The Expanded Marketing Mix: IKEA
At any successful company, marketing seeks to connect with customers, serve their needs, and accomplish the stated mission of the organization. A successful marketing process creates value through consumer satisfaction from brand building before the sale to post-sales service and support (Kotler et al, 2001). The marketing strategy process has four primary segments: product, price placement, promotion and people (Kotler et al, 2001). Companies with a service element to their business often highlight three additional areas: people, processes and physical evidence. In addition to outlining the seven Ps, this report focuses on the unique product and service marketing approach used by Netherlands-based furniture retailer and franchisor Inter IKEA Systems B.V.
The Expanded Marketing Mix
According to McDonald and Dunbar (1998), the marketing mix is the term used to describe the tools and techniques an organization uses to implement the marketing concept. Kotler et al (2001) recognize "4 Ps" that encompass an organization's entire competitive marketing strategy: product, price, promotion, and place.
However, McCarthy (1987) prefers a more explicit explanation of the marketing mix, suggesting that the mix is "a set of controllable variables which the organization puts together to satisfy a target group." A representative marketing mix involves a product provided at a price, combined with some level of promotion to attract potential customers, along with a way (a "place") to meet those customers (McCarthy, 1987). In service marketing, McColl-Kennedy and Kiel (2003) identify three extended elements for marketers. In addition to the traditional 4 Ps, McColl-Kennedy and Kiel (2003) stress the core role of people in a service industry, including both employees and customers or potential customers. Additionally, the service process and physical evidence take on additional importance in service industries. All 7 attributes are described below.
Defining the 7 Ps
Kotler defines the product as a combination of goods and services (Kotler et al, 2001). Given the service focus of their work, McColl-Kennedy, and Kiel (2003) define a product more generally. They term a product merely as a bundle of attributes--some tangible, some intangible--offered to a buyer by a seller.
Marketing and management theorists agree on the simple concept of price. The price is simply the amount of money buyers pay to gain the benefit of the product. The final price reflects both the customer's perceived value of the products and the competitive atmosphere in the market for those products (Barnes et al, 1997).
The third P in Kotler's definition, promotion, is the tool used to communicate the value of the product to potential customers. The goal of promotion is to create demand and persuade targeted customers to purchase the product (Kotler et al, 2001). Generally, promotional activities include advertising, direct/personal sales, sales promotion and publicity (McColl-Kennedy and Kiel, 2003).
Marketers often refer to the fourth P, place, as placement, logistics or distribution. Marketers must create a place or a way for logistics and physical delivery to get a product to market and into the hands of target consumers (McColl-Kennedy and Kiel, 2003). The distribution step incorporates various distribution channels, intermediaries, importers and exporters, as well as the locations of stores, store hours and more (McCarthy, 1987).
McColl-Kennedy and Kiel's expanded marketing mix includes people, process and physical evidence. Primarily used in consumer marketing, these additional mix attributes stress the importance of service alongside the products purchased by consumers for personal consumption. The first expanded attribute is people. As Barnes et al (1997) describe, "the people involved in every transaction have a major role to play, and can be a major force in the customer's decision processes." McColl-Kennedy and Kiel (2003) point out that all people, including customers themselves, factor into the marketing mix.
The sixth P in the expanded mix is process. The processes consist of standard operating procedures, mechanisms and relationship flows used by the organization to perform a service or manufacturing activity (McColl-Kennedy and Kiel, 2003). From a consumer standpoint, this process refers to actual documentation from invoices to terms of sale involved in the purchase, the various stages of negotiation and the order flow through the seller organization. Barnes et al (1997) define process as the simplicity or complexity of making product delivery happen.
The last P is physical evidence, or environment. McColl-Kennedy and Kiel (2003) define this final attribute as the environment in which a service is delivered in which the seller and buyer interact before, during and after the sale. For example, brochures, reports, letterhead, business cards, facilities, and even colors used in the decor of the service area factor into the environment in which an organization carries out a service activity (McColl-Kennedy and Kiel, 2003).
Applying the 7 Ps: IKEA
IKEA, a furniture retailer and franchisor, provides an excellent case study in the application of the 7 Ps in the expanded marketing mix. The company's core product is furniture retailing, including decorations for the home and home office under its "Work IKEA" concept (IKEA.com, 2004). IKEA takes a unique approach, focusing on convincing customers to buy furniture to improve their "environment." IKEA offers a wide range of home furnishings with good aesthetic design and functionality at lower prices than traditional furniture retailers. Based in the Netherlands, IKEA has a presence in 186 through its franchisees.
In an attempt to capture an entire room worth of furniture, IKEA leverages seamless integration and ergonomics of their line of furniture. The products for the "Work IKEA" concept include computer tables, home office chairs, home office desks, organizational tools, storage boxes and work lamps (IKEA.com, 2004). All the parts are in one unit and can fit snugly in a room's corner. IKEA work chairs have easy height adjustments and castors. The organizational tools include letter tray, pen holder, magnet board and cable reel. IKEA storage boxes come in many sizes, materials and colors for easier organization (IKEA.com, 2004).
In addition to its integrated product concept, IKEA seeks price leadership in each market. For example, the company offers price guarantees in every market. Prices listed in their catalog are guaranteed to be no higher than the price in the catalog for one year from the publishing date (IKEA.com, 2004). In Australia, the catalog boasts that if the customer finds a lower price at other retailer within 30 days on an item they purchase at IKEA, IKEA will refund the difference and provide a free meal in the IKEA store restaurant (IKEA.com.au, 2004).
Over its history, IKEA has mastered successful promotions in building a globally recognized brand. The most well-known promotion is the IKEA Catalog. Every year, IKEA prints and mass mails a catalog to consumers near its locations, introducing the latest products. IKEA has numerous Web sites tailored to the consumer's home country, giving potential customers access to on-demand pricing and product specifications. IKEA advertises heavily on consumer-focused television outlets worldwide to promote its environment-focused store and product concept (IKEA.com, 2004).
As mentioned above, the place refers to the marketing channel and distribution used to get products into the hands of consumers. IKEA has 186 stores strategically placed in 31 countries, with 20 located in U.S. markets including Chicago, Baltimore, New York, Los Angeles and San Francisco. IKEA ensures that its stores and its franchisees remain fully stocked, with 27 distribution centers in 16 different countries. IKEA recognizes the Internet as a growing distribution channel, with over 75 million visitors to its global sites last year alone (IKEA.com, 2004).
IKEA not only concentrates on creating a "partnership with the customer", but also pays attention to its employees and business structure. The company keeps its management structure flat, boasting on its Web site that "there are no barriers between management and co-workers" (IKEA.com, 2004). From buyers seeking more and more cost-effective designs to store personnel trained extensively and given initiative to serve customers, IKEA has a focus on the service aspect of their highly competitive business.
A second component in the total service approach used by IKEA is a focus on process. IKEA offers a convenient self-serve shopping method that allows customers to see furniture set up in the store environment and flow through the store to a central hall for the actual purchase. After checking out, IKEA provides simple home delivery for consumers that cannot or do not carry purchased items out themselves. Creating a streamlined shopping experience, along with the focus on delivering the lowest cost products possible, ensures that IKEA customers are satisfied with the both the products and the experience of buying them.
The final expanded component, physical evidence, consists of all of the tangible items used in association with the products and services offered by IKEA. In addition to the catalogs and brochures, IKEA maintains a simple, modern look in all of the stores with ample showroom space to view furniture as it might look in a home or home office. These physical items lead customers to readily identify the IKEA brand and associate the company with quality products and purchasing experiences.
The expanded marketing mix outlined by McColl-Kennedy and Kiel helps to highlight how businesses can use the traditional marketing mix to emphasize service as well. IKEA uses the additional three elements to differentiate themselves from their competitors and satisfy the needs of potential customers through superior products and service. Concentrating on each element of the marketing mix focuses marketers on the target customer, provides a framework for analysis, and, ultimately, a recipe for marketing success.
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IKEA.com (2004). About IKEA. Inter IKEA Systems B.V. Retrieved on August 12, 2004 from the World Wide Web at: http://franchisor.ikea.com/
IKEA.com.au (2004). About IKEA. Inter IKEA Systems B.V. Retrieved on August 12, 2004 from the World Wide Web at: http://www.ikea.com.au/ms/en_AU/about_ikea/facts_figures/figures.html
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