Marketing-Generics | Blog | {More Billy bookcases than people in Poland

More Billy bookcases than people in Poland

According to a recent article in the Daily Telegraph Ten per cent of Europeans are conceived in one of its beds. Two billion of its meatballs are consumed annually. And last year more copies of its catalogue were printed than the Bible”.  They are talking about IKEA of course, which now seems to be present in every country in the world, (although I guess there are no plans for one in North Korea just yet).  How are they so successful?

IKEA was founded in 1948 by Ingvar Kamprad with the vision of providing “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”.   This view of the world is eerily close (note I didn’t say copied) to Henry Ford’s vision of a car that would be “... low in price that no man making a good salary will be unable to own one...”   Nevertheless, Kamprad’s vision came true and has democratised good design and made a lot of money for itself in doing so.  The Telegraph says that IKEA have sold 41 million of its Billy bookcases, which is incredible volume, and is one for every man, woman and child in Poland, for example. 

The Telegraph says there is no customer service at IKEA, but my experiences have been that you can get help and good advice from knowledgeable staff, although it can take a long time in the queue admittedly.  As a student of business though, for me IKEA has 3 enduring lessons one can learn from:

1.  Get the product right and you can almost fire the sales force (well I am being provocative, but I guess the 41 million Billy bookcases didn’t take that much selling effort and overcoming objections...)

2.  Build an augmented product.  IKEA has great range of products and often outstanding design, but it’s the total shopping experience, the crèche, the restaurant, the easy parking, the Marketplace – it’s the whole package which keeps drawing customers in their millions

3.  Build a strong SCA.  For the foreseeable future, IKEA’s strategic position and competitive advantage and insurmountable by any competition.  Many companies talk about getting Sustainable Competitive Advantage (finding the ‘SCA’) without always realising that it’s thecombinationof advantages which build an un-attackable position, and that’s exactly what IKEA have done.  We all know that IKEA offer good Scandinavian design.  But doesn’t good design usually cost money?  To be able to do Scandinavian design at low prices? – that’s difficult to replicate and attack.  We know that keeping a wide range and choice costs a lot in terms of stock and logistics efforts.  But IKEA offer Scandinavian design and wide (widest?) range and at low prices!  That's really difficult to compete against.  But in addition, like Wal-Mart, IKEA have built superb logistics and business execution, so in the end their SCA comprises a combination of several, significant advantages, giving them a massive advantage over the competition.  So far, I have only seen the company Fly in France who get anywhere near IKEA’s offer, but they lack the critical mass, global presence and sustained profits of IKEA to be a real threat, so it looks as if IKEA will be selling many more Billy bookcases for some time to come        

Posted on: Tuesday, April 24, 2012