IKEA in Australia

As a part of International Advertising ADV301 we were assigned to research an advertising campaign for a product or brand that is marketed locally as well as internationally. To write a report comparing and contrasting the actual advertisements/commercials and campaigns taking various factors into account.

The following report will examine the world’s largest furniture retailer Ikea. By studying Ikea’s global strategy as well as the national strategies and the different advertisement internationally and domestically one will get a deeper understanding of their marketing and advertising executions. The advertisements that will be reviewed in this report are two TV commercial, one from Australia and one from the UK. I chose Australia and UK just to show that even countries with similar cultural preferences can have very different approaches. Background

A Swedish man named Ingvar Kamprad in a small town called Älmhult, Sweden, founded Ikea in 1943. The company distributes its products through its retail outlets located in over 39 countries. As of October 2010, the chain has 313 stores, most of them in Europe, North America, Asia and Australia (Ikea, 2010).

Ikea’s vision is to create a better everyday life for the many people (Ikea, 2010). Their business idea supports this vision by offering a wide range of high quality, well designed and functional home furnishing products to low prices so that as many people will be able to afford them as possible. Ikea has made this possible by using inexpensive materials in a novel way and minimizing production, distribution and retail costs.

IKEA and Advertising

IKEA’s positioning statement is “Your partner in better living. We do our part, you do yours. Together we save money”, referring to the ready-to-assemble furniture.

The brand image is the result of over 50 years work by Ikea’s co-workers at all levels all over the world. The actions done, things being said, the products offered, the low prices, presentation of product range and the information provided to customers all contributes to the overall image. Ikea has a long tradition of marketing communication and has upon till recently mainly focused on print media, which has shown to be successful. However in the last five years additionally media have been used to an extended degree including TV, radio and Internet (Wise, J., 2000)

During the years Ikea has had a number of controversial TV commercial, some have even been banned form certain countries throughout the world. However Ikea believes that their controversy is what makes them stand out and separate them from their primary competitors. The marketing department means that if you like it or not it engages people, it provokes conversation and debate, which successfully results in raising awareness of the brand and increasing sales (Wise, J., 2000). Ikea uses advertising to support many different areas of the business including brand awareness, store themes, catalogue drops and store openings.

Every year Ikea publish a free catalogue distributed both in stores and by mail. The catalogue is published in over 36 countries and translated into 27 languages worldwide. The catalogue consumes 70% of the company’s annual marketing budget and is considered to be the main marketing tool of the retail giant. 110 million catalogues were circulated last year – three times higher than that of the Bible, with 13 million of these being available in the UK (Ikea, 2010)

Advertising strategy

IKEA’s target audience is the same in each country they are situated in and is roughly described as “everyone” but mainly focusing on young families and couples starting out. “You have more ideas and ambitions than you have a thick wallet during that period of your life, we think Ikea fits in mostly there” says Christer Granstrand, head of Ikea’s international marketing department (Wise, J., 2000). However the target audiences differ from country to country in terms of how they perceive or interpret symbols or stimuli, respond to humor or emotional appeals, as well as in levels of literacy and languages spoken.

Most of Ikea’s ads are known to have a sense of simplicity, practicality, rebelliousness and the unexpected. Ikea has managed to maintain a kind of overall brand personality across the markets, even if the company is split by country into franchises operating with almost complete autonomy, including setting its own advertising budget and developing its own marketing initiatives (Wise, J., 2000). This means that the decision process is centralized but the advertising approach is regional (Mueller, B. 2006). Campaigns are based around the unique marketing conditions and cultural sensibilities of each country. Ikea realized that to strengthen its presence in the global market it was necessary to localize. They have over the year worked with different advertising agencies to bring out some of the most creative and unconventional television spots across the globe.

Ikea uses a standardized strategy with modified executions. Within a homogeneous environment advertising standardization is recommendable. If, on the contrary, environmental variables across markets are heterogeneous, customized advertising should be favored (Oboulo, 2010). Some studies argue that a standardized advertising strategy is the most desirable option when consumer needs are universal, while others argue that adaptation of the advertising strategy across boundaries is more appropriate due to differing consumer buying motives and cultures. Languages barriers, media limitation and culture diversity are three major factors that need to be taken in to consideration when developing a strategy.

Language is one of the major barriers to effective communication through advertising. The problem involves different languages of different countries, different languages or dialects within one country. Communication is impeded by the great diversity of cultural heritage and education which exists within countries and which causes varying interpretations of even single sentences and simple concept (Payne, N., 2009) Even the simplest and most taken for granted aspects of advertising need to be carefully researched. Colors, numbers, symbols and images do not all translate well across cultures.

Ikea sells home furnishing products, but not just products but also a way of life, they sell a lifestyle. The lifestyle we have and the way we live differs enormously between cultures and that insight is something Ikea has taken into account not only by tailoring the product range depending on the market but also adapting the advertising execution accordingly. For example, European spots, particularly those in the UK, are more in your face than those in North America, which tend to be more comedic. However Ikea has in general over the last years moved towards idea advertising and away from product and price spots that define many of the chain’s competitors (Wise, J., 2000).

A reason for Ikea’s international marketing success is that executives from Sweden are located wherever Ikea has a head office such as across Europe, North America, Asia and the Middle East, which helps to carry forward the company’s corporate culture (Wise, J., 2000). The international marketing department develops common strategies during meetings with local marketing managers where they look at common values, ideas and how they would fit with the traditional vision of Ikea.