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Setting Price For Ikea Essay

782 words - 4 pages

Case Study 1- IKEA: Design and Pricing

IKEA: Design and Pricing
Considered the world’s largest furniture retailer in the world, Swedish retailer IKEA has dominated the market in more than 314 stores and 42 countries and now has set its sites on North America (US and Canada). The company offers a vast array of space conscious furniture units as well as kitchen ware and accessories for the home. The marketing strategy- “make less expensive items without making them cheap”, in other words, the company relies on its current success of making good quality products with low prices. Prices typically run 30 to 50 percent lower than that ...view middle of the document...

Once the manufacturer is in place, the design team will create the Trofe’ mug based on its functionality, and capabilities of the companies creating and supplying it.
A product is no good to the company sitting on the shelves once it has been made, which is why the logistics and shipping processes are very critical in a company as large and efficient conscious as IKEA. Because many of the IKEA products are bulky furniture and home products, the concept of flat shipping was very extremely beneficial in shipping large amounts worldwide, disassembled.
1. What are IKEA’s competitive priorities? IKEA’s competitive priorities are that they typically have prices 30 to 50 percent below that of the competitions. In addition, as the price of the competitors continues to rise, IKEA has reduced it’s retail prices of about 20 percent during the past two years.
2. Describe IKEA’s process for developing a new product. As described in the case review, IKEA has a 5-step process on how it designs, builds and distributes items.
STEP 1 – Pick a Price based on factors in product development such as design, materials and suitable suppliers.
STEP 2 – Choose a manufacturer who has the capabilities to bring the product to life and package the products in a cost efficient and timely manner in order to get the product for shipping.
STEP 3 – Design the Product, the designer of the product writes a...

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