A CASE STUDY : HOW

IKEA DESIGNS ITS

SEXY PRICE TAGS

Kelompok 2 : Bagus
y
Arno Primaditya - 9115201308
ORIGIN
The origin of this IKEA is Sweden.

Dominates markets in about 32 countries.

Also conquered North America.

BATTLE PLAN

Keep making its offerings less expensive, without

making them cheap.
ONE FACTOR ACCOUNTS FOR
IKEAS SUCCESS
Good quality at a low price.
Sells household items at cheap rate but not cheapo.
Prices runs 30% to 50% below the competitions.
Price of Pang chair has fallen from $149 in 2000 to
$99 in 2001 to $79 today.
 CORPORATE MOTTO

LOW PRICE WITH MEANING

ONE OF THE IKEAS MUG
VRDE
RA
STORY OF THE MUG

IKEA works from a co-workers bright idea through to

production and sales.
Also tells about our demand and customers place on IKEA.
Our requirements-function, modern design, environmental
considerations and making sure products.
PICK A PRICE
Product development

Has a team behind every product

Designers
Product developers
Purchasers get together to discuss design, materials and suitable
suppliers.
E.g. Purchasers use their contacts with suppliers all over the world
via IKEA Trading Services Offices.
Development of Mug

Pia Eldin Lindsten (company owner) given the task of creating a

new mug over 5 years.
Also told about its cost in the stores.
The mugs are incredibly low cost.
Mug had a read knock-out price.
How to produce the right mug at right
place?

Pia and her colleagues had take into account the following
things :

Materials
Colour
Design

E.g. If the mug is made on green, blue, or yellow or white

as these pigments cost less than other shades, such as
red.
CHOOSE A MANUFACTURER

Suppliers and Purchasing

Task of developing products never ends.

Working with suppliers, the mug was shortened and the handle
change so it stacks more efficiently, saving space for transport,
warehousing and store display and not least, in the customers
cupboards at home.
IKEA is always keen to banish as much air as possible from its
packaging.
Story about a Romanian Supplier

Worked with IKEA for 15 years.

Long-term relationships help both parties to build up a
huge fund of knowledge about demands and
expectations.
Products are developed in close cooperation with
suppliers.
Introduction of code of conduct by IKEA

Governing working condition.

Environmental awareness among suppliers.
Healthy and safety conditions on the workplace.
Forbids the use of child labour.
This code is carried out by co-worker in IKEA Trading
Services Offices.
 IKEA Price Tags

Low price tags makes it crucial to the vision IKEA of creating

a better everyday life for many people.
IKEA works non-stop to reduce cost.
Low-cost mugs is an example of low environmental
considerations can influence the development of products.
Characteristics of New Mug

Lighter in colour.
Cuts costs.
More environment friendly.
Lead and cadmium free.
Use of less pigment.

NEW VRDERA
DESIGN THE PRODUCT
Designer begins design process by writing a brief.
Explains the products price.
Function.
Materials to be used.
Fabricators capabilities.
Send its to IKEAs designers and freelancers.
Refines promising designs.
Designer wants products to be like Swiss Army knives-to get
maximum functionality of minimum cost.
SHIP IT!
Distribution and logistics-lifeblood of IKEA
Important pieces of the puzzle on their road to a low price.
Sends goods at right number to right stores at right time.
Calculate the goods requirements and make sure about
deliveries.
About 2024 mugs are distributed all over the world from
Romania by rail, road and sea.
Transportation by IKEA also reduces environmental
impact.
SUPPLI CUSTOM
ER ER
Concept of Flat

Establishment of companys eureka moment in 1956.

In case of chair taking more space: remove the legs.
IKEA products have been designed to ship disassembled.
Flat enough to be sipped into the cargo hatch of a station
wagon.
Safety tied down an autos roof rack.
It lowers the shipping cost by maximizing the use of space
inside shipping containers.
Items assembled means transport volume will be 6 times
of its original volume.
From design studio to warehousing, IKEAs
employees motto

We dont want to pay to ship air

3 Times redesigning of IKEA Mugs

To maximize the number of mugs that can be stored on a

pallet.
A redesign-Added a rim such as in a flowerpot, where
each pallet could hold 280 mugs.
Another redesign-a shorter mug with a new handle,
allowing 2024 mugs to squeeze onto pallet.
Mugs sales price-50%
Shipping cost-reduced by 60%

When 25 million cubic metre of goods all over the globe is taken,
flat-pack frugality adds up.
It shifted more of its buying from Europe to the far East.
Shipping time.
Costs have become an even more critical concern.
Last year China tied Sweden atop IKEAs list of supplier countries.
Companys response
Global network of distribution centers.
Near container ports.
Major truck.
Rail routes.

18 distribution centers in the world

Handle 70% of IKEAs total product line.
30% of IKEAs products travel directly from supplier to store.
SELL IT!

Sells lot of expensive furniture by these processes :

Put a piece in a lush setting.

Let the customer fall prey to visions of wealth and comfort.
Offer plenty of easy credit.
Selling Mugs

Mugs are packed on pallet.

Transportation packaging is collected from recycling.
Price tags has been placed by the suppliers.
Display is to be done in-store.
Providing inspiration for smart interior solutions.
Contribution of customers to low prices by selecting and
collecting the products from the self-serve area.
Ease of Buying
IKEA Products

Taking them home.

Enclosing instructions to assemble them.

IKEA produced catalogues about the products printed in 34

different language versions.
Scene of IKEA stores
Scene of meticulously constructed virtual Sweden.
Company sponsoring child care facility.
Swedish meatballs and lingonberries.
Information kiosks provide advice on home dcor.
Color-coordinated cards offer plenty of suggestions.
Low-priced products that IKEA calls BTIs
(breathtaking items) are often perched on risers, framed
by huge yellow price tags.
IKEAs Point of View

Biggest selling point-price tag.

Blatantly manipulation layout.
Having plenty of time to consider purchases.
Broadcast ethos for living in the modern world.
IKEAs Main Motto for the
Customers

In New year it will be an even

cheaper.