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IKEA Slowly Expands its U.S. Market

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IKEA Slowly Expands its U.S. Market

The Major Competitive Advantages of IKEA

IKEA’s primary competitive advantages entail its low price strategy and strong brand image. While the giant furniture manufacturer has various desirable aspects that attract customers, it is most known for its lower prices for furniture products. In this line, the company’s success is attributed to the low-cost structure that continuously enables it to register annual increases in sales revenue and profits. The low-cost structure also aids the organization to tailor its operations around its business model of frugality. Moreover, IKEA’s low prices strategy is instrumental for its survival amidst stiff competition and a weak global economy. While consumers are conscious of purchasing quality furniture, they are also keen on low prices.

Similarly, the company’s robust brand image is a major source of competitive advantage. While many people around the world have not visited IKEA’s stores, they recognize the firm’s blue and yellow logo as a depiction of stylish, state-of-the-art, fashionable furniture. For this reason, consumers fill the organization’s stores to have a taste of the “IKEA world.” Brand image is critical to the organization’s success because customers are more likely to purchase from a widely known company compared to an organization that is less known.

While the company’s competitive advantages are critical to its success, it should focus on providing customized products as it seeks to spread its operations in the U.S. furniture market. Compared to other global customers, U.S. clients are sophisticated in that they are not only conscious of price, but also keen on having furniture products that meet their tastes and preferences. This aspect is a major challenge for IKEA because most of its products have a uniform design to aid in assembling. Therefore, the company ought to tailor its products and operations to the desires of U.S. customers.

Main Factors for IKEA’s Growth and Popularity

IKEA’s growth and popularity have largely been driven by its value proposition strategy. The company offers stylish furniture items at prices that are affordable to a majority of the world’s population. However, in the U.S. market, image is more critical compared to value because people believe in having the most refined products. Consumers in the U.S. believe in the concept of the “best of the best” when purchasing home furniture and furnishings. For this reason, they are ready to pay high prices to acquire high-quality products.

Recommended Strategic Options for IKEA to Enter the U.S. Market

IKEA will have to alter its marketing approach, increase online shopping, and provide customized products to access the U.S. market successfully. Contrary to word of mouth and catalogs approach that the giant furniture manufacturer uses in its marketing model, U.S. consumers prefer television and internet commercials. Therefore, IKEA has to adopt marketing strategies that reach a large population of U.S. customers. Similarly, the firm should enhance its online shopping platform. U.S. clients desire convenience in their shopping experience and are more likely to order furniture items online than buying from brick-and-mortar stores. More important, the firm should allow product customization options to suit the preferences of U.S. consumers.

Speculation of the Future of IKEA’s Stores

There is a high likelihood that IKEA’s stores, especially in the U.S., will be full of customers if they adapt their product offerings to fit local tastes. U.S. consumers will prefer the giant furniture manufacturer’s items to local stores if they offer high-quality customized furniture at relatively low prices. Furthermore, the organization’s trade-off of services for low prices is not feasible in the long run since individuals are becoming busier in their schedules and will prefer the convenience for obtaining required services to low prices.

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