table:

IKEA are a perfect example of how to utilise KPIs in order to set a time schedule for the

strategic marketing plan. Each area has specific targets set for 2020 which gives the

organisation a direction and combats against threats from other competitors who are also

striving to be eco-friendly.

Figure 2: IKEA Group Sustainability Report KPIs (2014)

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IKEAs utilisation of a strategic marketing plan has allowed them to consolidate and grow their

market share. In the mid-2000s there was a gap in the market for an eco-friendly furniture

supplier as emphasis was placed on “saving the rainforests”. IKEA has successfully

repositioned themselves as an eco-conscious brand but this could not have been done

without the implementation of a strategic marketing plan which they were able to do

throughout all aspects of the business. The plan allowed them to grow during the economic

turmoil and reaffirm their grasp on the home-furnishing market.

Evaluation

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Reference List

Day, G. S. (2008) Market driven organization. Available at: http://www.amazon.co.uk/Market-Driven-

Organization-George-Day/dp/1416584617 (Accessed: 30 October 2015).

Christopher & Doyle (1995) cited in Kotler, P. and Keller, K. L. (2011) Marketing management. 14th edn. Harlow:

Pearson Education.

De Kare-Silver, M. (1997) Strategy in crisis: Why business urgently needs a completely new approach.

Houndmills, Basingstoke: Palgrave Macmillan.

Doyle and Stern (2006) cited in Kotler, P. and Keller, K. L. (2011) Marketing management. 14th edn. Harlow:

Pearson Education

Elms, S. (2011) Integrated Planning: Cloud Thinking. Available at:

http://www.warc.com/Content/ContentViewer.aspx?MasterContentRef=95df4987-0bb9-41f5-a636-

0fd886c5b80a&q=%E2%80%9Cthe+secret+to+successful+communication+is+about+saying+the+right+thing+in

+the+right+way+in+the+right+place+and+moment.+However%2c+the+opportunities+to+do+it+right+(and+wrong)

+increase+dramatically+in+the+more+complex+and+individualistic+world&CID=A93663&PUB=ADMAP

(Accessed: 30 October 2015).

Gilligan, C. and Wilson, R. M. S. (2012) Strategic marketing planning. Routledge.

IKEA Group FY14 Yearly Summary (2014) Available at:

http://www.ikea.com/ms/en_US/pdf/yearly_summary/ikea-group-yearly-summary-fy14.pdf (Accessed: 27 October

2015).

IKEA Group Sustainability Report (2014) Available at:

http://www.ikea.com/ms/en_US/pdf/sustainability_report/sustainability_report_2014.pdf (Accessed: 29 October

2015).

Kotler, P. (no date) cited in Smith, PR. (2013) SOSTAC® planning. Available at: http://prsmith.org/sostac/

(Accessed: 30 October 2015)

Kotler, P. and Keller, K. L. (2011) Marketing management. 14th edn. Harlow: Pearson Education.

McDonald, M. H. B. (1989) ‘Ten barriers to marketing planning’,Journal of Marketing Management, 5(1), pp. 1–

18. doi: 10.1080/0267257x.1989.9964084.

Piercy, N. F. (2002) Market-led strategic change: Transforming the process of going to market. 3rd edn. Oxford:

Elsevier Butterworth-Heinemann.

Smith, PR. (2013) SOSTAC® planning. Available at: http://prsmith.org/sostac/ (Accessed: 30 October 2015).

The IKEA concept (1983) Available at: http://www.ikea.com/ms/en_GB/this-is-ikea/the-ikea-concept/index.html

(Accessed: 27 October 2015).

Vaughan, A. (2015) ‘Ikea to sell only energy-saving LED lightbulbs’,The Guardian, .