The Hindu Business Line : Some lessons in brand-building

IKEA is described as the quintessential global cult brand. Over 400 million people shop at its stores across the world every year year. Revenues are nearly $80 billion and growing at a brisk clip. It is a subject of case studies from Harvard and the founder, Ingvar Kamprad, though officially retired (79 years old now), is rated as high as Sam Walton for his impact on global retailing. But for him, `design' as an element of choice in furniture would not have taken hold the world over. The global middle-class owes a lot to him for this outstanding service.

There are three key lessons he has bequeathed on `brand-building' and sustaining it on a high:

Clearly articulate the "brand benefit'

What does the brand do? What is its essence? How does it feel to experience the brand? These key questions must be answered to articulate the brand's benefit. IKEA has gone about the task systematically. The target group is the global middle-class. The promise is "access to contemporary furniture design at prices within reach". The `brand experience' falls clearly into three phases.

The first phase is conveyed through the catalogue: At least a million copies are printed each year, for potential customers to drool over.

The second phase is the store visit. Wherever it is, the effect is not very different from a Disney-world experience, except that it is more an adult-wonder, as the vast expanse of the store seems never-ending, with more than 70,000 items on display!

How much can one take on a single day? The obstacle race ends happily at the warehouse, where the distinctive packing for easy transport further reinforces the favourable brand experience.

The third phase is the at-home experience: The joy of unpacking what is bought and the easy steps in the DIY (do-it-yourself) assembly of the furniture. How does it all add up?

IKEA seems to convey: "Leave the design to us. Come to the store. We will take care of the rest." The result is a guarantee of customer satisfaction and the multiplier effect, of word-or-mouth advertising.

Create `brand culture' to convey brand experience

Clarity begins at home. Mr Kamprad sought to instil his ideas clearly and unambiguously in his employees. His vision of creating `a better life for many' through IKEA is enshrined from the day an employee joins the company. Several practices define the company culture and help orchestrate efforts to deliver the brand as he originally envisioned.

There is work rotation periodically; and executives go down to the shop-floor and attend to duties there. This keeps them in touch with customers. There is accent on high energy and enthusiasm — people have to be passionate about customer interface. This is not dissimilar to the South-West Airlines' credo that they hire not an employee but an `attitude'.

The accent on constantly evolving novel promotions to excite shoppers keeps the IKEA pot on the boil. No one can escape the infectious buzz at the stores — smiling faces, helping hands, exciting promotions, value for money — the customer is usually overwhelmed and this has a lot to do with the internal brand culture, carefully cultivated along with the IKEA genius for design.

Bond with customer — rationally, emotionally

IKEA creates the rational part of the bonding in two important ways. The first is through carefully monitored pricing of its range, year to year. A basic tenet of company policy is to reduce prices at least by 2 per cent each year — this is the bare minimum. The cost obsession is at the back of supply-chain management. Well over 1,000 suppliers spread across the world form the backbone of the supply chain.

The second part of the rational bonding is through the device of items offered at the stores. One-third of the product line is changed every year.

The emotional part of the bonding is a combination of many small things but essentially boils down to the excitement in a store visit. It is a combination of a picnic and a shopping expedition. The conveniences provided include restaurants throughout the stores, play-pens for kids, and any number of free items to make shopping a joyful experience.

This apart, any new store rollout is an object lesson in buzz marketing. A store opening is a well-planned, carefully-calibrated exercise in generating excitement, with full use made of the media, starting with the Internet.

Tapping the creativity of the local community is an essential feature ahead of the store opening. What happens in the process is that there is enough action and excitement for the local community to get involved in a big way, and this goes a long way in generating goodwill and loyalty.

The lessons from IKEA are nowhere near unique. What matters is the execution and this is where IKEA shines brilliantly.

(The author, a former manager with HLL, is President, Telekonnectors Ltd., Chennai.)

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