This presentation is about the franchise where we studied the case of IKEA. the course is pricing and international distribution teaches for the students of the Master: International Business and Entrepreneurship at ESSEC Tunis which aims to understand and analyze the price and place strategies chosen by the different companies. this course is taught by Mme Rym TRABELSI.

1. THE FRANCHISE
CASE STUDIED : IKEA

2. Plan
• The franchise
• IKEA
• The marketing mix of IKEA
• Studied cases

3. Definitions

4. Definition 2
A franchise or franchising is a method of distributing p/s involving a
franchisor, and a franchisee.
the contract binding the two parties is the "franchise".
The practice of creating and distributing the brand p/s.
Definition 1
"It's an arrangement in which a company sells another business the
right to sell it's products or services in return for payment."
THE FRANCHISE

5. Types of
franchises
• JOB
• PRODUCT (OR DISTRIBUTION)
• BUSINESS FORMAT
• INVESTMENT
• CONVERSION

6. • It's a home-based or low investment
franchise that is taken by a person
who wants to start and run a small
franchised business alone.
• Franchisees usually have to purchase
minimal equipment, limited stock and
sometimes a vehicle.
JOB FRANCHISE

7. PRODUCT (OR DISTRIBUTION)
FRANCHISE
• Product-driven franchises are based on supplier-
dealer relationships.
• The franchisor licenses it's trademark but usually
does not provide franchisees an entire system for
running their business.
• Product franchises deal mainly with large products.
• Product distribution franchising represents the
highest percentage of total retail sales.
• Sometimes franchisor licenses not only distribution,
but also part of the manufacturing process.

8. BUSINESS FORMAT
FRANCHISE
• This type gets to use the franchisor’s trademark,
but more importantly, it gets the entire system
to operate the business and market the p/s.
• The franchisor offers a detailed plan and
procedures on almost every aspect of the
business, provides initial and ongoing training
and support.
• It's the most popular type of franchise system
and the one generally referred to when talking
franchising.

9. INVESTMENT
FRANCHISE
• These are large scale projects which require
a large capital investment.
• The franchisees usually invest money and
engage either their own management team
or franchisor to operate the business and
produce a return on their investment and
capital gain on exit.

10. CONVERSION
FRANCHISE
• It's a modification of standard franchise
relationships.
• Many franchise systems grow by converting
independent businesses in the same industry into
franchise units.
• The franchisees adopts trademarks, marketing and
advertising programs, training system and critical
client service standards.
• They also usually increase procurement savings.
• The franchisor in this model has a potential for very
rapid growth in terms of units and royalty fee
income.

11. WHY
FRANCHISING
What are the advantages ?
Solution 3
Franchising may increase the franchisee’s
purchasing power
Solution 2
It reduces chances for failure.
Solution 1
Franchising makes the task of getting started
easier because the franchisee gets a business
format- already market tested and found to work.

12. Reason 3
The franchisee may become subject to fail with
the failure of the franchisor.
Reason 2
A number of restrictions are also imposed upon
the franchisees.
Reason 1
The franchisees find no room or scope for
enjoying their creativity especially in case of
‘pure franchising.’
WHY
FRANCHISING
What are the disadvantages ?

13. IKEA
• Presentation
• History
• International locations
• Marketing Mix
• Studied cases

14. OVERVIEW
IKEA AT A GLANCE
• Swedish Company
• 445 stores in 52 countries
• Offers well-designed products at
low prices
• Mission: home furnishing that
many can afford
• € 31.9 Billion Revenue
• € 1.6 Billion in Food
• € 1 Billion in Online Sales
• 9,500 Products
• 155,000 Employees
• 51% Production in Europe
World’s leading
home furnishing Co

15. HISTORY
The history of the IKEA brand at a
glance.
INGVAR
Ambitious, focused and patient
since he has been a young boy
KAMPRAD
During school years was looking for
ways to make money
ELMTARYD
Name of the farm he grew up in
childhood (Parent’s farm)
AGUNNARYD
Name of the village he lived nearby
where he first established Trade Of
Essentials – pen selling business
I
K
E
A

16. T
I
M
E
L
I
N
E
1920 -
1959
1960 -
1989
1990 - The
present
1926 – Ingvar arrives
1943 – The first IKEA company is founded
1953 – The first showroom opens
& Say Hi to the flat pack
1963 – Hej Norway!
1973 – Hej Europe!
1983 – Bye, bye (for now) Japan
1995 – ”Democratic Design” is launched
1998 – “Sow a seed”
launches
2015 – All-in with LED

17. International
locations

18. IKEA
7 P's of
Marketing
Mix
Process

19. • It has a detailed list of product catalogue
ranging from furniture items and fittings, to
more sophisticated and intricate assemblies
to organize a variety of home furniture.
• Ikea has continuously kept changing with a
change in the business environment.
• The designs have always been fresh and
this was the major point of differentiation
for Ikea.
• The key for Ikea has been to give the
business a wide assortment of items and
administrations to satisfy their particular
aspirations and to defeat the obstructions or
impediments of confined classes.
Marketing
MIX :
PRODUCT
Eating, Desks, Mirrors, Children’s, IKEA,
Cooking, Bathroom storage, Beds &
mattresses, Chairs, Clothes storage,
Decoration, IKEA FAMILY products, Kitchen
cabinets & appliances, Lighting, Small storage,
Sofas & armchairs, Storage furniture, Swedish
food, Tables, Textiles & rugs, Tools & hardware

20. • IKEA competes with various global retail chains as well
as local supermarkets.
• IKEA makes low cost furniture for households and
offices.
• IKEA allows not only lower prices but also freebies at
the IKEA restaurant from Monday to Saturday.
• Ikea has embraced a methodology which is most
suited, and that is of not cutting costs to strip the brand
of it's esteem, and in the meantime, not to be obviously
overpriced, in order to repulse the business sector
strengths.
• IKEA’s strategy is based on cost leadership.
• Prices are 30 to 50% lower than competing products.
• Price variations are only a result of fluctuations in
exchange rates.
Marketing
MIX : PRICE
Low prices constitute the IKEA
vision, business idea and
concept.

21. • IKEA has a global distribution network. It has
huge volumes on the manufacturing side and flat
packages.
• IKEA has over 25 distribution centres and has
business operations in more than 50 countries.
• Over 9,500 products are sold at IKEA.
• Procuring materials in proximity with supply
chains to reduce transport costs and using more
ocean transport than road transports by building
DC’s in proximity to ports.
• IKEA only grants rights to become a franchisee in
markets where rights have not already been given,
thereby maintaining their exclusivity.
Marketing
MIX : PLACE
IKEA has got an excellent place
and distribution strategy as a
part of its marketing mix.

22. Marketing
MIX : PEOPLE
The employee culture is based on …
Customer satisfaction is at the core of
the values.
Enthusiasm
It does not discriminate on the basis of race, ethnicity
and religion.
In 2016 the employee base of IKEA has increased to
183 k .
Fun
There are 116 k employees in retail, 18 k in
supply and 21 k in production as of 2015.
Togetherness
IKEA gives utmost importance to the people : customers and
employees.
Employees at IKEA believe in the idea that they are
straightforward people with passion for home furnishing.

23. Marketing
MIX :
PROMOTION
TOOLS
IKEA uses promotion tools like TV, print,
online ads, billboards
ONLINE ADS
online advertisements promoted IKEA
products demonstrating the problems faced
by people, and offering solutions.
BRANDING !
Due to its popular brand name, and it's
pricing structure, the best promotions which
bring results for Ikea are sales promotions
and trade promotions.
IKEA focuses a lot on its
marketing activities.

24. Environment
It follows the clean environment slogan.
S.C. and Inventory Mngmt.
IKEA has the most unique supply chain and
inventory management techniques. Its designs
are differentiated in terms of price.
Production Units
44 production units scattered across 10+
countries.
Marketing MIX:
PROCESS
IKEA has several business processes in place.
Sawmills and Production
IKEA makes its own wood by owning sawmills and
produces high quality furniture. It has an in house
production facility with highly developed
technologies.

25. Marketing MIX :
Physical
Evidence
The organized maze !!!
The Maze !
it has specific path layouts, once you enter
the store and guide arrows, which help you
to your desired item.
P.E & Experience
Physical evidence for IKEA is its huge
store layouts which provide more than
just a shopping experience.
The stores
IKEA has 400+ stores in more than 50 countries.

26. Annual
revenue
IKEA Group worldwide from 2016
to 2020 (in billion euros)
2017 2018 2019 2020
50
40
30
20
10
0
38.3 38.8
41.3
39.6

27. Studied
cases
SOUTH KOREA
Place strategy
MOROCCO & EGYPT
High prices case
CHINA
Lowest prices

28. • A recent price surge witnessed at IKEA
Egypt and blamed on the country’s
fluctuating market, triggered waves of
anger among many local customers, who
now feel the furniture giant is becoming
less affordable.
• increase by 100% - 120%
• Egypt's pound plunged in value after the
central bank floated the currency to
address a dollar crunch, threatening to halt
imports.
• The step led the prices of many
commodities to rise sharply.
EGYPT MOROCCO
• Moroccans have criticized IKEA for pricing
items higher in the Morocco's catalogue
than in European's catalogue.
• It have some more expensive products,
some less expensive, and others the
same price.
• IKEA promises that it will work to lower
prices from year to year and to make our
products accessible to the Moroccan
people.

29. SOUTH
KOREA
Bigger than Louvre
The store opened on 18 December 2014 in Kwangmyŏng,
South Korea, at 59,000 square meters.
A CITY ...
IKEA planned a big store because they know that they
need one for a 23-million city. Among the 8,600 items on
sale, some were modified for local tastes.
More NUMBERS !
IKEA store have more than 8,000 products and attract
over 7 million visitors every year (more than 20,000
people per day).

30. The lowest price strategy
According to this strategy, the prices for more than
120 kinds of products with the signboard of ‘’The
Lowest Price in Beijing’’ in IKEA is about 20%
cheaper than any other furniture market.
RESULT
This strategy can help IKEA build its brand image in
China, and make a lot of contribution on its sales
and profits performance in total, although the
profits per promoting products decreased!
Generally !
IKEA try to raise some other products' prices to
cover the deficit of these chosen products‘ profits.
CHINA
The lowest price strategy

32. Maryem HASNI
The Team
Maryem HASNI
Maryem HASNI

33. Contact Us
www.reallygreatsite.com
hello@reallygreatsite.com
123-456-7890