IKEA’s – Japan Retreat & Retake by Marketing Research

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What is Marketing Research?

It is a process or a set of process to obtain the information needed to make a marketing decision.

“Market research is the process of assessing the viability of a new product or service through techniques such as surveys, product testing and focus groups. “

Why is it so important to make a marketing research?

It plays a vital part in developing you marketing strategy. The information obtained through the research give you an insight into the customer’s thought, which let you know what they wants and from where they gather information.
The research is conducted not only to understand your customer but also to gives you a better idea to understand your market trends.

We will take a case study of IKEA how they took the marketing research, to successfully establish their business in Japan, in-spite of the difficulties they faced.

 

IKEA’s History

 IKEA is the one of the famous ready-to-assemble furniture company and as of 2008, it is iKEAthe world largest furniture retailers. It was founded in Sweden in 1943 by then-17-year-old Ingvar Kamprad. They have 224 stores in 24 countries. When they entered into Japan in 1974, they had only few stores in just 5 countries such as Sweden , Norway, Denmark, Switzerland, and Germany which are all neighbouring countries.

In 1984, after 12 years of long struggle in Japan’s they finally retreated. They decided to ikea-gordon-facebook-profilere-enter into Japan, by conducting the marketing research information which needs to be Systematic, Analytic, Relevant, must be objective based and should be well distributed. So in 2002, they send Gordon Gustavsson (Gustavsson) who had been with IKEA since 1980’s and with some officials to carry out the ground work. Which includes identifying the target markets, competitors such as Nitori and Tokyo Interior who were the major threat to IKEA, promoting new products and promotional activities.

Compititors

Research Outcome:

Problem: Lack of market specific knowledge and lack of international experience as Japan was the 1st international country in Asia they entered. All their culture, lifestyle and behavior was so different.

“The Japanese market and consumers were not ready for IKEA, and IKEA was definitely not ready for Japan at the time [in the 1970’s and 1980’s]… Now we have done the major markets in the world why shouldn’t we be in the second-biggest retail market in the world?”

– Tommy Kullberg, CEO, IKEA, Japan, in 2006.

At that time, Japan was not quite comfortable with their furniture’s as it was too big to fit into their home and not ready for Flat-packs and self-assemble furniture and it was quite expensive too. They were no local employees in the store to gain any feedback’s or to obtain the customer’s rapport.

Plan to succeed: As they know the problem, they came up with a plan & changes. They visited almost 100 houses to make sure it’s offerings were in well synced with the current Japanese trend. They decided to choose the local companies to manufacture they products which was small and compact such as each with 4.5 or 6 tatami as required and made possible that within 700$, Japanese can pick up an entire living room. With the help of the media, they promoted their ads which gave locals a hope and trust on them.

They made an additional service charge for assembling and for home deliveries. They employed few Japanese right from the high to low level position.

Collecting Data: They also collected primary data from interviewing and by observing the people. During an interview of David Marra, Principal, AT Kearney in Tokyo, in 2006 he has said,

“Multinational companies entering Japan often don’t spend enough time to understand the nature of the competition here, which is usually fairly fierce, and the so-called unique needs of Japanese consumers. The key challenge for IKEA will be to translate their very globally successful concept, the type of design they offer and their retail format, into an acceptable Japanese way.”

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They also conducted survey by asking their customers. One such customer, Haruo Okuda, 72 said,

“Many of the products are for young people and look rather cheap and also admits he’ll be back in a week, this time with his wife, to buy bed linens”

that proves they gained the locals trust.

Ikea growth

Analyzing and outcome: Analyzing and planning the return strategy for 5 years from 2002, in 2008 they re-entered Japan as the 2nd round.  By analyzing the marketing research, they gained more knowledge both in market and in cultural experience, with that knowledge now IKEA is one of the top retailers in Japan.

What we have learnt ?

Doesn’t matter whether you are starting or expanding your business, the marketing research information will help you in making a good business decision such as, where your business should be? How to distribute your goods and how to have a good rapport with your customer? Only because of the marketing research, IKEA was able to retake its position back in Japan.

Blogged by : Mahesh Rajamanickam(214463095)

Reference :

Great Strategy Marketing: Hungry Jack’s Implements Shake and Win App for Freebies. 2016. Great Strategy Marketing: Hungry Jack’s Implements Shake and Win App for Freebies| Retrieved April 18, 2016 from http://greatstrategy.blogspot.com.au/2012/05/hungry-jacks-implements-shake-and-win.html

IKEA Marketing Strategy Presentaion. 2016. IKEA Marketing Strategy Presentaion Times | Retrieved April 18, 2016 from

http://www.slideshare.net/vikassonwane/ikea-marketing-strategy-presentaion

Sweden’s IKEA back in Japan after 20-year hiatus | The Japan Times. 2016. Sweden’s IKEA back in Japan after 20-year hiatus | The Japan Times | Retrieved April 18, 2016 from

http://www.japantimes.co.jp/news/2006/04/25/business/swedens-ikea-back-in-japan-after-20-year-hiatus/#.VxOdX_l96he

IKEA: The Japanese Misadventure and Successful Re-entry|Business Strategy|Case Study|Case Studies. 2016. IKEA: The Japanese Misadventure and Successful Re-entry|Business Strategy|Case Study|Case Studies| Retrieved April 18, 2016 from

Ikea’s New Plan for Japan – Bloomberg. 2016. Ikea’s New Plan for Japan – Bloomberg | Retrieved April 18, 2016 from http://www.bloomberg.com/news/articles/2006-04-25/ikeas-new-plan-for-japan

IKEA Marketing Strategy Presentaion. 2016. IKEA Marketing Strategy Presentaion | Retrieved April 18, 2016 from http://www.slideshare.net/vikassonwane/ikea-marketing-strategy-presentaion

 

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