IKEA Ansoff Matrix – an overview
IKEA Ansoff Matrix is a marketing planning model that helps the Swedish furniture chain to determine its product and market strategy. According to Ansoff Matrix, there are four different strategy options available for businesses. These consist of market penetration, product development, market development and diversification.
IKEA Ansoff Growth Matrix
Within the scope of Ansoff Matrix, IKEA uses all four growth strategies in an integrated manner:
1. Market penetration. Market penetration implies selling existing products to existing markets. IKEA uses market penetration strategy aggressively. Effective marketing strategy plays an important role in increasing the efficiency of market penetration for the furniture retailer. Traditionally the world’s largest furniture retailer had relied on its famous catalogue printed in large quantities as a time-tested instrument to pursue market penetration strategy. However, in 2020 the company announced that it will stop producing catalogues starting from 2022 due to the decline of demand.
2. Product development. This involves developing new products to sell to existing markets. Product development is one of the main growth strategies for IKEA. The home improvement and furnishing chain has more than 12000 types of products in its range and it launches about 2000 new products every year.[1] The company makes some of its products in-house, as well as, purchases from suppliers.
3. Market development. Market development strategy is associated with finding new markets for existing products. The world’s largest furniture retailer engages in market development extensively. IKEA has 11 franchisees operating in more than 500 locations in 63 countries.[2] The company is forecasted to enter into more developing markets in short and medium term perspective.
4. Diversification. Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy. IKEA experiments with diversification business strategy occasionally. IKEA restaurants within furniture retail shops can be mentioned as a stark example of diversification by the company. It has to be mentioned that although the furniture retailer has expanded its business strategies of cost advantage and no-frills products to foods offered at IKEA restaurants.
IKEA Group Report contains the above analysis of IKEA Ansoff Matrix. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on IKEA. Moreover, the report contains analyses of IKEA leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of IKEA marketing strategy, ecosystem and addresses issues of corporate social responsibility.
[2] Inter IKEA Holding B.V. Annual report FY21