The company selected for the market opportunity analysis is IKEA in USA. The Swedish company basically deals in textiles and furniture, and operates in more than 38 countries of the world (IKEA, 2011). IKEA is considered as the world’s largest furnishing business. Hence, it has a global demand. IKEA has also high demand in the US market and is currently succeeding, but it is not yet able to overtake competition in the furniture market in the country as it did in the other parts of the world.
The income of the American consumers is relatively high as compared with other markets, but IKEA is not able to attract higher end of the market, because it is not able to understand it. IKEA has a strong brand name however the American people have not yet recognized the innovative ideas of the company in the furniture sector.
To move up the competition ladder the company should review its strategies and focus on the demographic segregation of the market which is very important in the US. Larger urban areas of the country are more prosperous markets for IKEA. The company must only focus to expand in these urban areas and it should not lose energies on the other sectors.
The younger Americans, and budget shoppers, especially college students have higher potential to appreciate IKEA’s modern and stylish furniture in the urban areas. IKEA can use advertisement techniques specifically directed at this market segment to generate consumers’ attraction.
IKEA will have to understand the culture of America, so that Americas find their products more appealing. IKEA is considered as a cost leader and it has a great advantage over its competitors because it sells products 30 to 50 percent below the price of its competitors in the world (Zeller & Dimitriadis, 2002).
The economy of the US is strong for business, yet there are tough laws for international companies, especially the environmental laws (Daly, IKEA Marketing Plan, 2011). One way of making itself more attractive IKEA will have to adapt an eco-friendly policy of using non-wood furniture.
The competition in the US is tough because many international companies target the US market. Canadian company known as Leon, which is already well established in the US market is considered as one of the major competitors of IKEA (Daly, IKEA: Looking to the Future, 2011). Similarly, there are many other small and large retailers that sell furniture. The examples are Walmart, Home Depot, and Target.
The company will have to focus on the middle and low income consumers who want furniture with high quality and innovation at a lower cost. The American consumers also consider buying things using online marketing therefore IKEA will have to update its online market in US by using the latest technologies.
IKEA’s success lies in its foreign profits, which are invested for the expansion in the foreign markets like US. The company will have to focus on the above mentioned strategy highlights to get most out of their investment in the US market. IKEA does not have its own industrial plants, but it buys products from developing countries at a lower cost, and its business depends on imports and exports (Zeller & Dimitriadis, 2002).
The US government provides opportunities in this sector because US has signed many free trade agreements with many countries. The US market could therefore be considered as relatively an easy place for IKEA’s business but it needs to refocus its marketing strategies to achieve better results.
References
Daly, J. (2011). IKEA Marketing Plan. Seneca Information Technology and Telecommunications. Web.
Daly, J. (2011). IKEA: Looking to the Future. Seneca Information Technology and Telecommunications. Web.
IKEA. (2011). Facts & Figures. Web.
Zeller, J., & Dimitriadis, N. (2002). IKEA international Market. Web.