Ikea Entry Into India
Ikea Entry Into India
Ikea Entry Into India
1.1 TOWS:
Threats:
The predominant market for furniture in India was dominated by these brands Raj and Raj,
Durian, Godrej Interio, Neelkamal, Nesta, Style Spa, Zuari, until the organised
marketing and retailing entered India. So there is the @home town, @Jagdish store which
opened to customers walking for a whole new experience in choosing furniture. Close at
heals was Reliance Furniture. The last wave was from the Indian startups in dotcom
sector, www.pepperfry.com , www.jabong.com. Keller and Jacob (2011) stated that the threat
of entry is high as the online e-commerce are offering home installation and delivery with a
hefty discount.
Opportunity:
India with its billion population has approximately around 200 million who are earning on an
average of USD 1299 a month, this translates to a huge market and tapping it is a opportunity
that IKEA cannot refuse to lose (Czinkota, 2007). Then there is round the year marriages that
ushers an opportunity to sell home furniture in a set for the newly weds. There are offices and
hotel expansions, airport lounges which are good bets, and the huge story of Indian
infrastructure boom in metro cities, and the smaller towns Tier I, II, III.
Weakness:
The international pricing will not work in India, as the consumers are very price sensitive and
wants bargain and discounts(Clark and Knowles, 2009). The range of IKEA design is very
ultra modern and chic to suit the Indian culture and living which is again pointing towards the
design elements. The size, the choice of colours, indoors and outdoors will differ due to
cultural difference.
Strengths:
IKEA boasts of the World class manufacturing facility and brand name will attract the Indian
masses who are prone to buy foreign brands.
1.2 STEEPLE:
Social Factors: The social structure in India is changing and has changed for good. The most important is the
familial system that is an extended family which has now broken down to the nuclear stage. Neidell (2008)
added that the rising middle class is a educated one and the new format is seeing the settling of working
couples who are moving towards metropolitan cities in search of jobs away from the parental extended family.
They are likely to buy the modern design furniture in their rented or newly acquired apartment.
Technological: The IT has revolutionised the Indian industry and now it has overtaken jems and jewellery in
terms its contribution to the balance of payments. More so, the computer science and engineering faculties
have contributed to shape a new India, which has major IT MNC firms to setup offices in Indian soil to tap the
talent. The development of IT in every field which is progressing has enabled the new Indian system, its
governance structure from central Govt down to the villages.
Economic: The rising middle class PPP( purchasing power parity) has increased due to the education that has
enabled the children to study and procure job (Parker, 2010). The economic capability of the new income
groups in India has changed the buying behaviour. It has led to creation of the organised retailing in the
country that is seeing the customers shifting from the made to order to ready made SKUs that needs to be
delivered with a upfront payment.
Political: The country India has a political risk in the sense that the Govt. approving the entry of the retailers
through FDI is limited to 50 but it has to partner with an Indian business partner/firm. The approvals from the
necessary political ministers make it not a hot destination for opening of a company. There are red tapism and
kickbacks that has happened in the past marring the Indian political control on the business environment.
Legal: The FDI route to enter India defines that 50:50 JV is mandatory for market penetration as per Govt.
rules. This can be avoided bypassing the JV scheme, and opt for a franchisee option. This requires to choose a
franchisee option type that will be discussed later.
Ethics: The ethical issue is about the wood that is being procured by destroying the Indian forest, which is
enabling the engineered wood, rubber wood that is long lasting and termite resistant. So there is an opportunity
to do advertising for IKEA on the ethical standpoint appealing to the educated masses who are the target
market for their products (Lester, 2006).
This gives us a bigger picture, of the economy and the social web of the changing nature of the Indian
consumers in the last decade (Cateora et al. 2006). Going forward it needs to carve a new identity in the
market hence the brand communication plan needs to be prepared. The tool of 5Cs will be used in the
following section
1.2 5Cs:
The foreign brand will always have a upper edge and appeal for the target market. The Indian consumers as
well need to be made aware about the foreign brand entry. The use of the 5Cs will help IKEA to do wonders:
Completeness: The completeness of the advertisement mix and the promotional strategies for IKEA will
enable to perk up the attention of the target consumers who are contemplating to buy furniture. Burgess and
Steenkamp (2006) stated that the advertisements need to in Classy photograph with the Indian family in happy
mood that will increase the acceptance in the consumers mind.
Conciseness: The need to keep the advertisement concise that tells half, is a clever strategy to create a pull the
consumers to the inquisitiveness mode. The need for the creating the advertisements which contains the visuals
more than the descriptive content will help IKEA to make inroads into Indian consumer psyche.
Clarity: The spread and the layout has to be in distinct which should be able to attract the visual gaze be it a
print ad or a outdoor campaign. The need to design the conceptualisation therefore has to be done by engaging
a top notch advertising firm in India that suits the IKEA budget earmarked for the foray in the country.
Concreteness: The ads should emanate a feeling of the solidity in the way it is depicted for the target masses
in Indian context. The consumer should read the caption or the tagline, that should be in the Indian vernacular
languages to adapt to their linguistics for better acceptability.
Correctness: The correctness of the advertising is the place the right ad at the right time, and the follow up ads
to reinforce the buying behaviour towards the first purchase. The correctness of the advertisement meaning is
also critical that will enable the Indian consumers to understand the utility value of buying a IKEA product.
However, designing the advertising campaign in not enough as there are possible forces that will be acting on
the brand IKEA in the Indian soil.
5.Conclusion;
Thus the overall plan for the right market entry strategy will be dependent on the IKEAs board approving the
franchisee board penetration route. It will clearly layout the process, date wise roll out, the payments in terms
of royalties or annual fee, share of profit percentage. The successful launch thus will be requiring the need for
detailing in each of the interlinked process which will contribute towards the franchisee mode entry. The
challenges from the Indian perspective will be to counter the regulations, compliance, health and safety,
welfare for host country employees along with the training. The control factor in the franchisee type chosen by
IKEA company owned and franchisee operated therefore will be the key to initiate actions that are IKEA
concepts while the local Indian franchisee will carry out the execution. The estimated time line from
conception to launch is approximately around one and half years, which shows that the goals of 2016 detailed
earlier is apt to align functions, global supply chain, and built distribution capabilities in the Indian
subcontinent. Much of the advertising in local language with advertising mix has been planned to support the
online and the physical store push. The brand visibility factor is the key to the capturing of the Indian
customers attention.
#marketentry, #IKEA #casestudy #India #brand, #IKEAporter, #globalstrategy #IKEASTEEPLE,
#IKEA5Cs, #IKEATOWS
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