Marketing Case Study Name of the of the Professor University Date Answer 3 Target market While offering high quality furniture to the customers at easily affordable prices, IKEA focuses on a number of factors in order to segment the target market (IKEA, 2013a)…
The IKEA products are often referred as ‘start up furniture’ which is bought by the consumers for their first home. It is due to this reason that the company focuses on income level, age, education etc while targeting the market segment. The market has been segmented in the following manner: Segment Age Group Annual Income Level Psychology Education 1 18 - 25 >$ 34500 This particular age group has a tendency of being driven by social trends. They generally do not possess much knowledge about ethical trading. High school and College (education) 2 26 - 35 $34500 - $ 68000 This age group has knowledge related to ethical trading and they remain ready to purchase quality products by paying high prices. College and masters level (education) 3 36 - 65 >$ 69000 This age group purchases products in order to represent their self image in the peer group. Educational level does not have any influence on the purchasing behaviour of this particular age group. IKEA mainly targets the young group with lower income level (Business Today, 2013). The affordable price offerings increase the demand of the company’s products in the market. The college students those who belong to the young generation cover wide target market for the company as it mainly consists of those individuals who are planning to purchase furniture for 1st time. Another target segment set by IKEA on the basis of demography is the family life cycle. The company targets new families who require furniture for filling their houses but do not have high money to spend for this purpose. IKEA always provides quality products and services to these young families and they provide stores which are entirely environment friendly. The stores have specially designed playing area where the parents can keep their children at the time of shopping in order to complete it in a peaceful manner. The company targets those customers who want high value for their money invested and opt for quality products with comparatively cheap prices. Thus from the above table, target segments 1 and 2 are the target segments for IKEA. Answer 4 PESTEL Analysis Pestel analysis would help in the environmental scanning of IKEA (Lorat, 2009). Political The level of consumer taxation and corporate tax which is regulated by the political authorities of any particular country has an effect on the after-tax income of any corporation. The corporate tax rate has an impact on the profitability of the organization thereby affecting the after tax income as well. IKEA regional earnings are generally subjected to the regional tax laws. The corporate tax rate of any region has an impact on the business structure as well. The special business structure of the organization plays a vital role in the tax rate. IKEA business structure has a subsidiary model which instructs the subsidiaries of the company to abide by the regional tax rules and regulations. In addition to the corporate tax, the trade barriers such as tariff and quotas also have an effect on the businesses. The major reasons behind imposing tariffs and other trade barriers are: protecting the local employment, retaliation, national security etc. However imposition of tariff increases the prices of the products that are imported in the country. This benefits the local producers in place as they are not forced to raise the prices. In case of IKEA, their higher reliance on the local producers rather than import of the products decrease the extent of influence of tariff and other trade b ...
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