The paper "The Relative Impact of Marketing Research and Development" is a perfect example of a Marketing Term Paper. IKEA has been working in the industry since 1943 and is one of the major furniture dealers in the world. Being in the business for such a long period has enabled them to have the largest chain of furniture stores in the UK which deals in a variety of furniture, bathroom fittings, accessories, and kitchen fittings” (Company Website, 2012). The company has followed a policy of differentiation and being the cost leader looks to provide quality furniture at the lowest possible rates.
To ensure effective marketing the company has worked on loyalty programs, discounts and continuously innovating so that customers find something new every time they visit the stores. The market size of the furniture industry is on a rise and is estimated to be growing by 50%. The UK poses an opportunity for it as there has been an increasing trend towards trendier furniture. The market size provides an exemplary example for the growth and this is further substantiated from the life cycle chart.
The furniture industry is in the growth phase which has resulted in increased growth for the products. This is witnessed through the life cycle graph below which shows growth for this segment (Wee, 2008). The widespread growth that the furniture market provides especially in UK makes the market very prone towards growth and will ensure that industry provides adequate return to the players (Czinkota & Ronkainen, 2004). Environmental Analysis This analysis will help to understand the manner in which the external environment has an influence on the working of IKEA Political IKEA has looked towards understanding the political situation of the UK and based on it looked to develop a strategy (PESTEL Analysis, 2012).
This is identified from the fact that IKEA has not looked towards India as the structure doesn’ t allow foreign ownership of a single brand (Corporate News, 2010). IKEA has looked towards the UK as the government is stable so that sufficient time is available for the policies to be effective. This has helped IKEA to develop its business well and being able to understand the political scenario and having a strategy accordingly has helped IKEA. Economic The economic situation of an economy has a huge role is defining the purchasing power of the people.
A country which has a high disposable income and people are willing to spend more money on furniture and other luxury items are found to be an attractive destination for IKEA (PESTEL Analysis, 2012). Along, with it, IKEA has looked towards gauging the purchasing power of people based on the manner people purchase furniture and the frequency with which it is done (PESTEL Analysis, 2012).
This has helped IKEA in identifying potential customers better. IKEA has also looked to dwell on the tax aspect and looks towards tax subsidy and other benefits so that IKEA benefits and is able to conduct its business after understanding the economic scenario. IKEA has looked towards understanding this aspect properly and looks to provide furniture of different range and design based on the taste of the people. IKEA has looked towards understanding the customer's profile and prefers customers who are outward and willing to change with time (PESTEL Analysis, 2012).
This has made IKEA look towards countries where the population is rapidly growing and is changing as per the changing generations.
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