Executive Summary

In this project we have discussed the business idea regarding the establishment of IKEA
Bangladesh. We have analyzed the market through various data, survey and research and
described the market opportunity of IKEA in Bangladeshi market segment. We have also
discussed value proposition of IKEA furniture to describe how they position the brand into the
consumer mind by differentiated it with other brands.
In this project we have analyzed Bangladesh country profile by assessing both micro and macro
environment along with SWOT analysis which basically shows how IKEA can establish itself as
market leader in the furniture industry.
We have discussed several marketing objectives along with strategic plans like how they position
their brand, how they establish their brand, how they prices the products and how they acquire
customers and manage their logistics and supply chain management. We have also covered the
strategy they follow for distributing their products in the Bangladeshi market segment.
In the later part we have discussed how they implement their strategy through marketing mix and
how they evaluate their performance and control if necessary.

Introduction:
Problem and Solution:
In Bangladesh, there are many furniture brands across all over the country. Although local
furniture producers are doing great in this industry but the need for a world class furniture brand
to enter in this market to satisfy the needs and demands of every upper class and middle class
families is on the rise. People of Bangladesh are not satisfied with the local furniture
manufacturers rather than they want to use and explore the foreign world class brands so thus by
using their furniture they can increase their social status, style and elegance. So, IKEA will play
a vital role to solve this problem by providing world class furniture in reasonable price with the
facilities of online marketing. Moreover, IKEA will also make the consumers purchasing
decision more easy by providing them the convenient access of choosing their best suited
furniture through augmented reality.

Problems with consumers:

Some people of Bangladesh still didn’t feel comfortable to make their purchase decision through
e-commerce, mobile commerce or social commerce, especially the baby boomers and generation
X fall into this category. Thus, it will be difficult to grab such consumers’ attention through
augmented reality.

Solution:
To grab the attention of baby boomers and generation X of Bangladesh, IKEA would design
TVCs using emotional appeal that especially target those consumers attention. Moreover, they
will also introduce VR system on their every physical stores so that whenever those type of late
adopters of technology visit their store they can convince and demonstrate those customers that
how they can be privileged through the use of virtual reality or augmented reality.

Business Idea
IKEA is a multinational group founded in Sweden in 1943 that sells and designs ready-to-
assemble furniture, kitchen appliances and other useful goods and home accessories. Since 2008,
it has been the world’s largest furniture retailer. It has many stores across the world.

The company is known for its various types of appliances and furniture along with modern
designs and styles. An eco-friendly simplicity is often associated with their interior design. For its
attention to cost control, operational details, and continuous product development, IKEA is very
much renowned in the world.

There are 424 IKEA stores operating in 52 different countries as of 2018. The IKEA website is
the closest representation of the entire IKEA range containing at least 12,000 products. From
September 2015 to August 2016 there were over 2.1 billion visitors to IKEA's websites in the
year. The company consumes at least 1% of world commercial-product wood consumption, thus
making it one of the largest users of wood in the furniture industry.

According to our plan for the project, IKEA Bangladesh is a retail store which will be located in
Gulshan; Dhaka, Bangladesh from IKEA as a result of their global expansion especially in South
Asia. It will sell various kinds of furniture, kitchen appliances and home accessories. According
to the Bangladeshi furniture market it directly competes with other renowned Bangladeshi
furniture brands like Hatil, Partex, Otobi, Brothers Furniture etc. It would have ambition to
become the market leader of this furniture market segment of Bangladesh.

The showroom will be very big and situated between a very posh areas of Gulshan. IKEA
Bangladesh basically targets the upper class and upper middle class families of Bangladesh. For
covering the mass market it would have also develop various furniture segments for targeting
different types of customers on the basis of their income and social status like upper class,
middle class and upper middle class. The prices and qualities would sometime vary for different
types of customer segments. They would be totally depended on their trustworthy suppliers who
are supplying for them for many years with their raw materials and have an especial quality
management team which ensures the top quality of raw materials and other things so that they
can produce top quality furniture.

IKEA would use bricks and clicks strategy that is basically along with the physical store they
will also have their online website. Thus, IKEA would be fall in the enterprise level revenue
model through conducting e-commerce and social commerce activities. Moreover, they will also
do content sponsorship.

Market Opportunity
Bangladesh is a developing country. The economy of this country has been booming for a
decade. The GDP growth rate exceeds at least 7 percent average a year and the country has been
experiencing economic monsoon throughout the year. In the customer and consumer market
segment concern, the upper class along with upper middle class and middle class has been
booming over a decade. These people prefer world class brands; along with local quality
products and they want quality without compromising the style and designs. So IKEA has a great
potential in this Bangladeshi market segment. They have segmented the market based on various
demographic and economic basis. In demography segment they basically target the upper, upper
middle class young couples and middle aged women those have great interest on furniture
especially when they are about to begin their new life with life partner or middle aged women
those are actually want to replace the old furniture and replace with quality, stylish and better
furniture.
Key Value Proposition

A business or marketing statement that a company uses to explain why a consumer should buy a
product or use a service refers value preposition. This statement convinces a potential consumer
that their product or service can add more value or better solve a problem than other similar
offerings can. To target customers who will benefit most from using the company's products;
companies use this statement.

IKEA BANGLADESH delivers value as a player of low-price and provider of experience. For
many people around the world it creates “a better everyday life “by– providing functional and
stylish home furnishings with a high level of quality, sustainability, at very low prices and
customer engagement. IKEA BANGLADESH delivers its value proposition by excelling four
differentiating capabilities such as; they have deep understanding of how customers live at home.
IKEA Bangladesh applies this deep knowledge and transform this insight into a variety of
design, production, and retail practices. Another major differentiated capability is that IKEA
Bangladesh is very much Price-conscious and stylish product design especially in the
Bangladesh market segment so thus they integrates customer engagement, supply chain
efficiency, and price considerations into the design process itself. We also call it mass
customization. Another differentiated capabilities is their efficient, scalable, and sustainable
operations: IKEA has developed its own distinctive operational capability integrating supply
chain, manufacturing, and retail practice. And the last one differentiator is that their customer-
focused retail design: IKEA knows how to create an open-warehouse environments that provide
engagement, inspiration, and a distinctive “day out” shopping experience where Bangladeshi
people can comfortably spend time choosing the things they live with every day.

Analysis

Macro Environment

PESTLE Analysis

Political Factors: Country like Bangladesh where political violence, strike, and conflict can
happen any time give rise to the problems for any business activities to operate. In this country
sometimes political turmoil become so high that company face severe problems to get their raw
materials at the right time. Similarly, this would be a big issue for IKEA to conduct business
activities here.

Economic Factors: Economic condition is day by day developing in Bangladesh but still its per
capita income is comparatively low compare to other developing countries like India. Therefore,
it is a huge advantage for IKEA as they are offering their products with comparatively
reasonable price. Mostly the medium income people will go for IKEA.

Socio-cultural Factors: The people of Bangladesh are now at the stage of huge cultural change.
From the traditional way of living they are day by day adopting to the modern and digital way of
living their lives. Not only the teen agers, many aged people are also using different social media
and want to ease their lifestyle by having the facilities of convenient online shopping. Thus,
IKEA would open a door for this type of consumer as they not only can shop from online but
also can choose and match their product according to their space for furniture through the help of
augmented reality. However, problem will arise for some of the baby boomers and generation X
who still not feel comfortable with this type of shopping but as IKEA would also have their
physical store this problem may not be the big concern.

Technological Factors: Bangladeshi people are getting digitalized day by day because they are
day by day becoming well adopter of technology. The internet penetration rate is also increasing
and use of social media is also on the rise. Moreover, people are more habituated to use mobile
phones, tabs, laptops these days and Bangladeshi people also adapted this change dramatically.
Thus, the concept of mobile marketing is also developing in Bangladesh. Therefore, IKEA
would be greatly benefited as they will conduct different digital campaign and use different
digital media to reach the consumers such as they would develop a mobile app, through which
consumers can browse their furniture, see the prices, options, designs, quality and also through
the help of augmented reality they can get the idea from anywhere that how the furniture will be
suited according to their space.

Legal Factors: There is a big issue created whenever IKEA wants to enter into a new country
due to the changing laws and regulation of that country’s government. Same goes for
Bangladesh, especially the tax policy may be a concern for IKEA.

Environmental Factors: Bangladesh is a natural disaster prone country. Almost every year
different natural disaster hit the country which drastically affected the supply chain activities of
any business. Thus, it will create a big concern for IKEA to run its business as for these natural
disasters their raw materials may not arrived at the right time.

Micro Environment

Suppliers: IKEA has a long lasting relationship with their suppliers because they usually buy in
large amount of quantities. Instead of buying few amounts buying in bulk quantities together is
cheaper for IKEA and it also created large privileges for suppliers. The suppliers don’t bother
about the large amount of quantities of inventory which are taking up space in their warehouses
because they are aware that IKEA can handle the inventory by selling it to the millions of
customers. When IKEA will start to operate in Bangladesh, these trustworthy suppliers who are
supplying them for many years will be also the main suppliers for the IKEA in Bangladesh.

Competitors: In Bangladeshi furniture market some of the brands are really famous such as
Otobi, Partex, Hatil etc but none of these actually used the concept of augmented reality to reach
the customers. Thus, it is a great advantage for IKEA to compete in this market and as
Bangladeshi people prefer foreign brands more now a days this will also help IKEA to establish
its position here. Therefore, for this market IKEA do not have that much strong competitor.

Distributors: It will be best for IKEA to use their own distribution channel that is actually using
their own distributors as they will be just opening their operation in Bangladesh. Moreover, they
don’t have to have any special distributors for rural areas as their target audience mainly belongs
to urban areas.

Consumers: Newly married couple, large family with 5-7 members, people with mostly medium
income, people who live urban lifestyle, people who can easily adopted the new technology and
also have interest for the new products in market are the main consumers of IKEA.

SWOT Analysis

Strengths Weaknesses
 Brand value and recognition  Difficult to maintain standards in
 Clear vision different countries
 Financial Strength  Always not possible to provide high
 Cost-effective products quality product with low price
 Numerous number of designs  Environmental issues
  Measures strength using KPI  Negative publicity
 Strong and long-term relation with
suppliers
 Frequently innovate
 Excellent marketing activities
(placement of products in movies)

Opportunities Threats
 Consumers are becoming price-  Changing laws and tax policy of
sensitive day by day government
 Bangladesh is a country with  Rise in the raw material cost
relatively low per capita income  Unavoidable political situations
 Consumers demand for eco-friendly (strike)
product is on the rise  Baby boomers and gen X will take
time to cope up with the concept of
virtual reality or even did not accept it
at all
 Many local companies are already
trying to copy IKEA products

External Opportunities Threats

Factors  Consumers are  Changing laws and tax
becoming price- policy of government
sensitive day by day  Rise in the raw material
 Bangladesh is a country cost
with relatively low per  Unavoidable political
capita income situations (strike)
 Baby boomers and gen
  Consumers demand for X will take time to cope
eco-friendly product is up with the concept of
on the rise virtual reality or even
Internal did not accept it at all
Factors  Many local companies
are already trying to
copy IKEA products
Strengths SO Strategies ST Strategies
 Brand value and  Advertise extensively to  Design advertisement
recognition let the Bangladeshi such a way that grabs
 Clear vision consumers more aware Baby boomers’ and
about their brand
 Financial Strength gen X attention.
image, using any
 Cost-effective products authoritative figure or  Let the consumers
 Numerous number of famous celebrity of aware about the
designs Bangladesh. various designs and
 Develop a mobile app facilities that other
 Measures strength using
through which furniture brands do
KPI
consumers can get to not have.
 Strong and long-term know product related
relation with suppliers any information.
 Frequently innovate
 Excellent marketing
activities (placement of
products in movies)

Weaknesses WO Strategies WT Strategies

 Difficult to maintain  Create a FB page and a  Conduct thorough
standards in different brand community using research to find out
countries any authoritative figure the consumers
 Always not possible to as brand ambassador.
demand more
provide high quality  Create several viral
precisely.
product with low price videos according to the
 Environmental issues Bangladeshi  Introduce VR system
 Negative publicity consumers’ interest to on their every
the furniture. physical store so that
 Maintain standards by Baby boomers can
engaging customers also adopt it easily.
using augmented reality

Marketing Objectives

STRATEGY PLAN:
POSITIONING:

Positioning refers to the place that a brand occupies in the mind of the customer and how it can
be differentiated from the products of competitors. For positioning products or brands,
companies may introduce the customers the unique features of their brand to create a suitable
image through the marketing mix. If a brand has achieved a strong position, it is difficult to
reposition it. Basically IKEA has positioned its brand by following strategy:

Shopping Experience: IKEA Bangladesh gives the unique furniture buying experience. The
showroom displays every product it sells in room-like settings so customers can imagine how the
furniture would look like in their own home. IKEA introduced an online shopping interactive
catalog, as a shopping virtual-assistant intelligent user interface web application, developed by
the software house Net guru. IKEA launched a pilot virtual reality system called IKEA VR
experience. This IKEA VR Experience can bring virtual IKEA HOME in real world size. IKEA
continues to explore VR technology possibilities. The IKEA VR Experience could replace
showrooms by allowing customers to build and experience their dream house virtually in the
future.

Swedish Designs (functional and simple) & Quality: IKEA creates functional Swedish designs
(designs are part of their ‘matrix’). That one furniture only comes in 4 Scandinavian styles at 3
price points. Design is usually the last step (after choosing, the price point and manufacturer) in
the process. Other than its staff of 10 designers it also depends on freelancers highlighting that
design was to focus on simple yet functional styles. One another differential factor that helps
IKEA to position itself in the customer mind is quality. IKEA ensures world class quality that
other brand cannot give at the exchange of price they ask. They ensure quality furniture along
with durability and efficiency so thus customers can easily differentiate their brand (IKEA) from
other brands and thus help to position themselves in the customer’s minds.

BRANDING STRATEGY:
Use anthropologically-based consumer insights: "the leader of life at home," is the goal of
IKEA. Understanding what life at home is really like is very difficult. IKEA regularly visit
people's homes, observing and taking pictures, and produce a quarterly "Life at Home" report.
The in-person, intimate approach to customer understanding enables them to uncover new
routines, food habits, and wishes that people develop. The anthropological insights are
combined with results from an online panel and other published studies into a "Data Mining
Board," a digital tool that allows a user to search the information easily and identify patterns that
can be translated into stories that inform everything IKEA does.

Apply solution innovation to marketing: "The IKEA approach to storytelling, quality, and cost
serves as the foundation for which they build their marketing tactics." IKEA RGB billboard in
Germany as an example (it features three different headlines superimposed on each other in
different colors that are revealed at night when the board shines red, green, and blue lightbulbs
on the board, effectively tripling the ad space).

Put the priority on the design, not the designer: Partnerships with designers is a popular
strategy for retailers and consumer product companies these days. Perhaps most well-known at
Target, these collaborations usually exploit a name-brand designer like Vivienne Tam and Lilly
Pulitzer. IKEA takes a different approach. Like others, IKEA leverages famous designers to
bring something exciting and new, but they don't usually utilize well-known designers in a
deliberate strategy to promote the "purity of design instead of individual celebrity names." And
the products produced by the design collaborations become a part of IKEA's global product
range, instead of serving as limited time only offers as most other companies use them. They find
this approach "more exciting because it allows the true creativity and inspiration of product to
come through vs. the individual."

Apply a democratic corporate culture: Democratic isn't just a design philosophy at IKEA --
it's the way the company operates. The company's stated values include "humbleness and
willpower" and "accept and delegate responsibility."

PRICING STRUCTURE:
Basically IKEA design their pricing strategy based on two factors. And they are given below:

Cost- Leadership: This strategy based on to serve middle class and upper middle class people of
Bangladesh. IKEA has segmented their market based on three different market segments of
Bangladesh as upper class, upper middle class and middle class; geographic area ranges from
towns to urban to sub urban areas. This global furniture retailer based in Sweden targets young
furniture buyers who want style at low cost. Buyers trade off service for cost. Ikea designs its
own low-cost modular ready-to-assemble furniture (big part of their cost leadership). Customers
do their own pickup and delivery or get it delivered for a fee. Employees are trained to save
electricity and managers always travel coach and take buses instead of taxis. Cost is so important
that first a price point is established, and then the manufacturer, materials and design are chosen.
Expensive wood is used only on top visible layers of the furniture.

Differentiation: In this pricing strategy they specifically target the upper class people of
Bangladesh. For this market segment price itself is not an issue rather than quality along with
styles and elegances are the main priority. In this price ranges they always charge the premium
prices for ensuring maximum quality and style and designs. The premium price won’t affect the
purchase decision of IKEA because it ensures maximum quality and durability. The products of
this price range are usually unique, stylish, comfortable, durable, and exclusively designed so
thus the products can be easily differentiated from other rival furniture industry products and
services.

Customer Acquisition and management Strategy:

Cost Savings in Furniture Design

IKEA designs unique products that incur low manufacturing costs while meeting strict
requirements for function, efficient distribution, quality, and impact on the environment.
According to a case study produced by The Times of London, more than 50% of the products are
made from top quality raw materials. IKEA wants to use as few materials as possible to make the
furniture, without compromising on quality or durability. By using fewer materials, the company
reduces costs on transportation costs because it consumes less fuel and manpower to receive
materials and ship products.
Sustainable Relationships with Suppliers

A key part of IKEA’s success is related to its communications and relationship management with
materials suppliers and manufacturers to get good prices and top quality on what it procures.

Cost-Per-Touch Inventory Tactic

Having customers select the furniture and retrieve the packages themselves is an inventory
management tactic called ‘cost-per-touch’. As a rule of thumb, companies find that the more
hands touch the product, the more costs are associated with it.

For example, imagine when someone selects a piece of furniture to buy. The item is then
ordered, shipped from the manufacturer, moved from the delivery truck into storage in the
warehouse, moved from the warehouse to the customer’s vehicle or delivered by the furniture
retailer to the customer’s home. Every time the product is shipped, moved, and loaded, it costs
money. The fewer times someone moves or touches the item, the fewer costs are associated with
it. IKEA saves costs with this guiding principle to minimize touches because it doesn’t have to
pay the customer to retrieve the furniture and take it home.

Do-It-Yourself Assembly Lowers Packaging Costs

Most IKEA furniture is designed and sold in pieces for the customer to assemble. The pieces are
placed into convenient and efficient, flat packages for low-cost transport because they take up
less room in trucks, maximizing the number of products that can be shipped.

The unique packaging also take up less space in warehouse bins and reserve racks, allowing for
more room to stock additional items for order fulfillment. What the company saves in fuel and
stocking costs is passed on to customers.

In-Store Logistics
IKEA also relies on something rare and unique concerning its logistical management of
reordering products – it employs in-store logistics personnel to handle inventory management at
its stores. There is an in-store logistics manager responsible for the ordering process and a store
goods manager responsible for material handling logistics at all IKEA stores.

The duties of the logistics personnel are to monitor and record deliveries, carefully check
delivery notices, sort and separate the goods, and get them off to the correct sales area or
designated overstock locations. Overall, they ensure an efficient flow of goods within IKEA
stores, which is essential to maintaining high sales and enhancing customer loyalty.

Distribution Strategy:

Basically IKEA Bangladesh focuses on their own distribution channels across Bangladesh. Since
they have opened only one showroom in Bangladesh so thus they are less worried about their
distribution strategy. They have been using intensive distribution strategy.

Intensive distribution mainly means distribution on a large-scale and displaying the product in as
many ways and places as possible so that the customer sells in high volume due to large scale
distribution. The chosen level of distribution generally depends on different factors such as the
production capacity, the size of the target market, pricing and promotion policies as well as the
seasonal requirement of the product by the end user.

So IKEA Bangladesh has chosen this strategy and thus selected various distributors for
supplying the IKEA furniture in various regions, cities and urban areas of Bangladesh.

E-Commerce: Along with various distribution channels IKEA Bangladesh also maintains an
specialized website that are created only to do any kinds of business related and enquiry related
tasks and activities. Also in various e-commerce sites they have introduced their products along
with prices for mass market coverage.

Strategy Implementation
Marketing Mix (8 Ps)

Product: Main product of IKEA Bangladesh will be its stylish, numerous designed furniture.
In addition they will also sell the kitchen appliances and home accessories

Place: According to our plan for the project, IKEA Bangladesh is a retail store which will be
located in Gulshan; Dhaka, Bangladesh from IKEA as a result of their global expansion
especially in South Asia.

Price: IKEA Bangladesh will mainly design their price structure using cost leadership and
differentiation strategy in order to maintain their reasonable price policy together with the
concept of segmenting special customers for special service.

Promotion: IKEA BANGLADESH basically promoting its products by using various digital
media including online and offline media. They have especially made a customized website that
can fulfill every need for IKEA lovers. In the website there will be search engines, optimization,
and customer information. Product information, and many other things. There will be product
filters and various other things. Alongside with that they also have an online shopping interactive
catalog, as a shopping virtual-assistant intelligent user interface web application, developed by
the software house Net guru. IKEA launched a pilot virtual reality system called IKEA VR
experience. This IKEA VR Experience can bring virtual IKEA HOME in real world size. IKEA
continues to explore VR technology possibilities. The IKEA VR Experience could replace
showrooms by allowing customers to build and experience their dream house virtually in the
future. They also promote their products by delivering various discounts and feature along with
benefits. IKEA also arrange online face book event for the promotion of their products alongside
with they promote their products via various advertisements. Even if their products are available
through various E- commerce sites like daraz.com, pickaboo.com etc.

People: IKEA Bangladesh would mainly target the upper middle class and middle class people
especially who are newly married and technology adopters and accept new products.

Productivity and Quality: Though it is sometimes became difficult to maintain high

quality product with low prices but IKEA succeeded to do it because of their long lasting
relationship with their suppliers. Moreover, as they are buying in a large amount of quantities
from their own suppliers from the beginning of their journey, suppliers do not bother to provide
them best quality products in low prices.

Physical Environment: Bangladesh is a natural disaster prone country. Almost every year
different natural disaster hit the country which drastically affected the supply chain activities of
any business. Thus, it will create a big concern for IKEA to run its business as for these natural
disasters their raw materials may not arrived at the right time.

Process: The main process through which IKEA Bangladesh will conduct their business will
be through bricks and clicks. They will both have their retail store and the website.

Gant Chart

Evaluation and Control

The market reach on digital basis evaluation will be calculated as per these key matrices:

 Website click rate

 Repeat visit
 Return customers
 Conversion rate

Controlling via owned source:

Through our web page, our total collection will be displayed. There will be web designer and
content writers who would design our page so that our customers are satisfied in selection and
trusting IKEA. In the website, we will also have the customer interaction section where
consumers can share their views on how we can improve our product service.
Controlling via paid search:

The social media is regarded as one of the most reliable platform as for both paid and earned
media. However to reach the target customers we can specifically send our promotional outlets
or information about IKEA through Facebook, Instagram, YouTube for our special 365
campaigns which will post emotional based stories relating to our products.

Controlling tools:

We will monitor our goals and performance-based management of online activities using it. We
will start the process with the setting goal then, will analyze the measured figures follow.
Depending upon the user communication feedback it can indicate our user reach and interest
about the products.

Conclusion

IKEA is a recognized global brand with hundreds of stores across the world. In order to increase
performance, it must consider its external and competitive environment. This will disclose the
key opportunities it can take benefit of and the threats it must deal with. IKEA responds to both
internal and external issues in a proactive and dynamic manner by using its strengths and
dropping its weaknesses. Through this IKEA is capable to generate the strong growth it needs to
maintain a strong identity in the market. IKEA's passion associates with design, low prices,
economical use of resources, and responsibility for people and the environment. The company's
products, processes and systems all determine its environmental stance.

IKEA have faith in that there is no compromise between doing good business and being a good
business. It aims to go beyond profitability and reputation. IKEA is determined on becoming a
leading example in developing a sustainable business. This will create a better everyday life for
its customers in Bangladesh and all over the world. IKEA has discovered a business truth being
maintainable and responsible is not just good for customers and the planet, it is also good for
business.
Reference: