IKEA Marketing Channel Audit Report Assignment (Essay Sample)

CHANNEL AUDIT REPORT FOR IKEA
Prepared by: _______________________
Marketing Channel Management:
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-889020955000Executive Summary
IKEA has been operating in the local and global market successfully despite encountering numerous challenges. Its business core values has kept it going as the organization’s philosophical stand of “inclusivity is the key” being its major strategic pathway. The organization believes in the uniqueness of each market and that the streamlining of their distinct needs enhances the company’s diversity in the design of their products. The IKEA’s products have reached almost every market in the UK, U.S.A and other regions across the world with their segmentation strategy offering opportunities of possessing quality furniture among people of different age, sex, occupation and social class.
IKEA is a company that manufactures a variety of home appliances, furniture and related accessories. These products range from outdoor furniture, desks, mirror, baby and children products, eating-wares and many more related products. Its penetration into various markets and overtaking some furniture producing companies is bas on its resource capability, strategic marketing and a robust supply chain system. Although IKEA has earned credit on its consistent improvement in quality, pricing of their items and location of their stores have raised concerns in some international markets.
Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc483368592 \h 21.0.Business Description PAGEREF _Toc483368593 \h 41.1.About IKEA PAGEREF _Toc483368594 \h 41.2.Products Offered by IKEA PAGEREF _Toc483368595 \h 41.3.The key strategies for IKEA PAGEREF _Toc483368596 \h 61.4.IKEA Strategic Capabilities PAGEREF _Toc483368597 \h 62.0.Defining Organizational Channel Environment PAGEREF _Toc483368598 \h 62.1.Government PAGEREF _Toc483368599 \h 62.2.Competition PAGEREF _Toc483368600 \h 72.3.Markets PAGEREF _Toc483368601 \h 82.4.Technologies PAGEREF _Toc483368602 \h 93.0.Profile of Organization’s Channel PAGEREF _Toc483368603 \h 93.1.Market Segmentation PAGEREF _Toc483368604 \h 93.2.IKEA Channel Structure PAGEREF _Toc483368605 \h 113.3.Channel Intensity PAGEREF _Toc483368606 \h 124.0.Channel Member Behaviour and Coordinating Mechanism PAGEREF _Toc483368607 \h 124.1.Channel Conflict PAGEREF _Toc483368608 \h 124.2.Channel Cooperation PAGEREF _Toc483368609 \h 134.3.Channel Control PAGEREF _Toc483368610 \h 135.0.Assessment of Channel Performance PAGEREF _Toc483368611 \h 146.0.Problems and Prospects PAGEREF _Toc483368612 \h 157.0.Recommendations PAGEREF _Toc483368613 \h 158.0.Implementation PAGEREF _Toc483368614 \h 16Appendix A PAGEREF _Toc483368615 \h 17Appendix B PAGEREF _Toc483368616 \h 17Reference List PAGEREF _Toc483368617 \h 18
1 Business Description
1 About IKEA
IKEA is a furniture-producing company that operates in over 50 countries across the globe. The company was founded by Igvar Kamprad whose name initials were behind the formation of the name “IKEA”. The company’s logo has changed over time but the earliest design still features in the latest one. Importantly, behind its growth is the concept of combing function, quality, value and design in its business model. The company has been able to instil the culture of delivering quality and maximizing customer’s value. All its stores and franchises replicate the productive model, thus exhibiting continuous growth and extensive brand recognition. In addition, the success of these IKEA stores in various countries have been driven by the extent of coordination and the efficiency of the distribution channel.
IKEA has made a huge milestone since it was founded by Igvar Kamprad. The first IKEA was established in 1943 but it majorly dealt in selling merchandise and not furniture. The inclusion of furniture saw its way in the 1948 but as a general supplement to the growth of the business. The founder was consistent in in protecting his concept until 1980 when he opted to expand and operate at international level. One of the strategic move that he made was establishing relationship with other huge retail companies to franchise their product. In 1993, the inter-IKEA groups had already been formed and the inter-IKEA holding becomes their parent company. By the new millennia, the company had already opened many operational branches. In 2012, the Inter IKEA Systems B.V acquired the IKEA trademark so as to simplify the ownership of the IKEA trademark.
2 Products Offered by IKEA
Products by Categories

Baby Products
* Baby textile
* Baby tableware
* Changing table and nursing
* Children’s bed
* Children’s lighting
* Junior chairs
* Toy storage
* Cribs
* Toys made from furniture

Outdoor Furniture
* Outdoor cushions
* Outdoor flooring
* Grills
* Umbrella and wind shields
* Relaxing furniture
* Outdoor textile
* Lounging furniture

Beds and Mattresses
* Headboards
* Beds with storage
* Single beds
* Sleeper sofa
* King and Queen beds
* Spring mattresses
* Pillows
* Loft beds

Cooking appliances
* Dish-Washing accessories
* Ovenware
* Food storage
* Kitchen textile
* Kitchen furniture
* Frying pans
* Utensils

Kitchen cabinet and appliances
* Dish-cleaners
* Modular kitchen
* Ovens
* Wall storage
* Cook-tops
* Countertops
* Kitchen faucets

Home and storage furniture
* Sofa
* Armchairs
* Sectionals
* Shelf unit
* Living room storage system
* Cabinets
* Media furniture

The items in the table above are just a few examples of products that IKEA produces. These products are designed and developed based on the IKEA concept. That is, the function, quality, value and design are paradigm is used to manufacture an item. Further, the function of their products are based on the intended market segment. For instance, the children desk is made to help the child do homework or other creative activities. On the other hand, desks for adults is meant for office or structural uses. Moreover, the value of a product is measured by the degree of satisfaction it achieves in various market segment. The following are specific features of IKEA products:
* Customer-centric in that they are tailored for specific markets
* Competitive prices although they are very expensive in some markets
* They are of good quality since the company uses quality raw materials that ensure durability.
* They are stylish due to customized design.
* The products are sustainable because their manufacturing do not affect the environment negatively. In fact IKEA records a reputation on its CSR concerns.
3 The key strategies for IKEA
Expansion in Major other Cities: The company operates in many countries but it still has the capacity to invade the emerging markets in Africa, Asia and Middle East. This will ensure that its products gain its competiveness in potential marketing the mentioned regions.
Focusing on Metropolitan areas: The Company has had complaints especially in the UK market where the stores have been located remotely far away from the customers. It would be profitable if new stores are established close to customers.
Improving Customer Care Services: Despite gaining brand recognition and popularity in various market, IKEA’s customers complain over the ineffectiveness of the customer care (Smithers, 2014). The customers care system should be restructured to ensure that customer complaints are captured and responded to promptly.
4 IKEA Strategic Capabilities
Strengths

Weaknesses

* One stop shopping feature
* Cheap prices
* Brand reputation and recognition
* Friendly store layout
* Robust distribution channel
* Efficient global sourcing capabilities
* Strong public relations

* Store layout and location. Some people hassle to get items from some IKEA stores.
* The after sale services are not appealing to some customers.
* Insufficient and unappealing advertising
* Few stores in some countries.

2 Defining Organizational Channel Environment
5 Government
The government regulations through legislation and policies have influenced the distribution channel of IKEA. Apparently, the primary concern while operating a furniture company is the issue of sustainability. The legal environment in all the markets that IKEA serves have instituted policies that ensure the protection of environment. The Chief Sustainability Officer of IKEA, Steve Howard, acknowledge the Paris agreement that will see renewable energy sources are used in their operations to enhance sustainability. The political environment has necessitated the need for effective waste management and other green projects. Furthermore, the sustain ability issues has also been extended to the safety of children and users of their products and the preservation of forests.
6 Competition
The following presents the top competitors of the IKEA in the global market:
22288502598420Source: MUJIKEA. Competitive framework: IKEA https://mujikea.wordpress.com/2014/11/17/competitive-framework-ikea/00Source: MUJIKEA. Competitive framework: IKEA https://mujikea.wordpress.com/2014/11/17/competitive-framework-ikea/2628900236220Product Category Competition0Product Category Competition
Firstly, IKEA faces competition from the world leading online retailers, such as Walmart, Target, Ebay, Amazon, Home Depot and Costoc. Regarding the product category competition, the competitors are using various strategic approaches to gain competitive advantage over IKEA. The summary of how a few competitors compete with IKEA brands are as follows:
* BUT’s locate their stores mainly in ...