WOLF BITES - Issue 15
What advertisers can learn from IKEA’s mastery of the price/convenience balance
Recently I had the “pleasure” of helping my son assemble some IKEA furniture for his new condo. The experience left me, once again, amazed at how IKEA has mastered the price/convenience balance.
IKEA gives you low price, but they also give you a load of inconvenience and the biggest inconvenience is assembly. It is almost impossible to assemble an IKEA item without mixing up two parts that look alike, but are very different.
Ikea's highly attractive pricing makes the customer forget that some assembly is required. This winning marketing strategy also turns on the consumer's willingness to accept significant long-term pain for relatively minor short-term gain.
You only discover your mistake after assembling most of the item, which means you have to take the whole thing apart and start over. You are also likely to end up with extra parts. Does this mean you missed a step? Probably. Maybe. Who knows?
Now, I have to admit that the finished piece looked pretty good, especially for the price. And we felt a certain satisfaction from having mastered the assembly puzzle. We still remembered the inconvenience we encountered during assembly, but that memory fades fast. IKEA counts on that.
Look closely at IKEA and you will see they are masters at eliminating costs and adding inconveniences, necessary steps to offer a low price: Shipping costs to IKEA centres are cut because it is far cheaper to ship a flat box than an assembled piece of furniture; retailing cost is low because there is no retail outlet – just a huge warehouse with a few scattered displays; there is no cost for delivery to the customer’s location because that is the customer’s job; and there is no cost for assembly because, once again, that is handled by the customer. Brilliant.
The lesson? Your customer will absorb a lot of inconvenience if you give him or her reasonable quality at a low price. And nobody masters the price/convenience balance like IKEA.
Next month: Are you a candidate for destination marketing?
Read Wolfgang's latest marketing blog.
|Wolfgang Franke is President & Creative Director of Words at Work Advertising & Marketing, a full service communications company established in 1988. Our growing list of valued clients are found throughout our local market, Markham and the Greater Toronto area, across Canada in cities such as London, Ontario, and Edmonton, Alberta, and an expanding list of international locations ranging from The Big Apple in New York to Kanturk, Ireland.|