IKEA: DESIGN & PRICING
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IKEA: DESIGN & PRICING
What are IKEA’s competitive priorities?
The primary competitive priority for IKEA is anchored on creating value for its customers. IKEA focuses on providing high quality products at a low price. The objective of offering low priced product is achieved through a continuous improvement within production function, and adopting modern design, which consequently leads cost-efficient production. As a matter of fact, IKEA has maintained low prices for its products for many years. In particular, its products are priced at thirty to fifty percent lower than its peer competitors. The continuous improvement within production function has also ensures that the company provides high quality products. Additionally, it has competitive edge because its suppliers utilize acceptable work practices as well as environmentally friendly procedures.
2.Describe IKEA’s process for developing a new product.
The process of developing a new product in IKEA starts with determining what the new product will cost. This cost determination is based on the material used, design and the color. After that, IKEA selects a manufacturer, from the network of manufacturers, who can efficiently produce the product. The next step entails designing the product while ensuring efficiency of the entire process. The costs of the processes such packaging, shipping, and others are kept low or controlled. Also, every aspect or feature of the product is reviewed by the team of designers and product developers, to ensure that they maximize the ability to manufacture the new product. Next the product is shipped in the best effective and low-cost means. To control the shipping costs, disassembled products are shipped instead of already assembled product. In other words, products are packed in a way that ensures they occupy the least amount of space.The final step is distributing and selling.
3.What are additional features of the IKEA concept (beyond its design process) that contribute to creating exceptional value for the customer.
The manner in which IKEA ships their products ensures they incur less shipping costs or low shipping costs are tied to the products. This, together with the presence of their distribution centers near railways, highways and ports, enhances their cost control hence low-priced products. As a matter of fact, due this efficiency in shipping, the prices of IKEA’s products are twenty to thirty percent lower than their peer competitors. Also, IKEA prides itself in offering variety of products within their stores. The stores are designed in a manner that is interactive for the consumers. The modern designs within the store showcases the IKEA’s furniture and products and this is a great functionality. In addition, IKEA’s customer service is topnotch. IKEA has experienced and knowledgeable staff who assist customers. Lastly, IKEA has its catalogs printed in 34 different languages thus reducing miscommunication barriers.
4.What would be important criteria for selecting a site for an IKEA store?
IKEA needs to select a site large enough to accommodate a large showroom. This site should be within the proximity of a rapid rate of growth and already highly or densely populated area or region. Moreover, IKEA can focus on erecting showrooms in busy intersections and main highways where the store can be easily seen by customers.