IKEAs Marketing Audit and Its Purpose - Case Study Example

Introduction For any business, organization or company to thrive well in this global competitive world, the management must come up with strategies to ensure it is well equipped for the global competitive platform. The formation of the strategies by a firm and especially in the production of semi-conductors is faced by some challenges due to competition cause by the high rate of technology growth (Olson et el, 2005). The challenge most firms faces include the similarities in their linkages strategies and the strategic capabilities of each firm. This has brought so much pressure on the management to develop competitive strategies for their companies for the purpose of global competition. According to Thompson & Martin (2005), many managers have assumed that the only requirement needed by a manager to be able to create an efficient and effective strategy for any business rendering services is the 4Ps. This kind of assumption is not right because of the fact that the use of the 4Ps is not sufficient to come up with the best strategy for marketing the products. The needs of the customers must be considered through a research in the area the business should be established (Grant, 2010). The objectives of marketing are formulated and this will depend on its financial objectives of the particular organization and this is what IKEA has done. (Grant, 2010). Competition is a process of dis-equilibrating the processes in market for the firms to be able to take advantage of the resources in terms of market share and segmentation for the purposes of financial performances. There are impacts of the competition on the technology of any industry causing a drastic organizational growth in terms of market share (Erica, 2006). It has also led to some changes in terms of global reach. This whereby, the new technology adapted by IKEA had led the company to open its doors for employees all over the world trained to use the technology as well as due to the fact that it has been involved in opening of new branches in many parts of the world. This is however not the case with HABITAT is not open to new technologies. Due to competition, the IKEA Company is continuously coming up with innovations as far as the new technology is concerned to ensure that it has a great ability to reach out globally (Johnson & Scholes, 2004). Marketing audit and its purpose Marketing audit is an important activity with reference to the success of any given business and the IKEA Company has strongly adopted it in its operations. The process is done before the business is began (Armstrong & Kotler, 2007). Market analysis refers to the process of determining attractiveness of the market for the purposes of understanding threats and opportunities with reference to the business’s weaknesses and strength ((Mullins, 2005). This involves the analysis of market in terms of distribution channels, market trends, market size, market profitability, and growth rate and market segmentation. Market segmentation being one of the market analysis used by premier book services refers to the process of identifying the portion in the market exhibiting differences from each other (Rix, 2007). This process enables the company to meet the needs of the consumers. It also enables the business owners to be in a better position of competition with their competitors. IKEA has been keen to use these tools as compared to HABITAT Internal environment The following are the main strengths that are associated with the IKEA Company. Its community Participation is a major strengthen in that it increased its market opportunities. An example is the social clubs it has set up. IKEA has ensured that it is part of the community socially and through that, it is able to reach out to the community members. During many and different community contents like the cultural activities as well as sport, the company participates and has been able to greatly support many talents within the members of the community. It also supports many sporting clubs, which are established in the community level, which goes along way in bringing socialization. Some of the sports that are supported include marathon, horseracing, football and handball. All this effort has enabled the company to gain popularity in the society hence increasing the trust it has with the customers. The company’s Customer relation is its strength because is has led to increase in it production. The company performs customer evaluation. This is done through a research. This enables IKEA company to get to know the opinions of the customers, perceptions, attitudes and expectation. This enables the company to come up with products, which matches the interests and needs of the community (Grant, 2010). The company produces innovative products and at customer’s pocket friendly price. The company has come up with a wide range of sub products. In addition, the innovative packaging is another factor that has increased its market in that different quantities and wide range of packages are in use hence leaving customers with an opportunity to choose what they need and what they can afford (David, 2002). External environment This kind of investigation during auditing enables the business leaders to answer a number of questions as far as the customers’ needs are concerned. It enables the marketers get to know the existing needs of the consumers and then fulfils them. It also helps the corporation understand the buyers’ decision-making process as well as their behaviour. The IKEA company’s marketers are able to gauge the perception of the customers towards the brands of the company to improve where need be. It also enables the company to get to know the nature of competition in the market to be able to set it target. This will be determined by getting to know the number of competitors, their level of profit, their strengths and weaknesses as well as their marketing strategies and plans (Hannagan, 2005). It answers the question of the nature of the environmental culture like the religious beliefs, level of literacy, evolving and existing lifestyles and the nature of the consumerism. It answers the questions about the economic conditions in the market in terms of the disposable markets, policies about taxation in the market that is targeted, all the economic indicators to be used like the exchange rates, interests and level of unemployment. Finally, it helps the marketers to know the changes that may occur legally and politically hence affecting the business later (Hill & Jones, 2007). These include laws, regulations and legislations governing the labour tariffs, quotas and copyrights. Porter’s Five Forces Model The following are the five forces models factors that IKEA has applied while HABITAT did not apply. The threat because of competitors, which is also the main potential for the company in its achievement of profits, is a major area the company has ensured it has dealt with all of its challenges. By dealing with it well, the company has ensured some of the barriers like the government policies, brand, capital requirements as well as the loyalty of its customers as well managed (Dennis, A. 2001). The other factor is product substance threat, which is a factor that describes a company trying to provide some of its products that goes beyond the common boundary. IKEA has an intention or an objective to ensure that the customers are provided with variety of products for them to make choices. The HABITAT Company is disadvantaged because while IKEA has been diligent in ensuring it applies this principle it has continued to reap benefits in terms of product differentiation, product quantity that are available in sale and quality appreciation of the product quality (Dennis, 2001). The other factor includes the established rivals, which is a factor that IKEA uses in determining the rate at which competition occurs in the industry. The IKEA Company has been keen in ensuring it has done a number of things to counteract the effects of the same. Unlike IKEA, HABITAT forgot that it is very important to monitor the expense of the advertisement, invention of competitive strategies, web mastery as well as ensuring that the company has come up with some competitive advantages strategies through the process of innovation. IKEA has been able to deal with these problems through the process of quality improvement, price fixation and innovation (Dennis, 2001). The suppliers bargaining power refers to the representation of the input in the market. This is because they are responsible to ensure that raw materials, components, labour and the great expertise are availed in the market. The problem comes up when the suppliers declines to offer the services to the companies. The IKEA Company has ensured it has a good rapport with the suppliers. It has also ensured that its channels of distribution and labour unions are created. It has also ensured that different suppliers bring the same raw materials to the company to make sure it is not exploited by one supplier (Dennis, 2001). The power of customer to bargain is another factor that IKEA has ensured it applies. This can make the firm or the company experience great pressure as a result of the prices. This will eventually interfere with the volume of the purchasers. IKEA has been able to strike a balance as far as this factor is concerned hence the reason as to why unlike the HABITAT it has been able to thrive successful in the industry. The company overcame any challenges as far as customer bargaining power is concerned through shortening the channels of distribution. This is because the longer its channels of distribution the higher the prices of the products hence the power of the customers to bargain is affected (Dennis, 2001). The Value Chain theory This is one of the theories developed by porter that which deals with the creation of a competitive advantage for a company to ensure it has created and the sustained superior performance. The IKEA Company applied this strategy very well and that was one of the reasons for its success. The company has linked together some of its activities like the customer care, brand management and quality control to ensure that the process of planning for better performance in terms of customer satisfaction has been achieved (Rix, 2007). The management has constantly used this tool to identify all the activities, which need special attention to improve the company’s competitive advantage. This is one of the tools that HABITAT has not applied in its competitive strategy Resource based analysis This is a strategy that any form of an organization employees to match its skills with the internal resources. As well as the opportunities and all risks that come up as a result of the external environment (Armstrong & Kotler, 2007). The company has clearly identified all of its resources. It has apprised all of its strengths and its weaknesses against that of all the competitors. Then after the identification of all the opportunities, the company has been able to use its available resources well. It has also identifies its capacities and especially with respect to what it does better or more effectively than all of its rivals (Finlay, 2000). Conclusion In the very competitive environment in terms of business, a business must have a strategic plan so that it can be able to stand in the platform of competition (Hamel & Prahalad, 1994). The following are the five processes that the IKEA company employed in the process of formulating a business strategy but HABITAT failed to apply; objectives and mission formulation, environmental scanning, formulation of the strategy, implementation of the strategy and finally the control and the evaluation of the strategy. It is the mission that describes the vision of the company, values, goals and the objectives in order for the business to pursue its future opportunities in terms of the market share (Susan, 2002). The environmental scanning entails external analysis and internal analysis helpful in understanding the weaknesses, strength, threats and opportunities of the business. The formulation of the strategy entails the process of matching all the information gotten from the environmental scanning in terms of weakness and strengths as well as the threats and opportunities. The importance for this is to give the business a platform for competition as well as superiority in the area of profitability. The implementation of the strategy refers to the process of putting into actions all the programs, procedures and budgets. It is the process that fully involves the organizations resources like the human resource as well as the finances. Finally, the control and evaluation stage involves the process of monitoring and adjusting the implemented strategies through defining the parameters that needs to be measured (Armstrong & Kotler, 2007). Defining the values targeted as far as these parameters are concerned, setting the measurement of the performance, comparing the results measured with all predefined standards and finally making any changes that are necessary in the strategy. The competitive strategies that HABITAT failed to apply made the difference between its success and that of IKEA because IKEA applied them succeed Reference Armstrong, G. & Kotler, P. 2007. Marketing: an introduction (8th Ed). Pearson Prentice Hall: New Jersey. David, F. 2002. Strategic management: concepts (9th Ed.). Prentice Hall: New Jersey: Dennis, A. 2001. Marketing: principles and practice (4th Ed.). Financial Times, Prentice Hall: New York. Erica, O., 2006. Strategic planning for Dummies. Cambridge university press, Amazon Grant, R. 2010. Contemporary strategy analysis. 7th edition. Canada: Blackwell. Grant, R. 2010. Cases to Accompany contemporary strategy analysis.7th ed, Canada: Blackwell. Hamel, G. and Prahalad, C. 1994. 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