Ikeas Entry Strategy In Russia Marketing Essay

Ikeas Entry Strategy In Russia Marketing EssayGlobalisation is the growing trend towards universal merchandiseplaces in products,capital and labour,unrestricted by barriers.Globalisation is not a impudent process but it has acce associate in recent years with the rapid growth of multnational companies and expansion of free external plenty with the key feature of Globalisation that have an impact on business schema areIncreased international trade as barriers to trade are reduced.Growth of multanational businesses in all countries as there is greater freedom for capital to be invested from angiotensin converting enzyme country to another.Freer movement of workers between countries. learn investment is when a business entering a strange based assembly or manufacturing facilities.Globalisation is having a great impact on the merchandising strategies adopt by businesses that trade internationally. One features of globolisation is that national and regional difference in tastes, polish,fashion and wants are becoming less obvious. According to some analysists (e.g Levitt) The solid ground is becoming much(prenominal) standardised in the goods and services that it is demanding. If this is true, then the opportunies for companies to use technology to gain massive economies of scale by selling the same product across the ball are big.Other writers ( e.g Donglas and Wind ) suggest that substantial differences lull exist in consumer needs in different countries markets.Standardisation is only one option for entering these markets and this will sometimes fail.The alternative is for businesses to adapt a global merchandise mix to local anesthetic needs and conditions this is called localisation.Product adaption involves changing the product to meet local conditions or wants. For example, finish cell phone maker Nokia customises its cell phones for every study market. Developers build in rudimentary voice recognization for Asia where key boards are a proble m and raise the ring volume, so phones can be heard on crowded Asian streets. Nokia is excessively making a major release to create full featured but rugged and low cost phones that meet the needs of affluent consumers in large developing countries such as India,China etc.Product standardisationThe term standardisation indicates the presence ot certain desir suitable qualities like utility durability, safety and desirable features like design, weight, colour in a product. Standardisation refers to the process of background cognition standards for a commodity on the basis of its desire qualities. Standardized global marketing refers to an international marketing system for using basically tha same marketing outline and mix in all the companys international markets.IKEA is the Swedish home furnishing company having to a greater extent than two hundred stores in 32 countries selling a range of some 10,000 articles and having more than 84,000 employees within IKEA free radical.IK EA as a multinational company entering Russia with strategy based on adaptation and on standardisation.A strategy based on adaptation to meet local condition or wants in foreign market(Russia). This strategy is adopted to the larger extent as it is supported by the following evidences from case study.IKEA has an impression that few companies in Russia foc employ on settlement the needs of the many a(prenominal) wad by offering attractive products at reasonable prices. It enters the market knowing exactly that there is a gap market demand left therefore decided to think global but act local.Entry strategy was based on the view that there is a need to live and learn about the bleak market before setting the strategies. Within IKEA, setting up a in the altogether bussiness was described as very little theory and very much practice. IKEAs entry strategy based on taking stock of the existing situation. The mostly used technique is called SWOT analysis ,i.e strengths,weaknesses,oppor tunities and threats. IKEA identifies the key needs and wants of Russian, for example low level of training and lack of fellowshipd concern staff and takes the task to condition and prepare the local people who will be ready to lead further expansion process. As a manager has commented about his management stem My main task is really to make this group more Russian and export people for the upcoming expansion IKEA practesed home visits to customers inorder to talk to people trip up how they live and used their homes and to identify potential needs and wants not fully realised by customers themselves. Understanding local family conditions and furnishing traditions them provided as a basis for an trenchant introduction and marketing of the IKEA concept.A store manager pointed out that the main priority in Russia is the normal living costs and then comes the car and TV and afterwards may be a trip abroad. One example of how IKEA has considered the local preferences is in develo ping the room settings to refect local conditions in terms of apartment sizes and local traditionals of furnishing. It should also be possible to mix Mix and match the range with the Russian home.IKEAs entry strategy for Russian based on standardization, the market concept holds that marketing program will be more effective if tailered to the unique needs of each sharpened customer group. Consumers in different countries still have widely varied nicety backgrounds.They differ significantly in their needs wants spending parts, product preferences and shopping patterns, because these differences are hard to change, IKEA adapt their products prices, bring and promotions to fit consumers desires in Russia.IKEA decided to apply adapted Global marketing strategy for adjusting the marketing strategy and mix elements to each international target market bearing more costs but hoping for a larger market share and return.Standardised marketing strategy for using basically the same marke ting strategy and mix all the company internationally markets.IKEAs basic strategy neither to adjust the style of the products of the local,needs nor follow the competitorss product ripening was central preserving the IKEA concept and image the range is supposed to be ,IKEA unique and typical IKEA All range of product are divided into four major categories or styles, scandinavian country, modern and young Swede,which are clearly distingushed in all businesses areas across the store.One of the reasons why IKEA was successful with its standard product ranges in Russia was the fact that several(prenominal) of these IKEA ranges emphasise the morden style,which is very different from the traditional Russian style but is attractive and new for the Russian customers since it symbolises change. but, IKEAs entry strategy on adaptation and standardisation was limited ,that the store played an spare role by becoming the training site for new employees.Since IKEA was totally new to many Russ ian customers to bring people as much as possible in the store in order to learn about IKEA becomes an additional task.IKEA is difficult to strike the balance between adaptation and standardisation in the Russian market. IKEA introduces more or less the same product range in all new countries irrispective of what is considered popular by local customers. In Russia IKEAs Scandinavian furniture design in some contract to the historically pet dark wood, massive, lacquered, expensive furniture. In order to support this strategy IKEA most often identifies the potential needs that are similar across markets.3. IKEAS commercialise BEHAVIOR IN RUSSIASelling in foregn market was once to a fault risky and expensive for most firms, so only large businesses growing too large for their national markets are used to commit to this form of marketing. Improved communication, better transport links and free International trade.For many firms International marketing is now an opportunity to profit ably exapand their sale indeed, for some firms it is no longer an option to remain based in just one country.Consumer make many buying decision every daytime and the buying decision is the focal point of their markets effort. Most large companies reseach consumers buying desicions in great inside information to answer questions about what consumers buy, where they buy, how and how much they buy, when they buy and why they buy. Market behavior depends on the factors that affect consumers behaviour.Culture is the set of basic values, perceptions, wants and behaviors learned by phallus of society from family and other Copernican institutions. Failure to adjust to these differences can result in effective marketing or embarrasing mistakes.Company are always trying to sport culture shifts in order to discover new products that might be wanted.Cultural factors exert a broad and deep influence on consumer bahaviour. The marketer needs to understand the role played by the buyyers culture, sub culture and amicable class.IKEA company in Russia enters by recreating its company culture from scratch. In Moscow that included the replication of the store design and layout in accordance with the latest version in the existing store and extensive heathen education that was carried out by the team of experienced IKEA people.Another IKEA approach was to create needs that could be satsfied within the range and to inspire customers with numerous new solutions based on existing range. The theme Living with small spaces was one such solution used in Russia. Consumers behavior also is influenced by social factors, such as consumers small groups, family and social roles and status.Marketers try to identify the reference groups of their target markets. Reference group expose a person to new behaviors and life styles, influence a persons attitudes and self concept and create pressures to confirm that may affect the persons product and set choices. The importance of group influence varies across products and stains. It tends to be strongest when the product is visible to other whom the buyer respects.Personal factor also influnce market behavior of the market. A buyers decision also are influenced by personal characteristics such as buyers age and life cycle stage, occupation ,economic situation, life style, temper and self concept. People change goods and services they buy over their lifetimes, taste in food, clothes, furniture and recreation are often age related. Buying is also shaped by the stage of the family life cycle the stages by mover of which family might pass as they mature over time. Marketer also define their target and develope oppropiate products and marketing plans for each stage.IKEAs market behavior in Russia has been different due to the fact that Russia ia an emerging market that has advanced.Since IKEA was totally new many Russian customers to bring people as much as possible in the store in order to learn about IKEA and get a affi rmative attitude was a main goal from the very begining. IKEA put a strong emphasis on making the Russian customers feel welcome and classical in the store which was very unusual for Russian stores at the time. The way the range was presented and the opportunity to touch and test everything in the store also do the products much more desirable to the Moscow customers. This was new and unusual retail approach.Another respect that IKEA company used, it considered the local preferences in developing the room setting to reflect local conditions in terms of apartment sizes and local traditions of furnishing. Also building an image of low price brand that guaranteed attractive and morden products of good quality.IKEA was solely to the journalists and introduced them to the IKEA way and values by organising press trips to Almhult in Sweden to learn how the range is created. The result was that the press coverage of IKEA in Russia become much more positive.IKEA trading operations in Ru ssia was the fact that IKEA was the only company that stayed in Russia after the currency devaluation and subsoquent collapse in August 1998 when almost all the foreign companies left the country,that created an spry effect of trust an willingness to cooperate with IKEA on the part of the major Russian politiciansBy concluding the IKEA marketing behaviour in Russia has been different in reapects of Russian culture, social factors, personal factors, economic situation and psychological factors.4. IKEAS VISION ,ITS MARKETING STRATEGY AND INFLUENCE IN RUSSIABusiness mickle is the statement of what the system of rules would like to hit or accomplish in the long term. Basically a vision statement is what the organisation wants to become (future) e.g Nokia-our vision is a world where every one is connected ,Minnesota Health Department(USA) the vision is to keep all residents healthy, McDonalds Reustarants-Mc Donalds has a vision where the world buys more McDolnalds than any other deg enerate food. A brand is the name sign ,symbol design or combination of all used to distinguish the product of one firm from others. A brand is the means by which the firm identifies itself with customers e.g ITC for Indian Tobacco Company, family names such as Tata steel, IBM Computers etc.Positive brand equity derives from customer feelings about and connections with a brand. Consumers sometimes bond very closely with specific brands.For example one Michigan couple had such a passion for Black Deckers Dewalt power tool brand that they designed their entire wedding around it. Building a strong brands posses challenging decisions to the marketer.Major brand strategy desicions involve brand positioning, brand name selection, brand sponsorship and brand development.Managing brands companies manage their brand careful. First the brand positioning must be continously communicated to tha consumers. Major brand marketers spend huge amounts on advertising to create brand awareness and to build preference and loyalty.Such advertising compagns can help to create name recognition, brand knowledge and may be even some brand preference. However the fact is that brands are not maintaned by advertising but by the brand experience. To day consumers come to know a brand through a wide range of contacts and touch points.These include advertising but also personal experience with the brand, word of mouth, company web, pages and many others.IKEA can be regarded as a global brand because IKEA is a leading home furnishing company with more than 200 stores in 32 countries, sellimg a range of some 10,000 articles and having more than 84,000 employees within the IKEA group.IKEA marketing strategy in Russia influenced/contribute to the companys brand vision by focusing on solving the needs of the many people by offering attractive products at reasonable price.IKEA enters Russia by recreating its company culture from scratch. In Moscow that included the replication of the store desig n and layout in accordance with the latest version of the existing store and an extensive culture education that was carried out by the team of experinced IKEA people.Marketing communications become an important means to create tha right image of IKEA .The ways to communicate the image through the out door products, image ads in the glossy magazines, TV, buzz network or word of mouth.Internal organisation processes also supported the positioning strategy. familiar activities carried on a regular basis were informal and formal discussions at the store level where co-workers from once or several store depertments take part.The discussions cover different costomer issues the best ways to present the range to the customers.Market data and experience were also transfered and shared within and between different depertments and units at the company.By conluding the marketing strategy in Russia contribute to the companys brand vision by focusing on solving the needs of the many people by o ffering eye-catching-product,communications,Internal organisations and positioning strategy6. IKEASS OPPORTUNITIES TO ACHIEVE LONG TERM SUCCESS, MAIN CHALLENGES AND MEASURES IN RUSSIAN MARKETIdentifying successfull business opportunities is one of the most important stages in being an effective company. Many compnaies say they want to work for themselves butthey do not make the leap to success because they have not been able to identify a market need that will offer sufficient demand for their product to allow thebusiness to become profitable.International business operate more than one country, these are often called multinational companies. Multi national companies are business organistaions that have their headquaters in one country, but with operating branches in other countries.IKEASS opportunities to achieve long term success in the Russian market was that the IKEAS owner saw Russia as a long term investment also enables the management to supply a long term view that may becom e a competitive advantages in the yearto come. IKEA was successfull with its standard product range which was the fact that several of these IKEA ranges emphasizes the modern style which is very different from traditional Russian style but is attractive and new for the Russian customers since its symbolise changes.Marketing communication became an importnat means to create the right image of IKEA in Russia. Government authorities and officials of different ranks were also critical stakeholders group. Their goodwill and support was crucial for IKEA expansion in Russia. However IKEA has faced some challeneges in Russia such as Lack of experienced local workers, Totally new to many Russian customers, High customs fees , neccessity to procure more from the local producers, difficult in finding and developing suppliers in Russia, Low buying power of Russin customers. Russian customers low price wasvery strongly related to unattractive products of poor quality and one of the challenges h as been to overcome this and explain how it is possible to offergood products at low prices.Measures taken by IKEA to overcome the challenge were providing training programs to local workers, improving market communications, adapting the local Russian culture, common activities carried out on a regular basis were formal and informal disccussion at there levels were co-workers from one or several departments take part.