Ikea: Design and Pricing

Chapter 3: Case: IKEA: Design and Pricing

1. What are IKEA's competitive priorities?

IKEA's competitive priorities are quality products at affordable pricing for the customer (everyone should be able to afford a nice home without feeling bad about the price). They continue to look at what is trending and design products that are up-to-date and fashionable without inflated pricing.

2. Describe IKEA's process for developing a new product?

IKEA process for new product development begins with cost and development/design analysis (what is the best and most affordable way to produce the product and what materials should be utilized). IKEA does this by using their network of manufacturers to determine, the most efficient and effective way to produce the product. Once the manufacturer has been chosen, the actual design process begins and then the production, packaging, and shipping. IKEA is always thinking about what the customer wants and they continue to make products that will last and satisfy their customers. Additionally, because they do focus on consumer friendly products, they also focused on shipping their products as affordable costs by making their packaging as compact as possible.

3. What are additional features of the IKEA concept (beyond their design process) that contribute to creating exceptional value for the customer?

The shopping experience at IKEA is phenomenal. Everyone is always very helpful and friendly and the store has a fun and user friendly layout for the customers to enjoy. Additionally, as mentioned before, their shipping program reduces cost for the customer and the company by minimizing unnecessary packaging and bulk. IKEA also takes pride in being environmentally conscious and able to meet all size demands.

4. What would be important criteria for selecting a site for an IKEA store?

IKEA stores require significant lot size to build their warehouses on. They also require accessible shipping. Most importantly, they require customers. IKEA is a fun place to go, but if there were no customers, it may not work out as well for them. I would recommend that they build a store where there is a strong housing market and population with accessible highways and shipping.