CASE - IKEA's Household Appeal

No matter where you live, no matter what kind of household you live in-married with children, same- sex couple, single or single parent, or just roommates-IKEA wants to be "your partner in better living." The Swedish retailer rings up $33 billion in sales through 284 stores in 26 countries, offering stylishly-designed furniture and quality housewares at affordable prices.

In fact, IKEA continues to lower prices year by year on popular items so it can both attract new customers and stimulate repeat business, even among consumers whose household incomes are stalled or falling. Offering a range of good-better-best products widens the store's appeal to consumers setting up new households, families getting ready for new babies, families where children regularly travel from one parent's household to another, and households that are buying on a limited budget. Also, consumers who might have bought IKEA's top-of-the-line items before the recession now have more choices if they're trading down to less-expensive products.

Shopping at IKEA is deliberately family-friendly: Many of its stores feature a play area where youngsters can be dropped off while one or two parents browse the store for adult or children's furniture and make their purchases without their children along.

The stores also are equipped with restaurants that serve Swedish-style foods for breakfast, lunch, and dinner, equipped with high chairs for the youngest shoppers. When the IKEA store in Wednesbury, England added a children's play area and expanded the restaurant, it saw an immediate sales increase and found that the length of the average customer visit had doubled, to about four hours.

Yet not every family member looks forward to an IKEA shopping trip. For Father's Day weekend in Australia, the IKEA store in Sydney set up a temporary Manland, a room where men could watch sports programming and play video games while their wives or girlfriends shopped. "Manland is the perfect solution for both the blokes who find shopping a chore and the ladies who are forced to drag their partners around," said IKEA's PR manager in Australia.

Although targeting singles and couples with advertising that appeals to their needs and wants is nothing new, IKEA was among the pioneers of mainstream advertisers to target gay couples. Its TV commercial showing two men shopping for furniture together caused a stir in part because the men were depicted as a committed couple.

A recent-and controversial-billboard for IKEA in Italy features two men holding hands (and a shopping bag) under the headline: "We are open to all families." The ad goes on to say: "With us, you will feel at home. What we want to do is make life easier for everyone, every family, whoever they are."

IKEA's word-of-mouth reputation for quality and value gives the company an advantage in expanding to new markets. Before the first IKEA store opened in Bangkok, the marketing manager acknowledged the presence of competition but also noted that many locals "have travelled abroad or learned from friends about IKEA furniture."

In advance of this store opening, IKEA distributed one million copies of a special 16-page catalog featuring items chosen specifically for the Thai market. So many consumers worldwide use the full 370-page IKEA catalog for ideas as well as shopping that IKEA prints more than 200 million copies each year and makes the catalog available online and via an app.

consumers who use Facebook were recently invited to create a 3D IKEA bedroom on YouTube and click on items from the company's catalog to furnish it as they wish. IKEA adds the finishing touch by hanging photos from each user's Facebook wall in the bedroom. "We want to be the experts in truly understanding peoples' needs, wants, and dreams to help them live a happier life at home," explains an executive. Of course, any merchandise chosen for the virtual bedroom can be easily ordered for delivery in the real world.i

Case Questions

1) The Manland experiment lasted only one weekend in one store. What are the marketing advantages and disadvantages of expanding it to other stores? Do you think IKEA should do more with this idea? Why or why not?

2) Would you classify IKEA's products as suitable for conspicuous consumption, voluntary simplicity, and/or compensatory consumption? Explain your answer.

3) IKEA's ads targeting gay couples have drawn criticism as well as acclaim. What effect do you think such controversy has on the retailer's image and appeal?

4) Why would IKEA continue to print millions of catalogs every year, while other retailers are eliminating printed catalogs in favor of online and in-store shopping?