The IKEA Phenomenon

In 1943 a young entrepreneur Ingvar Kamprad opened his first shop after receiving some money from his father for good grades in school. Being 17 at the time, he had already had a selling experience, a few years earlier he had discovered the basic principle of business by distributing matches around his neighborhood.  He found out he could buy large amounts of matches in Stockholm at a lower price and resell them for a good price and still keep a fine profit. Initially he was selling random products at his store and in 1948 he added locally produced furniture. The business started to go very well and in 1951 he started the distribution of the IKEA mail-order catalogue. In 1956 he spotted he could save money and space by adding the option of home-assembly. In 1958 Kamprad opened his first furniture dedicated store. From that point everything was going pretty quickly: 1963 - first store outside of Sweden (in Norway), 1973 - first store outside of Scandinavia (Switzerland), 1975 - Australia and Hongkong, reaching Poland in 1991, China in 1998; over 300 stores in 44 countries in 2011. Ingvar Kamprad, now in his eighties, was placed that year as 11th wealthiest person in the world with a fortune estimated at $23 billion. What's interesting, Poland is the second supplier of IKEA stores around the world, right behind China. What made Swedish company so successful?

Typical IKEA shop

Design: Plain and simple

IKEA furniture resemble the Scandinavian way of design: they're simple, minimalistic, functional and beautiful, but still affordable for masses, everyday objects. Most of them use low cost materials (mainly plastic) and form-pressed wood which helps to keep the price low.

There's no better example of IKEA style than "Lack" table.

Stores: Friendly for customers

Starting with his first store, Ingvar wanted to take care of his customers. He invented in-store restaurants and play area (Småland) to leave kids while parents could easily go shopping. This made his store a very friendly place for families. Customers didn't leave his shop exhausted, which made them willing to come back. After some time, food served in IKEA has become iconic in the same way as any other product in the store - by being simple and tasty, famous Köttbullar or cheap Hot-Dogs for many were convincing enough to visit the furniture store only to eat something.

One of IKEA bestsellers in Poland

Prices: Low

By keeping his prices low  (prices in the catalogue were guaranteed for a year after its release)IKEA  quickly earned the name of an affordable furniture shop, combined with its characteristic design and iconic durability: IKEA’s products sold well.

The IKEA Effect

Recently published studies have revealed people have a tendency to overrate products which involved their work. That is, if a person had put some effort into assembling a table, even from prepared elements, he would value it more than an identical table made by a factory. Even making a pie out of prepared mixed ingredients by just adding some eggs would make that pie much more attractive (and tasty) than buying the same product prepared for us by someone else.

Advertising: Clever, honest and non intrusive

Everyone knows the IKEA catalogue, in Sweden the day of its release is an annual event as significant as  national holidays and many Swedes have a sticker on their letterboxes saying "No advertising - thank you, but the IKEA catalogue with pleasure". Even the last controversy concerning the removal of  women from the Middle-East version of the catalogue got huge publicity.

Typical commercials are also simple and clever, I am sure everyone still remembers their TV ads:

Or recent series "Ty tu urządzisz".

Other important aspect of advertising is the product presentation in the store, the same product is presented in different arrangements. All without screaming titles and crazy descriptions.

Tradition

The company used its Swedish origin to  build its image and help to gain trust among customers. Using single Scandinavian words to name  its products didn't always work out as expected due to their unfortunate connotations, for example:

• a"Jerker" desk
• "Fukta" plant spray
• a"Fartfull" workbench

Unexpectedly for IKEA this product quickly gained attention in USA without any advertising.

Questions:

1. What do you think of IKEA products, their design and prices?

2. Do you happen to shop in IKEA or prefer other places? Why?

Sources:

http://en.wikipedia.org/wiki/IKEA

http://en.wikipedia.org/wiki/Scandinavian_design

http://www.viennareview.net/on-the-town/on-display/the-sun-never-sets-on-ikea

http://thestar.com.my/lifestyle/story.asp?file=/2012/8/27/lifeliving/11910125&sec=lifeliving

https://ktwop.wordpress.com/2010/08/28/the-ikea-phenomenon/

http://hbr.org/web/2009/hbr-list/ikea-effect-when-labor-leads-to-love

http://www.foture.net/blog/2012/04/24/huge-changes-for-ikea-customers/ - pic1

http://www.ikea.com/us/en/catalog/products/40104270/ - pic2

http://natemat.pl/34051,k-ttbullar-polacy-stoja-w-kolejkach-po-klopsiki-z-ikei-maklowicz-nie-sa-smaczne-ale-niedobre-tez-nie-pic3

http://www.dreamcubes.com/b2/anything-else/16/ive-join-the-jerker-gang/ - pic4