Transcript Costs Per Time Period

Client:
• IKEA began in Sweden.
• 1943: Ingvar Kamprad started the company at the age
of 17.
• The name : Came from his initials “I.K.” & then he
added the “E” & the “A” from the words Elmtaryd &
Agunnaryd, which was the farm he grew up on.
• IKEA is now a successful home furnishings store & the
world’s largest furniture retailer.
• Offer: A wide variety of very affordable products with a
unique store layout.
• August, 2010: Had 280 stores in 26 countries. (That
belong to the IKEA Group.)
Top 5 Sales Countries:
Germany
France
UK
Business idea:
“…offering a wide
range of welldesigned, functional
home furnishing
products at prices so
low that as many
people as possible
will be able to afford
them.”
U.S.A.
Italy
(other countries)
16%
11%
49%
10%
7%
7%
Competitive Advantages:
 Able to offer affordable furniture through
cost-cutting & close supplier relations while
placing an emphasis on the design process.
 Offer display stores that provide amenities:
restaurants, child playrooms & grocery
stores.
 Easy to use website with “Ask Anna,” IKEA
USA's Automated Online Assistant.
 They collaborate with nonprofit
organizations such as Greenpeace & the
World Wildlife Fund (WWF).
Strengths:
 A strong global brand which attracts key consumer
groups and promises the same quality and range
worldwide
 A clear vision ‘to create a better everyday life for
many people’
 Strong concept based on offering a wide range of well
designed, functional products at low prices
 ‘Democratic design’ which balances function, quality,
design, and price. IKEA’s cost consciousness makes
sure that low prices are taken into account when each
product is designed.
Strengths - Continued:
 Increased use of renewable materials in production
 ‘Smarter’ use of raw materials with less waste; Volume
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commitments (creating long-term partnerships with its
suppliers therefore, by buying large volumes over a
number of years IKEA can negotiate lower prices)
Long-term partnerships with suppliers
Economies of scale (buying raw materials in bulk at
cheaper unit costs)
Delivering products directly from the supplier to IKEA
stores (cuts handling costs, road miles, and lowers the
carbon footprint)
New technologies
Weaknesses:
 The size and scale of the business: This could make it hard to control
standards and quality. Some countries where IKEA products are made
do not implement the legislation to control working conditions. This
could represent a weak link in IKEA’s supply chain, affecting consumer
views of IKEA’s products. The IWAY code is backed up by training and
inspectors visiting factories to make sure that suppliers meet its
requirements. In addition, there is the need for low cost products. This
needs to be balanced against producing good quality.
 Need to differentiate itself and its products from competitors. IKEA
believes there is no compromise between being able to offer good
quality products and low prices.
 IKEA needs to keep good communication with its consumers and other
stakeholders about its environmental activities. The scale of the
business makes communication a difficult task. IKEA produces
publications in print and carries out major TV and radio campaigns to
enable the business to communicate with different target audiences.
Opportunities:
 IKEA provides solutions for a sustainable life at home
with tips and ideas on their website. They also have a
sustainable use of resources by aiming for a zero waste to
landfill, wastewater treatment, and programs to reduce
its use of water.
 IKEA aims to reduce their carbon footprint by reducing
energy use and using renewable energy, and by cutting
their use of air transport and reduce packing.
 IKEA is also adopting social responsibility by the support
for charities such as the World Wildlife Fund (WWF),
UNICEF, and Save the Children.
 IKEA builds trust through good communication with
consumers, co-workers, key opinion former, and the
press.
Threats:
 Social trends such as the slowdown in first time
buyers entering the housing market, is a core market
segment for IKEA products.
 Market forces are more competitors entering the low
price household and furnishing markets. IKEA needs
to reinforce its unique qualities to compete these.
 Economic factors such as the recession, slows down
consumer spending and disposable income
reductions.
Top 3 Competitors:
1.) Rooms-To-Go
2.) Pier 1 Imports
3.) Target
Competitors:
Competitors:
Competitors:
IKEA Round Rock Store:
 Located: 3701 North I-35, # 1 IKEA Way,
Round Rock, TX. 78665
 Opened: November 2006
 Currently expanding: Expected to be
306,000 sq. ft. by Summer 2012. Adding a
3-level parking garage to keep the 1,200
parking spaces.
 Offers: 41 different room-settings,
supervised children’s play area, & a product
picking & delivery service, The Exit Bistro &
the Swedish Foodmarket.
Target Audience - Female:
 Education: Recently graduated with Bachelor’s degree in
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Business from UT
Employment: Human Resources in local firm.
Marital Status: Single
Kids: None
Pets: Two calico cats
Household Income: $20,000-$29,999
Interests: Concerts at local venues. Often shops conservatively
at trendy, but affordable apparel retailers. Art museums &
watching documentaries.
Lifestyle: “Fast fashion” retailers contribute to Michelle’s trendy
& always evolving sense of style. This is true in her habits of
shopping for home décor, as well.
Hobbies: Watches shows like Top Chef and Project Runway.
Nightlife on weekends in downtown Austin. Entertain in her 1
bedroom apartment in South Austin.
Personality Type: Michelle is an innovator.
Michelle
Age: 24
Target Audience – Male:
 Education: Graduated from a St. Edward’s with a Bachelor’s
Michael
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Age: 28
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degree in Communications
Employment: Works in sales for Dell for the past 4 years,
been promoted twice.
Marital Status: Engaged
Kids: None
Pets: 1 dog - Pit bull/Boxer mix
Total Household Income: $30,000-$39,999
Interests: Enjoys action films & TV shows about health &
fitness. He stays up to date about current affairs.
Lifestyle: Since having his girlfriend recently move in with
him, Michael wants to buy furniture that is more fitting for 2
people.
Hobbies: Michael is active & utilizes all of Austin’s outdoor
activities. On weekends Michael hikes with his girlfriend.
Personality Type: Michael is a Thinker. He is mature and
responsible,& he shops responsibly.
Marketing Objective:
Increase store location awareness
among the surrounding areas
communities and consumers by 5
percent in the next year leading to
a 10 percent sales increase at the
IKEA Round Rock store.
Marketing Budget:
 IKEA’s annual sales summary for 2010 = 23.1 billion Euros (About
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30.52 billion U.S. dollars)
# of IKEA stores in 2010: 280
Take annual sales & divide it by 280 stores = About 109.03 million U.S.
dollars
Proposed Advertising Budget: $285,000
Comes to an average of about $23,750 to run the scheduled
advertisements each month.
Advertising Media Selections: Billboards, pedicab
advertising, Bench displays & Bus exterior displays =
$282,180. $2,820 will go towards any unexpected expenses that may
occur.
The advertising media selections would be spread out over the period of
a year.
Advertising Budget:
Billboards
Bus Exterior Displays
Pedicab Ad.
Unexpected Expenses
Bench Displays
1%
17%
42%
16%
24%
Billboards:
Advertising Media Selection:
Advertising Media Selection:
Company:
Size:
Costs per unit per month:
Type of time period:
# of units:
Billboards:
Johnson Outdoor
Advertising
14' X 48'
$1,200
Per month/Pulsating
10
Costs per month for 10 units:
$12,000
Costs Per Time Period:
$31,200
Company:
Size:
Costs per unit per month:
Type of time period:
# of units:
Billboards:
LAMAR Advertising
14' X 48'
$5,000
6 months/Continuous
3
Costs per month for 3 units:
$15,000
Costs Per Time Period:
$90,000
A total of 13 billboards will be
utilized over the period of a year
throughout the Round Rock &
Austin areas & communities.
Billboards:
 A total of $121,200 of the budget will be spent on
billboard advertisements.
 3 of the billboards will be done through LAMAR
Advertising.
 LAMAR will do the more elaborate billboards.
 10 billboards will be done through Johnson
Outdoor Advertising.
 Good way to reach a large # of consumers.
Example of a Billboard Ad.:
Pulsating Schedule for Johnson Outdoor
Advertising Billboards:
Costs to run units:
Units 1-2 will run in the months of December 2011, January &
February 2012.
$7,200
Units 3-4 will run in the months of March, April & May 2012.
$7,200
Units 5-6 will run in the months of June, July & August 2012.
$7,200
Units 7-8 will run in the months of September, October &
November 2012.
$2,400
Units 9-10 will run in December 2012 only.
TOTAL PER YEAR:
$31,200
Each unit or
billboard will
run for 3
continuous
months at the
different
increments
scheduled.
Bench Displays:
• A total of 25 bench displays will
be utilized.
• Dec. 2011 - May 2012: bench
displays will run.
• $45,000 of the budget will be
spent on bench displays.
• Way to generate a local
presence.
• Cloth that can be purchased at
IKEA will be on some of the
bench’s as displays with a sign.
The sign will have the IKEA logo
& the stores address.
• Other bench displays will have
an ad on the backrest of the
bench.
Advertising Media Selection:
Bench Displays:
Company:
Blue Line Media
Size:
84" w by 30" h
Costs per unit per month:
Type of time period:
# of units:
$300
6 months/Continuous
25
Costs per month for 25 units:
$7,500
Costs Per Time Period:
$45,000
Example of a Bench
Display:
Sign on the bench
would have the IKEA
logo as well as the
address for the IKEA
Round Rock store.
Bus Exterior Displays:
• 5 buses will be covered in
IKEA advertisements on the
exterior of the bus.
• October - December 2012:
Bus displays will run.
• A total of $67, 500 of the
budget will be used for bus
exterior displays.
• High exposure rate.
Advertising Media Selection:
Company:
Size:
Costs per unit per month:
Type of time period:
# of units:
Bus Exterior Displays:
Blue Line Media
Bus exterior
$4,500
3 months
5
Costs per month for 5 units:
$22,500
Costs Per Time Period:
$67,500
• Like “moving billboards.”
Example of a Bus Exterior
Advertisement:
Pedicab Advertising:
Advertising Media Selection:
Company:
Size:
Costs per unit per month:
Pedicab Advertisements
DirtNail Pedicabs
Back Panel Sides A & B
4’ w x 3’ h
$400
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Type of time period:
3 months
•
# of units:
40
•
Costs per month for 40 units:
$16,000
Costs Per Time Period for
Pedicabs:
$48,000
# of Pillows per pedicab:
Costs per pillow:
2
$6
•
Costs of pillows for all pedicabs:
$480
Total Costs with Pillows Per Time
Period:
$48,480
•
40 Pedicabs will be utilized.
January – March, 2012: Pedicab
advertisements will run.
$48,480 of the budget will be
spent on pedicab ads.
Have a high exposure rate,
mobile.
Back panel is about eye level with
customers.
Each pedicab with feature 2 IKEA
pillows to capture the
consumer’s attention & for
passengers to enjoy.
Ads will be promoted during high
traffic times in the downtown
Austin area & in the high traffic
areas.
Ads will be promoted in the day &
at night. (Backlit at night.)
Example of a Pedicab
Advertisement:
Media Selection Schedule:
•
Oct. – Dec.,
2012:
advertising for
the Round
Rock store will
be at its peak.
•
Consumers are
exposed to
IKEA ads in the
months
previous to the
busiest
shopping times
of the year.
Any Questions???