Competitive advantages

 

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Competitive advantages

I believe that the most important competitive advantage of IKEA in the work on the assortment is definitely the presence of the assortment matrix. Thanks to the fact that a decade ago, four style groups were identified with a precise definition of how they should look, the firm has three distinct advantages.

 

First, as we have seen, it is quite easy for a business unit to find voids in its own assortment and explain its wishes to a designer. In other words: “country” has many different incarnations on the market. In the past, in this segment, IKEA sold vendor-specific models which include user manuals download PDF http://ikea.manymanuals.com/ (products developed by the vendor and stored in showrooms). Those with a good memory may remember the ABO series, which was represented by a bed, a chest of drawers, a bookshelf, etc. Inexpressive design and sparingly measured material to reduce the price naturally created problems. Every competitor standing up developed a copy of ABO, which soon negatively affected prices in a fight for the buyer, which IKEA was never able to win. Simply put, the ABO concept meant that every furniture retailer consistently saved on wood, color and upholstery, to lower the price in the fight for the title of the cheapest. As the product became standardized, only price differentiated one piece of furniture from another. Soon enough, we found ourselves over the edge, as the furniture looked more and more like the thin and thin caricatures of the original. Not furniture, but sticks, as Ingvar somewhat scornfully spoke of the series. (It should be noted that the segment of peasant furniture for over fifteen years has been one of the largest in the entire range in terms of money turnover.)

 

To avoid the ABO deadlock, we made a roundabout maneuver and, in record time, launched two unique series within the framework of "country" - LEKSVIK AND MARKER. MARKER series, developed directly at the Swedwood factory, in just five months, from an idea to a store product (that is, about a sixth of the usual time). The reason for this, in addition to good cooperation, was the insufficient workload of the factory and the presence of a huge amount of spruce wood. At that time, spruce was much cheaper than pine, but the disadvantage was that there are many knots and other cosmetic defects in spruce wood, and therefore it is difficult to make standard furniture covered with transparent varnish from this raw material. The problem was solved by cleaning, in particular, the glue seams, which made the surface look antique, and then soaked it with a dark stain. Designers, product developers and technologists have carefully examined every smallest detail in order to make the most of the material and thereby reduce the cost to the buyer. The walls, of course, were made thin, but all the corners and the upper part were made of solid pieces of wood, so that the furniture gave the impression of solid, stable and high quality. As a result, the purchase price was 895 kroons, which is about a third of what a similar product would cost from competitors.

 

At LEKSVIK we were inspired by the Gustavian assortment, which we rolled out at that time. The bookshelves in this series featured attractive, softly rounded shapes, which designer Karina Beng has kept. At the first "flush tip", where a prototype from a model workshop was demonstrated, we all realized that we were facing a future sales leader. I will never forget how the procurement strategist proudly said that we could afford the 995 SEK sale price. Quite spontaneously, I asked why we could not produce it for 695 crowns with a small gross profit. A colleague blushed with irritation and said that this was impossible, and his reaction was quite understandable, since a lower price was not possible with the manufacturers with whom we were negotiating. A few months later, by attracting more producers in low-cost countries and - perhaps most importantly - by doubling or even tripling the volume, we still managed to achieve a sales price of 695 kroons per gross with a profit of 10-20% in stores. After reaching a lower and completely unapproachable price level for competitors, nothing in quality, design or product characteristics has changed. It is with such elegant solutions that IKEA is distinguished when its mechanism works most harmoniously. Unheard of quality and attractive products at prices that competitors can only dream of. After reaching a lower and completely unapproachable price level for competitors, nothing in quality, design or product characteristics has changed. It is with such elegant solutions that IKEA is distinguished when its mechanism works most harmoniously. Unheard of quality and attractive products at prices that competitors can only dream of. After reaching a lower and completely unapproachable price level for competitors, nothing in quality, design or product characteristics has changed. It is with such elegant solutions that IKEA is distinguished when its mechanism works most harmoniously. Unheard of quality and attractive products at prices that competitors can only dream of.

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