IKEA is one of the most successful furniture retailers in the world, with outlets in 32 countries and plans to develop further. IKEA offers a wide range of well-designed, functional home furnishing products at very low prices. The economical price is the main idea. IKEA develops and purchases products in such a way that they can be offered at the best prices across the world. It is interesting to note their market positioning statement: “Your partner in better living. We do our part, you do yours.
Together we save money.” The main promotional tool used by IKEA is its catalogue. In fact, the brochure is the main marketing tool of IKEA with around 70% of the annual marketing budget being spent on this alone. It is produced in 38 different editions, in 17 languages. 110 million catalogues were circulated last year. IKEA uses the catalogue in all markets with very few differences between them, apart from the obvious ones of language and currency. Some catalogues are printed without prices so that they can be locally adapted to local taxes, inflation and currency values.
The catalogue helps in overcoming problems of promoting products to segmented markets. When catering to global segments, there can be differences due to language, the taste of the common people, local laws and taxes in the country. These are problems due to segmentation. IKEA uses the same catalogue in different countries but in 17 languages. The catalogue is thus customized to the local segment by using translation. Using the same catalogue in all the different countries means IKEA is adopting the same promotional tool in all countries with a dash of localization. This means IKEA is selling standard products everywhere and selling them in the same way. Such standardization of products means achieving economies of scale and reduction of production costs. Such a strategy leads to achieving efficiency in production, distribution and marketing. This is in accordance with the vision statement of IKEA.
The composition of the promotional mix depends on a number of factors such as available resources, objectives and policies, the characteristics of the target market, the characteristics of the product and the availability and cost of promotional methods. IKEA has chosen catalogue as its main promotional tool as it is economical and stands by the company’s objectives. Advertising or personal selling is costly and hence cannot be afforded. Different market segments require different products at different prices. To satisfy all customers the organization produces its catalogues at different prices. This is the usual method. In the case of IKEA, in order to reduce the cost of publishing catalogues with different prices, they have opted to have catalogues with no pricing written on them. Only the language is different for its catalogues. Though there is price segmentation depending on the inflation and currency value of the country of marketing, it is subtle and not very obvious. The catalogue also caters to the target markets and the characteristics of the product. Moreover, it is already available. However, as IKEA has stores in many countries, a regional promotional approach must be adopted that requires variations of the mix to be adapted for individual markets. This is explained by its brochure that is made available in many languages to suit regional markets.
Generally speaking, there are six types of promotion: advertising, sales promotion, publicity, personal selling, direct marketing and sponsorship. Of these methods, IKEA is choosing sales promotion through its catalogue. The catalogue as a promotional tool can also be seen as a form of pioneer advertising that is used in the introduction state of a product, informing the consumers of what, why, how and where details of the product. Markets use the promotion to persuade consumers to use, adopt or accept an organization’s products. In the case of IKEA, the catalogue caters to all five stages of the consumers: innovators, early adopters, early majority, late majority and laggards. It informs the new consumers of the products available, creates interest, emphasizes its economic value, and encourages the consumer to buy. Successful targeting is also achieved through the catalogues of IKEA.