IKEA and Volvo marketing strategies in the Italian market Authors: Sofiya Gilyazova Alina Gogunova Program: Economics, Management and Technology of Entertainment and Arts Tutor: Francesco Chirico Jönköping May 2012 Acknowledgements We would like to thank the following people for supporting the thesis: - Francesco Chirico, PhD (Jönköping International Business School) - Sven de Smet, Marketing Director for Europe (Volvo Cars Corporation) - Nicolas Lopez Appelgren, Global Marketing Director (Volvo Cars Corporation) - Valerio Di Bussolo, Corporate PR Manager (IKEA Svenska AB) Page | 2 S. Gilyazova & A. Gogunova Jönköping International Business School, Spring 2012 Abstract In the world of accelerated globalization and interconnection between countries and their businesses, it is of vital to have a complete comprehension about the environment where these businesses are presented. The main idea of this thesis is to ascertain the degree of influence of cultural characteristics of different countries on their marketing strategies in different markets. IKEA Svenska AB (IKEA) and Volvo Car Corporation (Volvo) were chosen for the analysis for several reasons: the companies are presented extensively on the global market, adopted a global philosophy and continually focused on international expansion. The purpose of this study is to analyze the strategies of aforementioned companies and investigate their degree of adaptation in the Italian market in accordance with cultural characteristics. Since Italy differs significantly from the domestic market of the two Swedish corporations, a study of this market would appear to be very beneficial and challenging from the perspective of the increasing interdependence of global markets. This thesis is presented as a multiple case study of two companies. To collect necessary and reliable primary and secondary data, qualitative method was applied through triangulation technique. The central source of primary data was semi-structured interviews that were conducted with representatives from the both companies; the secondary data was obtained from various authoritative sources, such as Internet newsletters, market surveys and reviews, corporate reports, statistical data and previous researches. The results revealed that the companies do not use the same strategies in Italy but both of them adapt to the local conditions, though with different degree. Volvo implements the transnational strategy with their well-known core competencies and intent attention to adaptation of their products; while IKEA fully benefits from global standardization strategy offering the same product in different markets and making this similarity famous. As it is stated in literature, the method and manner of companies’ performance in the market is very important. This study can be possibly generalized and applied for other companies or the same companies in other markets, in order to sustain competitiveness and core values. Page | 3 S. Gilyazova & A. Gogunova Jönköping International Business School, Spring 2012 Table of Contents List of Figures ................................................................................................................................................ 6 List of Tables .................................................................................................................................................. 7 1 Introduction ........................................................................................................................................... 8 1.1 Background .................................................................................................................................... 8 1.2 Problem........................................................................................................................................ 10 1.3 Purpose ........................................................................................................................................ 12 1.4 Research Questions ..................................................................................................................... 12 1.5 Delimitations ................................................................................................................................ 12 2 Methodology ....................................................................................................................................... 13 Frame of reference .................................................................................................................................. 13 2.1.1 Internationalization and globalization process ......................................................................... 13 2.1.2 Cultural differences as an strategic determinant...................................................................... 15 2.1.3 Strategic approach for market extension and integration ........................................................ 18 2.2 Method ........................................................................................................................................ 27 2.2.1 Qualitative research .................................................................................................................. 27 3 Results and analysis ............................................................................................................................. 29 3.1 IKEA Case Study ........................................................................................................................... 29 3.1.1 Overview of the Italian furniture market .................................................................................. 29 3.1.2 Background of IKEA ................................................................................................................... 29 3.1.3 Selection of the marketing strategy .......................................................................................... 30 3.2 Volvo Case Study.......................................................................................................................... 37 3.2.1 Overview of the Italian Automotive market ............................................................................. 37 3.2.2 Background of Volvo ................................................................................................................. 38 3.2.3 Marketing strategy of Volvo Cars on the Italian market ........................................................... 39 3.3 Interpretations ............................................................................................................................. 46 4 Discussions .......................................................................................................................................... 52 4.1 Theoretical contribution .............................................................................................................. 52 4.2 Limitation ..................................................................................................................................... 52 4.3 Future research ............................................................................................................................ 53 4.4 Implications for managers ........................................................................................................... 55 4.5 Conclusion .................................................................................................................................... 55 List of References ........................................................................................................................................ 57 Appendices .................................................................................................................................................. 62 Appendix 1. Interview questions: Volvo Cars Corporation ..................................................................... 62 Page | 4 S. Gilyazova & A. Gogunova Jönköping International Business School, Spring 2012 Appendix 2. Interview with Nicolas Lopez Appelgren (Global Marketing Director, Volvo Cars Corporation) ............................................................................................................................................ 63 Appendix 3. Interview with Sven de Smet (Marketing Director for Europe, Volvo Cars Corporation) ... 68 Appendix 4. Interview questions: IKEA ................................................................................................... 75 Appendix 5. Interview with Valerio Di Bussolo (Corporate PR Manager, IKEA)...................................... 76 Page | 5 S. Gilyazova & A. Gogunova Jönköping International Business School, Spring 2012 List of Figures Figure 1.1 Human Development Index: Trends 1980 – present ................................................................. 11 Figure 2.1 Four types of possible marketing strategy ................................................................................. 14 Figure 2.2 Four basic strategies. Source: Hill & Jones (2007) ..................................................................... 26 Figure 3.1 IKEA main suppliers around the world ....................................................................................... 34 Figure 3.2 IKEA marketing strategy ............................................................................................................. 36 Figure 3.3 Volvo Cars plants worldwide .....................................................................................................