发布人：伦敦眼 发布时间：2018-01-24 18:06:22 该文章访问量：3892
1 Using case studies
2 Model case study
Topic: Adapting international brands to local markets
Case Study: The experience of IKEA in China
The Chinese economy has expanded at an annual rate of over 8 per cent for the past 30 years. Parallel to this, the Chinese furniture industry has grown vigorously, with annual sales recently rising by over 20 per cent a year. Legislation to privatise home ownership and rapidly rising income levels have created unprecedented growth in the home improvement market. According to estimates from the Credit Suisse group, China will be the world’s second largest furniture market by 2014. This demand has boosted domestic production and also prompted international furniture manufacturers to enter this lucrative market.
IKEA, a Swedish furniture company, was one of the international companies to move into China. It is a major furniture retailer operating in over 40 countries around the world and has annual sales of over 21 billion euros (IKEA website).It entered the Chinese market in 1998 with its first store in Beijing, and sees great potential in the country, having already expanded to ten stores and five distribution centres. Despite this successful growth, IKEA has found itself facing a number of challenges in terms of local differences in culture and business practices.
Marketing IKEA in China
Marketing management needs to be largely tailored to local contexts. IKEA has kept this notion in mind when designing marketing strategies and trying to appeal to local customers while maintaining profitability. The company attempts to find the best possible compromise between standardization and adaptation to the local markets. Its product policy pays careful attention to Chinese style and integrates the set of product attributes effectively (Armstrong and Kotler, 2006).
The store layouts reflect the floor plan of many Chinese apartments, and since many of these have balconies, the stores include a balcony section. In contrast with traditional Chinese furniture, which is dark with much carving, IKEA introduces a lighter and simpler style. However, efforts have been made to adapt its products to Chinese taste. For instance, it has released a series of products just before each Chinese New Year. In 2008, the year of the rat, the series ‘Fabler’ was designed, using the colour red which is associated with good luck.
Changes were also made to some product ranges. In Sweden, people are used to sleeping in single beds, or to putting two single beds together to form a double bed. However, this idea was not very well received by Chinese couples, due to the fact that sleeping in separate beds symbolizes a poor relationship and is believed to bring bad luck. In addition, Chinese brand names should have positive connotations. The Chinese name of IKEA (Yi Jia) means ‘comfortable home’, which gives the company a useful advantage in the market.
An important feature of a retailer is the services it offers. The Shanghai store, for instance, has a children’s playground and a large restaurant, which make it distinctive. However, Chinese consumers expect free delivery and installation, and although IKEA has reduced its charges for these, it still compares unfavourably with its competitors.
When the company first entered China its target market was couples with an income of 5–8,000 Rmb per month. Following steady price reductions this has now been lowered to families with just over 3,000 Rmb. Various strategies have been adopted to achieve these reductions; the most effective being to source locally. Seventy per cent of its products sold in China are now made in the country (Song, 2005). Furthermore, IKEA replaced its thick, annual catalogue with thinner brochures which now appear five times a year. These not only cut printing costs but also give greater flexibility to adjust prices.
Accessibility is also an important issue for the Chinese market. In most countries IKEA stores are sited near main roads, but as only 20 per cent of likely customers own cars in China, easy access to public transport is vital (Miller, 2004).
Advertising plays an important role in the total promotional mix. IKEA uses advertising effectively, with adverts in the local newspapers to keep customers informed of special offers. All TV commercials are produced locally with Chinese characters. Public relations is also vital to building a good corporate image.
In China, IKEA co-operates with the Worldwide Fund for Nature (WWF) on forest projects. The company insists on using environmentally friendly and recyclable materials for the packaging of their products, as part of their efforts to build a good corporate image.
Discussion and Conclusion
IKEA’s product policy in China has been to successfully standardise products as much as possible, but also customise as much as needed. But it has learned that service is also vital: free delivery and installation are the perceived rules in the local market which it needs to follow. It has further found that it is better to locate in a downtown area, easily accessible with public transport, when free delivery is not provided.
International companies that operate in China, such as IKEA, face more complicated marketing decisions than local companies. They must become culture-conscious and thoroughly research local requirements rather than simply introduce a standard model of business.