Ikea Costs Strategy Essay

IKEA offers cut the costs of nearly 300 items since September 2012. The price tag on a hot product, Skubb boxes, was cut to 29. on the lookout for yuan coming from 49 yuan. The president of Ikea China ( retail organization ) Jillian said: " The advantage we have is that we can control each of the links inside the supply chain, and reduce the price tag on each hyperlink effectively in order that it runs in the entire process from merchandise design to ( condition, material and so forth ), find the OEM producer management, logistics design and mall managing. ” IKEA claims that " what we should design first is the price tag ", we. e. set price 1st, then style products by designers.

Models are based on price

To keep low price, the designers of IKEA Bong Cup need to fully consider the elements such as materials, color and design. For instance, cups' color are colored as green, blue, yellowish or light, because these color materials cost less than any other colors (such as red ); in order to reduce expense in storage, transportation, and production, designers design Bong Cup as a special cone, because this shape of Bong Cup can make themselves go through equipment as quick as possible, leading to a lowering of cost. Furthermore, IKEA also change the height as well as the handle shape of Bong Cup so that they can bunch more efficiently, then, as a consequence, conserve space in transport, storage space, store exhibits and the space used by absolutely free themes in the cupboard at home. IKEA also created the " modules " - design furniture design and style methods (IKEA's assembling pieces of furniture is split, and items are broken into different modules. Different quests can be manufactured in different parts in terms of expense; at the same time, some modules may also be used in different furniture), which not merely reduce the expense of design, and the total expense of the product may also be reduced.

Storage area derived from cost

In terms of storage and vehicles, IKEA employ flat packaging to reduce the pace of damaged furniture in storage and transportation...

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