IKEA: International Marketing Strategy (Brazil's example)

Résumé du document

This document outlines IKEA's international marketing strategy with specific reference to Brazil. Brazil has no cultural conflicts and is an untroubled multiracial society that respects all immigrants and religions. Politically, the country is a conflict-free democracy with stable public institutions that uphold international laws and promotes progress and peace between nations. Some of the key Brazilian solid macroeconomic fundamentals are the key factors driving the sustainable growth of the country. Factors such as its consistent fiscal policy, inflation under control, institutional stability, declining government debt, rising GDP ratio, growing industrial output, and decreasing interest rates play a significant role in the progress of the nation. According to Latin America's largest science, technology and innovation system, investment grade forecast by 2007/2008, cultural differences are bound to exist in business. Brazilians feel that informal relation is very important in negotiation. They aim at creating a trustworthy climate with their interlocutors. Brazilians are very particular about the value of the product and novelty; and often cross check the same with European and American trends.

Extraits

[...] IKEA works like a furniture‘s hypermarket. We can find all the types of furniture and supply for the house ‘under only one roof'. All the stores are equipped with a large free car park to be able to receive a lot of customers. Each set of product is exposed in a particular environment and arranged in a certain way so that the customer will like them in the store, so that they can stay as long as they like and take pleasure in making their purchases. [...]

[...] These enterprises are located in the centre-south region. And in some areas they constitute a furniture pole like Bento Gonçalves in the Rio Grande do Sul Estate or Votuporanga in São Paulo. Distribution: The commercial landscape is vast and multi-faceted; we can talk about multiplicity of products and of distribution channels. The offer is spread to answer to all the needs for all socio-economical classes. There are no major distributor chains in Brazil. Most furniture imports are made through direct importers and, a small proportion of local manufacturer's wishing to complement their production line. [...]

[...] If the demand has a good reaction toward IKEA, we will plan to set up our own business in Brazil, by franchising. Three key success factors for IKEA Experience in the retail market: The brand IKEA was created in 1943, it represents more than 240 IKEA stores in the world. “IKEA is one of the world's most successful multinational retailing firms. The system of IKEA is a system of store in self-service. The furniture is sold in kits that are assembled by the customer at home. [...]

[...] SWOT Forces The fame of the brand the brand image of the company which stands for clean, green and attractive design and value for money Vast experience in the retail market and home furniture Cost leadership position Product differentiation Excellent organization of the company for perfect answers to the expectation of the consumers (price, delivery delay, quality ) Capacity to adapted itself in various markets Symbiosis of the services Weaknesses The difficulty to maintain a central organizational structure The little knowledge of the Brazilian market and South America in general Difficult for some consumers to assemble the furniture Negative perception of the quality of the products (furniture in kit, cheaper ) IKEA does not have a commercial Web site Opportunities IKEA does not have real candidates of its scale Big Brazilian furniture market: more than 6 billions dollars in 2004, a rise of more than 70% compared to 2000 ( 3.6 billion euros) Presence of a large quantity of raw materials on the spot ( 4.6 million hectares of planted forest) Many suppliers present in Brazil (important characteristic, because it's the base of IKEA's settlement in the country) Brazil is one of the only countries possessing certain key factors for sustained growth (surface, population, consumers, active population ) Brazil is also the world's 7th-largest global consumer market Labor at lower cost Threats Competitions: More than 16,000 Brazilian furniture manufacturers Big US exports of furniture to Brazil Brazilian economy is excessively affected by various external factors Problems of crises in others countries (for example, the affect on the Brazilian market by the crises in the Asian and Russian markets) The real-dollar exchange rate Prohibitory costs of credit bank base rate among the highest in the world) Heavy Brazilian Bureaucracy (time and paperwork) Consistent social contributions Problems of infrastructure (roads ) Market entry strategies As Brazil exports more furniture than it imports, and as there are already many manufacturers and resources for the furniture market in Brazil, we think it is more judicious to use strategies using these factors than making direct exporting where IKEA would be in competition with the United States, Italy etc. Consequently, we are going to present two alternative market entry strategies for IKEA in Brazil. Contract manufacturing IKEA's size is sufficient to enter a new market. IKEA has enough capital to set up manufacturing facilities in Brazil, even if it does not demand excessive investments. And by this way IKEA does not need bank loans, so it avoids high interest loans. [...]

[...] This represents of the total of the furniture market in Brazil. US exports of furniture to Brazil reached $43 million in 2000 (so 39% of total Brazilian furniture imports) and are expected to decrease to $36 million in 2001. The US is the first foreign provider with its 39% of the imported furniture market, followed by Germany with Italy with and other countries with 15%. Brazil exports more furniture and articles of decoration than it imports them. The credit balance of the balance of trade increased these last four years to reach 883 million US$ in 2005, against 380 million US$ in 2001. [...]