IKEA Brand Scorecard Final Essay

Introduction The brandscore card is an essential element used to evaluate the overall equity of a brand. The scorecard is an effective way to asses the unmet needs of the brands customers, it enables the brand to stay relevant and effective in the marketplace in a methodological manner. The scorecard should be able to fill any gaps that have developed within the brand’s approach to management and its strategic direction, as well as developing and maintaining a functional management system that can grow as the brand grows, while remaining comprehensive and completely brand relevant. (Kaplan and Norton, n.d.) In terms of evaluating the current situation of a brand, a brand scorecard enforces a successful management plan by directly addressing what is at the core of the brand. It allows for the brand managers to objectively rate their brand against their own set of standards, based on their strategy. Brand Planning 1 IKEA’s Mission & Vision In order to create a viable scorecard to measure against the IKEA Brand against, it is important to define exactly what the vision and the mission of the IKEA Brand is and if they honour their vision and mission. According to IKEA’s business concept , â€Å"At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them†(Ikea.com, 2014). From their own definition of what their vision is it can be said that they aim to vastly improve the quality of the lives of people who are in a lower income bracket, whilst still maintaining a certain level of product superiority and status. The IKEA brands vision is to use the concepts of conservation and minimalism to their full potential, by focusing on the effectiveness of simplicity and the functionality of each product rather then purely the aesthetical components. The price of each IKEA product makes a large part of what their brand vision entails, â€Å"Low prices are the cornerstone of the IKEA vision†(Ikea.com, 2014). By using their low prices as the foundation of their brands vision, Ikea fulfils a widespread and need for product availability. 2 Potential Goals In line with the Ikea vision there will always be consumers in need of their products. By following their current goals such as: Keeping prices low – at design phase, there are strict product requirements which need to be met in terms of function, efficient distribution, quality and impact on the environment. A certain level of quality is always maintained – by using effective negotiation skills and carrying out rigorous quality control evaluations on their materials. Awareness and measurement of their brand environmental impact – Ikea are transparent in their approach to choosing suppliers and using sustainable materials that can be recycled and renewed as well as monitoring and controlling a high standard of their social and working conditions. Consumer friendly product – throughout the supply chain, Ikea is true to their environmentally friendly approach from raw materials all the way to the end user. Reduce carbon emissions – IKEA gave 9000 bycicles to their employees as well as subsidized their employees’ fairs to work. This increases healthy living for their employees and reduces carbon emissions. They also designed their water cans to stack on top of each other neatly, reducing the amount of trips it would take to transport them to the stores. Maintain existing stakeholder relationships – Ikeas ensures that the communication lines between suppliers, manufacturers and of their  stakeholders are clear and concise according to both their vision and mission. In order to access the potential goals of the Ikea Brand, it is necessary to consider the following statement â€Å"It’s not difficult to manufacture expensive fine furniture: just spend the money and let the customers pay. To manufacture beautiful, durable furniture at low prices is not so easy – it requires a different approach. It is all about finding simple solutions and saving on every method, process or approach adopted – but not on ideas.† (Ikea.com, 2014). We have identified two potential goals for Ikea: Simplistic Assembly Process – their assembling instructions are crafted so that consumer can easily interpret the instructions in a straightforward manor resulting in easy product assembly. Bettering current environmental impact – ensuring that they maintain their current best practice with specific reference to their means of distribution and manufacturing, by making sure that they are highly aware of the environmental impact of the resulting increased traffic that may occur from erecting stores. 3 Corporate Objectives To produce cheap and affordable product for the public and their customers To provide a better life for those who cannot afford expensive products To ensure that their customers find what they are looking for in their stores. To provide low prices without compromising on quality 4 Situational Analysis 4.1 Macro: Economical – High profits, high growth and good profit margins has contributed to the retail market. Social – IKEA have formed partnerships with WWF and UNICEF in order to educate others to be aware of child labor and destroying forests. Technological –IKEA have use excellent recycling methods and also encourage their stakeholders to use technology to their advantage in terms of efficiency. Environmental – IKEA have implemented regular measurement tools and inspection to monitor all noise, water, air pollution such as the â€Å"E-Wheel† (IKEA, the Times 100) Legal – IKEA has in store terms and conditions and abide by industry best practice in the suppliers that they choose to work with and the standards that they demand on manufacturers in terms of the law. 1.2. Market The market – 43 manufacturing units in 12 countries. The Chinese market has almost doubled due to large urbanization needs. (Li Fangfang, China Daily USA, 29 August 2013). IKEA has almost 300 stores in 36 countries and 42 distribution centres in 18 countries and over 1000 suppliers. (National Geographic, 2013, n.d) Competitors – IKEA’s main competitors are: Wal-Mart Stores, Ashley furniture industries, Howden joinery group. IKEA have the competitive advantage because they have researched where to find the best resources, they have developed the latest technologies in manufacturing, they have encouraged their suppliers to use the latest in research and development and the have built sustainable relationships with their stakeholders. Consumers – IKEA has a wide spread target market as they have such a vast variety of products that are trendy and extremely affordable. It appeals to those wanting the latest styles but also to the market that cannot afford costly furniture. Location – IKEAS stores are generally located just outside of the main town due to their stores being so large. 4.3 Micro – SWOT Analysis Strengths: Powerful Brand Image Wide range of products & Styles Funky up & up-to-date Swedish designs Cheap & Affordable Able to assemble your own furniture One stop shop Friendly atmosphere and layout of their stores They have restaurants and day care Strong global sourcing Weaknesses: Assembling furniture yourself may not appeal to certain clusters of consumers Not too many stores across the globe For those looking for a quick shopping experience, the store might be unappealing IKEA Swedish designs could limit their target market Quality of furniture is not built to be life long Opportunities Untapped Markets (Africa) Make consumers more aware of IKEA Open high end stores or smaller express stores Create more online store presence Threats Increasingly competitive pricing Social trends such as a slow down in first time home owner buyers Economic factors such as less spending power due to recession effects 5 Key Issues Quality of Products – some products may vary in quality from country to country. Things such as a countries standards for manufacturing may not be as high compared to another country and therefore the end product could be different. Size of organisation – if there are any changes implemented to IKEA’s strategy or operations, it is difficult to roll out to their entire organisation as they are so massive. Differentiation – with the current  economic climate, many furniture stores are producing low cost furniture but may not have the same sustainable values as IKEA. This makes it challenging for IKEA to keep their costs low as well as try and differentiate themselves from their competitors. Spending Power – The economic recession has hit consumers hard and therefore they have less spending power which has lowered expenditure on goods such as furniture. 6 Assumptions The Ikea brand assumptions are based upon their established and successful financial revenues: The Brand has remained current, both socially and culturally. The brand is empathetic and touches the consumers on an emotional level. There is a considered environmental plan that the brand is aware of in all of its practises. The brand focuses on upholding ethical business practises, it is transparent. 7 Segmentation, targeting and Positioning IKEA targets young and fashionable people as its main consumers; in particular those love modern furniture and accessories. Therefore, its products are more colourful and novel. In addition, IKE fixes the products’ prices at a lower level, which is quite attracting for the average consumers, such as white-collars. IKEA mainly target the younger market who like innovative products. 8 Brand objectives To increase market share in news segments such as Africa, Asia and South America. The benefits of this would be increased profits, brand awareness and increased market share. Reduce costs to appeal more to their intended target market in order to increase market share. One way in which IKEA are trying to cut costs is by 9 Strategies and plans IKEA plans â‚ ¬1.5bn investment in wind and solar energy through to 2015 as part of new sustainability strategy in order to be completely independent from using energy and resources. This will protect their consumer from price spikes and their own organization from fluctuating resource and energy prices. IKEA plan to become an energy exporter with their renewable energy.  IKEA has dedicated and committed themselves to making sure that delivery trucks are at least 60 to 70 per cent full. They will replace 1.2 million light sources in stores with low energy consumption LEDs, as well as only sell LED lights in their stores from 2016. (Will Nichols, BusinessGreen, part of the Guardian Environment Network theguardian.com, Tuesday 23 October 2012) 10 Communication Objectives To develop better communication and integration strategies so that IKEA has the same brand quality through their organisation internationally. 11 Task Budget The Ikea brand focuses on their project management, employee management and their resource management processes by directing all employees in a positive manner, â€Å"IKEA co-workers enjoy many advantages and opportunities from working in such a free and open environment – but all freedoms are counter-balanced with expectations. For example, the expectation that each co-worker is able to assume responsibility for his or her own actions. Although on the surface it is evident that we have a lot of fun together working at IKEA, at the same time all are expected to be very hardworking and conscientious. Here are some more examples to illustrate give and take, IKEA style.† (Ikea.com, 2014) By ensuring this positive management style they are able to entrust their business objectives to the right employees. Each task is managed and set according to specific and expected outcomes. The tasks and objectives can be achieved through their smart brand management and budgeting correctly. 1 – The IKEA brand makes a point of acknowledging its brand history and the various ways that it has left a brand footprint within its brand environment. There are however inconsistencies between what the employees think of the brand and what the consumers think of the brand. It can be recommended that the employee engagement efforts transcends into the appropriate marketing strategies targeted to the consumer. By doing so there will be a far more holistic brand perception. 2- The IKEA brand is targeted at a lower income bracket and it does this successfully by continuously seeking to source affordable and quality suppliers. The importance of continuously having their correct target market in mind is always a census thought in the mind of the brand managers. 3- The IKEA brand strictly sticks to their current corporate identity, all the brand collateral is consistent, they make a point of doing all marketing on an international level. However they must be couscous of their various contact points ( mainly at the smaller branches) as these are sometimes overlooked. 4 – IKEA is able to deliver a consistent product, there are various return policies in place that allows the consumer the ability to deal with any product issues in a simply and easy manner. 5 – IKEA is responsible towards all its stakeholders, it maintains the relationships by using proactive objectives to direct all of its future  interactions. The brand can improve its equity by reinforcing the current brand image internally, engaging with all the levels of employees. 6 – IKEA offers products that are appropriate to their brand visions, they better the lives of the consumers. 7 – IKEA offers various and innovation products. The brand should continue with their irreverent approach to innovation. 8 – IKEA has a pricing strategy that is unarguably inline with their brand identity. The pricing strategy has set a ideal brand expectation to the IKEA consumer, It is however of utmost importance that IKEA is alway consistent in terms of pricing. 9 – IKEA is aware of and involved with every product that they product, each is treated as potential development and there is no apparent product hierarchy. 10 – The IKEA brand is a green focused brand throughout its entire supply chain, it upholds a impeccable environmental process. However there is room for improvement within their distribution sector. References Businesscasestudies.co.uk, (2014). Introduction – Building a sustainable supply chain – IKEA | IKEA case studies and information | Business Case Studies. [online] Available at: http://businesscasestudies.co.uk/ikea/building-a-sustainable-supply-chain/introduction.html#axzz3BWC79qBb [Accessed 24 Aug. 2014]. Ikea.com, (2014). Our business idea – IKEA. [online] Available at: http://www.ikea.com/ms/en_SG/about_ikea/our_business_idea/index.html [Accessed 24 Aug. 2014]. Ikea.com, (2014). Our low prices – IKEA. [online] Available at: http://www.ikea.com/ms/en_SG/about_ikea/the_ikea_way/our_business_idea/our_low_prices.html [Accessed 25 Aug. 2014]. Kaplan, R. and Norton, D. (n.d.). The balanced scorecard. 1st ed. http://www.ukessays.com/essays/marketing/the-critical-issues-faced-by-ikea-marketing-essay.php Will Nichols for BusinessGreen, part of the Guardian Environment Network theguardian.com, Tuesday 23 October 2012 http://usa.chinadaily.com.cn/business/2013-08/29/content_16929111.htm http://money.howstuffworks.com/ikea4.htm (National Geographic, 2013, n.d, http://www.natgeotv.com/ca/megafactories/ikea-facts) Essays, UK. (November 2013). An Analysis Of Market Segmentation Of Ikea And Bandq Marketing Essay. Retrieved from http://www.ukessays.com/essays/marketing/an-analysis-of-market-segmentation-of-ikea-and-bandq-marketing-essay.php?cref=1 Essays, UK. (November 2013). Competitive Advantage And Problems Faced By Ikea Marketing Essay. 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