International Marketing plan for IKEA into India

That, coupled with the friendly government policies and the favorable demographics makes it a perfect destination for IKEA. An environmental analysis on India, internal and external, also positions it as an excellent destination for IKEA’s expansion. Nonetheless, the entry may not be that smooth. Even so, an analysis of the competition available places IKEA at a vantage position. In its online and offline endeavors, IKEA will need to have a favorable entry strategy. The rationale for choosing India 6 2. PESTEL Analysis of India 7 3. Literature Review 9 3. Relevant Industry Analysis of India 9 3. Porter’s Five Forces 10 3. Entry Mode Strategies for the offline market 17 8. International Marketing Communications Models (IMC) 17 8. AIDA Model 17 8. Analysis of the AIDA Model 18 8. Integrated Marketing Communication Planning Model for offline 18 8. Integrated Communication model 23 12. Analysis of Integrated Communication 23 13. The rationale for the online activities 24 13.

The benefit of globalization to enhance online activities in India 24 14. Conclusion 24 15. An analysis of the Indian market shows that it is one of the best to invest in given the potential it has. By expanding to India, IKEA will be entering a $20 billion furniture industry (Exchange4media, 2016). Sources of Information In this report, I will mostly use primary and secondary sources of information. As for the primary sources, I will rely on peer-reviewed journal articles, whereas for the secondary sources, I will use books and credible online sources. History of the IKEA Headquartered in Leiden, Netherlands; IKEA, a global furniture retailer, was founded in 1943 by a 17-year old carpenter Ingvar Kamprad. It for instance, has constantly evolving investor friendly policies as well as the government’s emphasis on infrastructure development. The other factors include lower costs of production as a result of lower labor rates, availability of skilled labor as well as the country’s location which neighbors other potential markets in South Asia.

India also has a vibrant democracy and very favorable demographics, i. e. youth population surpasses 50% of its total population (Govindaran&Venkatesan, 2018). trillion. That puts it as the 7th largest economy in the world with the country’s GDP expected to grow at 7% in the financial year 2018. Again, concerning taxation, the country has made significant strides in streamlining the same with the current corporate tax rate at 30%. Other factors include but not limited to a decreasing inflation rate and a negative trade balance (Rahman, 2018). India’s social environment is perhaps its main strength. The country has reliable 3G and 4G network technologies which aid technological projects (Pestle, 2014). India has made significant progress concerning the legal environment including the Companies Act of 2013 that governs operations of companies in India. There are also several laws that regulate the labor issues in India, for instance, the Employee’s State Insurance (ESI) Act 1948, the Industrial Disputes (ID) Act 1947, the Payment Bonus Act (PBA) 1965 and the Maternity Benefit Act (MBA) 1965.

Again, as regards the environment, industrialization in India has negatively impacted the quality of air in India. Other environmental wastes include industrial wastes, lack of water resources as well as the lack of legislation (Rahman, 2018). They include among others exporting products, acquisitions, alliances, joint ventures, establishing subsidiaries, etc. Relevant Industry Analysis of India This section details the external factors that affect business operations in India. Porter’s five forces tool will be used to analyze the competitive environment in India’s furniture industry. Porter’s Five Forces The Porter’s five forces model is a formula used to deconstruct the industry structure into five primary variables namely rivalry among existing firms, the bargaining power of suppliers, the bargaining power of customers, the threat of new entrants as well as the threats of substitute products and services.

The competitive rivalry in the furniture industry in India is to some extent huge with the main competitors being Urbanladder, Pepperfry and Wooden Street. There is also the threat of substitute products. For IKEA, it is low. Over the years, IKEA has built its brand image and gained a reputable status. That, coupled with its other strategies, for instance, affordable pricing, customer service as well as the availability of many products under one roof minimizes the threat of new entrants. The threat is also low since the products and services that can replace those offered by IKEA are few. The other competitor as aforementioned is India’s leading e-commerce player Flipkart. The company partners with local solid wood furniture makers and sells under the private label for its new sub-brand ‘Pure Wood.

’ Still within the online category is Amazon, an American e-commerce giant, which in the same way offers a furniture product category. In addition, there is Pepperfry which is an online furniture retailer in India. The company has a very engaging mobile application that enhances its customer’s experience. SWOT Analysis IKEA has a brick and clicks strategy meaning it has strengths, weaknesses, opportunities, and threats for its offline and online activities. IKEA’s strengths may include having a wide range of products and styles which the customers can assemble themselves. The company’s brand reputation and market presence are also highly advantageous as it lowers the costs of promotion. More so, it has a self-service model where the visitors can shop for themselves. IKEA’s global standardization strategy has also facilitated global sourcing.

The threats, on the other hand, include competition from other sectors are they organized or unorganized that deal with similar products as IKEA, for instance, Walmart. Others include legal and regulatory changes as well as an increase in demand for premium products (Jurevicius, 2013). Marketing Mix (7P’s) Figure 2: 7 P’s (MBASkool, 2018). IKEA is an international marketing business that sells furniture and accessories across Europe, North America and in some parts of Asia. For the offline strategy, the product offerings include furnishing, bathroom fitments, kitchen fittings, and home extensions, etc. IKEA has 28 distribution centers and11 customer distribution centers in 16 countries globally where its inventory is effectively tracked and controlled and in so doing catering to the demands of its stores (IKEA, 2018). Factors influencing the choice of channel There are many factors to consider while selecting a distribution channel.

These factors may include product considerations such as the unit value of the product, the weight of the product, standardization, product nature, after sales services, technical quality, etc. There are also market-related considerations which include the market size, the nature of customers, and the location of buyers. Other considerations are concerned with the manufacturer and include goodwill, desire to control the channel of distribution, financial strength, the volume of production, etc. Entry Mode Strategies for the offline market The Indian market is the second most populous market but also one of the most complex to enter. As a result, IKEA should come up with a good entry mode strategy. The most important consideration is to find the right local player to have a partnership. The partnership can be in the form of a joint venture or a franchise.

However, franchising would offer the best entry mode for IKEA regarding low costs and less bureaucracy. Integrated Marketing Communication Planning Model for offline Integrated marketing is an approach of unified and seamless promotional tools. When all the communication tools work together in harmony, they work better. The information relayed across all communication channels is thus consistent. In this case, a six steps process of coming up with an integrated marketing communication will be analyzed. Analysis of Integrated Marketing and Communication Planning Model An integrated marketing plan comprises six main steps. Others include using surveys, measuring the return on investment as well as assessing the referral traffic (Peltier, Schibrowsky, & Schultz, 2003). Integrated Communication Model Marketing communication is done using different marketing channels. Integrated communication involves creating a unified and faultless brand experience for consumers across all channels.

Analysis of Integrated Communication Model Integrated communication exhibits four main characteristics; coherence, consistency, be complementary and show continuity. Alternatively, the three elements that make up the integrated communication include marketing communication, public relations, and human relations. Many opportunities make the online strategy a viable option. First, there is the growing number of online market segment and online users in India and Asia. The other opportunity is about the new technologies and features in the e-commerce industry which improves the purchasing behavior of the young population. Besides, the big data analytics makes it possible for online businesses to understand their target customers, offer the right products. The growing cloud business as well will drive the brand’s fast growth. IKEA’s prices match the quality of the products they offer (MBASkool, 2018). People are usually at the center of IKEA’s business philosophy, for instance, they have an App called the IKEA Place which uses augmented reality to show customers how the furniture will look like at their homes.

Usually, IKEA will make its furniture and places it on their online platforms where customers can select and order. A majority of the interaction takes place on the online platforms, and the customers have an option of having trials for some of the featured products. IKEA provides its consumers with a unique feature of having all kinds of furniture and accessories on one online platform. After generating interest, IKEA should build a desire in the target customers to own the product through timely engagements. The final step for the AIDA model is an action where the consumer decides to purchase a given product. For the online platform, a customer visits the web or contacts a representative where they will access several available offers tied to free shipping (Lamb, Hair, & McDaniel, 2009). Integrated Marketing and Communication planning model For the online strategy, IKEA will require an integrated marketing and communication planning model with an objective of increasing web traffic, increase sales, increase return customers among other things.

IKEA should create interactive websites, and use social media to reach out to potential consumers (Peltier, Schibrowsky, & Schultz, 2003). For online strategies, integrated communication can be realized via approaches such as Search Engine Optimization (SEO) where different techniques are employed to improve a website’s ranking and hence attract more visitors. Significant actions should underpin alternatives that increase website interaction through user-friendly mobile applications (Pawar, 2014). The rationale for the online activities Many benefits come with the entry of IKEA into India’s market. The growth of internet users and subsequently, online marketing has made this approach highly viable. The number of internet users in India as of 2010 was 81 million which makes it a huge market segment. IKEA’s affordable pricing and differentiation approach give them a competitive edge over its rivals. The entry mode strategy for IKEA’s offline business is forming a joint venture or franchising.

For the online, an acquisition can work correctly. Communication with stakeholders is essential. The AIDA, IMC and ICM models will facilitate IKEA’s interaction with consumers and other stakeholders. Sood, R. July 21). How IKEA adapted its strategies to expand and become profitable in China. Retrieved November 10, 2018, from https://www. businesstoday. Retrieved November 09, 2018, from https://www. export. gov/article?id=India-e-Commerce Govindaran, V. Venkatesan, R. February 16). Hoskisson, R. E. Strategic Management: Concepts: Competitiveness and Globalization. Boston, MA: Cengage Learning. Huang, Y. ikea. com/in/en/ Jain, V. July 19). tips for a better Indian market entry strategy. Retrieved November 07, 2018, from www. Dedrick, J. Impacts of Globalization on E-Commerce Use and Firm Performance: A Cross-Country Investigation. The Information Society , 323-340. Lamb, C. Hair, J. five challenges for Ikea in India. Retrieved November 08, 2018, from https://www. livemint. com/Companies/hpM1JrPxNIQQHpvwykMLeN/Five-challenges-for-Ikea-in-India.

html?facet=amp&utm_source=googleamp&utm_medium=referral&utm_campaign=googleamp MBASkool. Peltier, J. W. Schibrowsky, J. A. Schultz, D. Retrieved November 09, 2018, from https://www. howandwhat. net/pestel-analysis-india/ Samiksha, S. important factors affecting the choice of channel of distribution by the manufacturer. Retrieved November 13, 2018, from www. Public Relations and Communication Management: Current Trends and Emerging Topics. New York: Routledge. UNCTAD. Foreign Direct Investment Database. United Nations Conference on Trade and Development. We assure you that any information you provide will be used mainly for academic purposes. We shall not share any information with the business community without your consent. Please, give faithful responses to these questions; 1. Which age bracket do you fall? Below 18 18-40 above 41 2. What are you interests? 3. Would you shop in a new store if it opens doors today? Yes () NO () 10.

If Yes, why? The stores offer poor services () The stores charge higher prices () I need to change my store () 11. What would you like the new store to do differently? Customer satisfaction () Charge cheap prices () Deliver goods at my doorstep () 12. What do you think is the major setback in setting up business in India? Poor customer service () Technology challenges () Government regulation () 13. What are the opportunities India that could enhance business operations? Youthful population () government policies () 14.