Free «Strategic Integrated Marketing Communications» Essay Sample

Strategic Integrated Marketing Communications

Marketing Plan

1.      Situation Analysis and Target Market

1.1  Company and Product Background

IKEA is a privately owned Swedish furniture retail company that has had a history of radical success using standardized retail marketing strategies throughout the world (Torekull, 1998; Business Week, 2005; Edvardsson and Edquist, 2002). IKEA’s STUVA is a children’s storage system product line with colourful designs and styles that has been an attractive addition to its wide variety of furniture ranges (Johannson and Thelander, 2009). The marketing plan is based on the re-launch of STUVA that would help the company to boost sales in the time of recession.

1.1  PESTEL Analysis

  • The rise in property rates has restrained the sales and profits for the past two years. Profits have fallen from 90m to 77.4m (Hay, 2006).
  • IKEA is the product of “Do-it-Yourself” culture. The UK society is shifting from individual concerns towards home improvement, where they are concerned and influenced by their living environment (Howell, 2006; Johannson and Thelander, 2009).
  • The entire production, warehousing to the final display of the product in the store is automated with minimum human labour involvement other than designing the products (Lewis, 2005).
  • With retailers all over the world entering into online selling market, IKEA is reluctant to ‘sell’ online as the nature of the product ranges it offers and the customers it targets prefer to physical product displays, which can be seen and touched (Business Week, 2005).

1.2  SWOT Analysis


  • Brand image of IKEA (Hay, 2006).
  • IKEA has around 283 stores in 26 countries, altogether generating £2.3 billion annually.
  • Cost efficiency and store design (Business Week, 2005).
  • Low cost business model where profit margins are to 18% (Kippenberger, 1997; Lewis, 2005; Business Week, 2005).
  • The company has become a master of buzz marketing (Torekull, 1998; Business Week, 2005; Edvardsson and Edquist, 2002).


  • IKEA’s target market has been restricted to adult buyers.
  • IKEA’s customers face trouble in assembling the flat pack furniture.
  • For home furnishing, web and e-tailing is not effective.


  • Asian markets, such as India and Pakistan are opportunities for further global expansion.
  • IKEA has to open doors to expand its product ranges and target populations to welcome a much larger share of customers in the existing market it operates in (Johannson and Thelander, 2009).
  • Student segment is both sizeable and accessible constituting of 1.14 million of population (Business Week, 2005; Hay, 2006).


  • Economic downfall forcing sales down tremendously (Johannson and Thelander, 2009).
  • Standardized marketing approach (Howel, 2006).
  • Rivals such as Argos, MFI and B&Q (Lewis, 2005).

1.3  Segmentation and Target Market

Demographic, geographic and psychographic basis of segmentation are to be used, whereby price, quality, affordability, style and design are to be used to position in the young adult segment of the furniture market against Marks and Spencer, Argos and B&Q (Percy, 2008).

As opposed to the existing target market of IKEA, which constitutes of the customers of an average age of 30, the target segment for the re-launch of STUVA is a younger market segment that constitutes of 16-23 year olds who are mainly students residing in the UK who are too busy to put in the effort of organizing and regularly cleaning their room, but look for a stylish small, but spacious space to live in (See Table 1).

Table 1: Target Customer Profile


1.12 million student population of the UK




Females and Males both


All across the UK, wherever IKEA lies


Student life, busy schedule


independent/dependent, organized, style and space conscious






2.      Marketing Objectives

The following are the marketing objectives:

  • To create the image of STUVA as a product line for the young people;
  • To capture the young market segment that has been previous untapped by the company and its rivals;
  • To use cost efficiency in all tools, methods and channels used for product designing, promoting and distributing, in line with the overall marketing strategy of IKEA;
  • Increase 12% sales of STUVA in the first two years, by 2013;
  • To sustain a 17% profit margin for STUVA throughout the first two years of the marketing campaign.

3.      Marketing Strategy

STUVA is the children’s product line of storage furniture, which has not been IKEA’s biggest sell-out product line. IKEA’s cash cows and star brands have been its tea-light and living room storage systems mainly for children, the baby bedroom sets and cradles what have been the main attractions for customers.

STUVA is to be repositioned and re-launched for this very young segment and for a different purpose and use other than the basic use of storage in order to capture the young market, which IKEA has so far left untapped.

4.      Marketing Tactics

4.1  Product

The product strategy is to design the product line that costs the least and provides the most effective, stylish and modern design that speaks “young.” The current production of STUVA is highly cost effective, and is allowing the company to generate 5% of profit margins, which will be kept intact and expected to generate the same profit margin for the young adult market as well.

STUVA furniture product line is to be repositioned for young adults, who are too busy to sort out their room every now and then and want things clean and sorted out always without much hustle. The storage system combined with a similar style bed set, as offered for children previously, will be made available for young adults with simple designs, but space conscious outlook comprising of maximum storage capacity, where books, clothes, sheets, files, gadgets and any other related stuff can be stored and accessed promptly upon need without much hustle to locate them.

Three sub-product ranges will be available for the new STUVA with different price ranges: moody, stormed and casual, where moody is filled with colours and contemporary youth relate designs and patterns, stormed is more capacious and stylish, but serious looking designed set; and casual is the ordinary, but modern style set that offers more choice to decorate according to the specific tastes.

4.2  Price

The low-but-valuable pricing strategy (Percy, 2008) of IKEA will be followed, where the product line will be priced between 200-500 pounds per set including a bed set and a storage system making up the entire bedroom set. The use of psychological pricing is to be used for each of the product ranges given in Table 2 shown below:

Table 2: Product Line Pricing

Product Lines



Product Line 1 Moody



Product Line 2: Stormed



Product Line 3: Casual



The repositioned is to use the backward pricing strategy of IKEA whereby considering the target price and target margin, the cost is decided and then directed to designers to design and produce the line that falls in the cost range.

4.3  Promotion

Advertising and promotion dominate 70% of the overall marketing budget. Therefore, much emphasis has been given to how the product line will be communicated to the target market. The promotional communication objective of the re-launch is to communicate that IKEA’s STUVA is a product line designed specifically for young adults who want to come back home from their study, do their part-time work and other activities to a modern, stylish, clean, swept and organized living space without having to worry about spending extra time cleaning it before their friends come to visit.

Following is the message that is to be used in the advertisement campaign: “Growing bigger, hustle free.”


Lida, the advertising agency in the UK, which is the current b2b service provider for IKEA in the area of advertising, is to be used for the re-launch of STUVA as well to design clever and effective advertisements targeting the youth. The company brochures, catalogues and magazine advertisements will be used as per the regular print advertising strategy of the company. 


This is the second most effective medium, where IKEA has hired an Ambassador of Kul (fun) for STUVA, who will be a representative of the young adults market that the company is planning to target at present through STUVA, takes complete information of the product, and as a paid employee of the company creates a ‘buzz’ through social marketing and blogging to spread the popularity of STUVA for the youth through word of mouth, which has been previously a highly useful and cost effective (Percy, 2008).

Viral Advertising

The online medium is much more effective channel to attract the younger lot (Station, 2004). Viral advertising to create the &lsqu;buzz’ will be used similar to the one used for Kitchen Party, very recently by IKEA.

Sales Promotions

The initial promotional offer will include gift vouchers for the first three customers, following the legacy of the company’s famous promotional offers.

4.4  Place

The product line will be sold through physically store locations as well as online store in the UK. The preferences for the 30-somethings, the main target audience of IKEA and the new young adult market are different, whereas, the 30-somethings are difficult to attract towards larger furniture purchases through the internet.

5.      Resource Allocations, Budget, Finance and Control

The STUVA re-launch marketing plan is a revival approach towards increasing the market share and sales revenue of the company with the objective to use minimum capital investments and costly measures and induce higher profit margins and sales revenue. This requires an extensive resource allocation that in no way increase costs of the company.

The overall marketing budget is set to be £4373000, the allocations of which are as follows:


Table 3: Marketing Budget Allocations

Advertising and Promotion




Operations (Distribution, Administration and Salaries)



These allocations can be witnessed from the Production Budget, Sales Budget, Advertising and Promotion Budget and Profit and Loss Statement for the years 2012 and 2013, the duration of the marketing campaign for the re-launch.

Table 4


Production Budget for STUVA - Re-Launch

For the Years Ending 2012 and 2013












Product Line 1



Units ('000)





Cost per unit (1.66% of Sales)





Total Cost





Product Line 2