Prices in The Chinese Markets Discussion and Responses

Prices in The Chinese Markets Discussion and Responses

Prices in The Chinese Markets Discussion and Responses

review the articles on IKEA and China in this week’s Reading & Resources section.

When IKEA entered the Chinese market, it dropped the prices on its products significantly, but only in that market. Prices in Europe, the United States, and the other Asian countries stayed the same. Compose a post that responds to the following prompts:

Based on the macro environment and micro environment, and specific to opportunities in China that might be different from those in the US, discuss ANY ONE relevant element of the macro (external) environment (PESTLE: Political, Economic, Social, Technological, Legal/Regulations, Environment (natural resources, climate, etc.)) and ANY ONE relevant element of the micro environment (market, competition, industry).

Now read this 2022 article from CNN: https://www.cnn.com/2022/06/13/business/ikea-closing-shanghai-store-intl-hnk/index.html

2. Comment on one more relevant element of the macro environment as you reflect on the CNN article.

POST

Here are two discussions which need to replydiscussion 1The increasing demand for furniture in the country has led to an increase in IKEA sales in China. As a result of China’s economic growth, living standards have risen, which is the first factor that contributed to the creation of opportunities (Chu et al., 2013). The average level of living in China will rise as a result of increased spending on home furnishings.

Their diversified consumer base and low labor costs were further benefits. Not only that, but they also perform and are extremely consistent. China has advanced technological and production capabilities that will help them in the long run.Future manufacturing will also employ green practices, which will consume less energy. IKEA had employed a stock list, but they later discovered that online marketing was a more effective approach to draw customers.

Additionally, IKEA made sure that public transportation could easily access the stores. IKEA ultimately had to rely primarily on trial and error to determine what worked and what didn’t so they could subsequently fix and develop it. IKEA in China has made all the necessary adjustments to make sure that neither its expansion objectives nor its brand promise are compromised.

IKEA has demonstrated daring, flexibility, and awareness by relocating its manufacturing, collaborating with local vendors, navigating legal obstacles, and changing its brand offering to reflect the market’s stage of development and the experiences of its customers (Thibaud, 2021). In 2018, IKEA declared that its official website would be the country’s first online storefront. IKEA has difficulties with customers using the display furniture while they were asleep.

As a result, it wasn’t difficult because it produced a fantastic idea, or the customer would be more likely to buy the goods because they were “at home.” The justification for the permit was that the more customers tried on, the more likely they were to buy, despite the fact that sleeping on IKEA’s display beds is a typical occurrence. IKEA allowed pop-up exhibitions and even set them up so that customers could unwind in the space.

P (political): It can be expensive to export furniture between continents because of tariffs. Examples of economic variables include interest rates, inflation rates, and foreign exchange rates’ (social): IKEA is the go-to store to visit or shop online if you’re looking for inexpensive furniture to buy during a pandemic.

T (technological): While China tried catalogs but found they didn’t fit, they switched to internet marketing, the United States intends to change its marketing messages. To sell to the audiences who buy more, identify them. L (legal): Comparatively lax labor laws to those in the US.E (environmental): Some IKEA stores are located in busy cities or areas with public transportation, while others are smack dab in the middle of nowhere.

References Chu, V., Girdhar, A., & Sood, R. (2013, December 6). How IKEA adapted its strategies to expand and become profitable in China. Business Today. https://www.businesstoday.in/magazine/lbs-case-study/how-ikea-adapted-its-strategies-to-expand-in-china/story/196322.htmlThibaud. (2021, February 13). IKEA in China: How Big Furniture Retail Adapts to the Chinese Market.

Daxue Consulting – Market Research China. https://daxueconsulting.com/ikea-in-china/discussion 21.) One macro environment that affected Ikea was the social environment in China. IKEAs typical strategy in other countries like the US and Europe was to market their products through a catalog. That was the wrong mistake when trying to market in China. The catalog allowed competitors to take a look at Ikea’s products, imitate them, and sell them at a much lower price. IKEA had to change its strategy right away and had to understand and adapt to China’s social environment.

They engaged social media and word-of-mouth marketing which was much more important than catalog marketing in China. “IKEA in China also leverages the use of social media and word-of-mouth marketing, which is highly important in the digitally interconnected Chinese consumer base” (Daxue Consulting, 2022). One micro environment that affected Ikea was the market. In every country the economic conditions are different which can create fluctuations in the market. And understanding the market was key for Ikea in China. Ikea was trying to appeal to the masses in China by offering furniture at low prices as this strategy had worked in other parts of the world for them.

But unfortunately, Ikea products were seen as aspirational in Asian countries and its low prices were considered higher than average in China. Ikea’s mass marketing and low-price strategy were the wrong strategies and they had to better understand the market. Ikea took some time to understand the market and changed who they would market to. Ikea “started targeting the young middle-class population. This category of customers has relatively higher incomes, is better educated and is more aware of western styles” (Chu et al., 2013). This was massive change in strategy for Ikea and it has paid off for them. 2.) One macro environment that may have played a role in Ikea considering closing its Shanghai store is the economic environment. Covid cause many places to enact a lockdown and spending went way down. Ports we overcrowded and there were shortages of trucks to pick up at the ports. This backup could push prices up and more inflationary pressure.

When China went into lockdown it posed a great threat to China’s economy. “China’s consumer spending took a significant hit from Covid outbreaks and the stringent lockdown measures” (He, 2022).  Political environments also played a role as China enacted a strict zero-covid policy and strategy. It caused many companies to suspend operations. Ikea is also shifting their social strategy as consumer’s shopping patterns are changing. They are shifting towards online shopping and convenient delivery and these wants were accelerated by consumers because of the pandemic.

This seems to be the case facing for many companies. The eCommerce business is growing rapidly and more companies are moving towards online shopper marketing. References Chu, V., Girdhar, A., & Sood, R. (2013, July 21). How IKEA adapted its strategies to expand and become profitable in China. Business Today. Retrieved July 14, 2022, from https://www.businesstoday.in/magazine/lbs-case-stu…He, L. (2022, June 13). IKEA is considering closing another store in China. CNN. Retrieved July 14, 2022, from https://www.cnn.com/2022/06/13/business/ikea-closi…The great success of IKEA in China. Daxue Consulting – Market Research China. (2022, June 28). Retrieved July 14, 2022, from https://daxueconsulting.com/ikea-in-china/

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