Report
Relationship Marketing
Case study on IKEA
Solveig Matz
Viktoria Grah
Eileen Manz
Table of contents
Table of contents ... 1
Executive Summary... 2
Introduction... 3
1
IKEA's main Stakeholders within Relationship Marketing / Scope of Study. 4
1.1
Customer market... 5
1.2
Supplier market ... 11
1.3
Employee (Recruitment) Market, as part of the internal market... 13
2
Discussion and Criticism ... 18
Conclusion ... 20
Appendix: IKEA's influence market and referral market ... 21
Reference list ... 25
Bibliography... 27
2
Executive Summary
This report has shown that Ikea is likely to establish a vital relationship marketing.
They put the customer at the heart of the company and align their interaction with other
stakeholders like suppliers and employees by customer's needs and wants. They are
aware of an uniform value communication towards the customer and offer customers
relational benefit. In turn the customer, according to theorists like Gwinner, Morgan and
Hunt etc, is likely to develop a long term relationship loyalty with IKEA.
Although IKEA therefore seems to establish a fundament for customer loyalty, it cannot
be used as an evidence for their striking relationship marketing.
Firstly, IKEA stresses on corporate communication, service and social benefits but fails
to introduce monetary benefits for customers as a point discount system attached to
their IKEA Family Card. Secondly, the reasons for customers long term relationship
with companies can be hardly measured and finally even harder evidenced as a result
of efforts put in to relationship marketing solely.
3
Introduction
Within relationship marketing three main dimensions can be found on purpose, nature
and its role. While some theorists identify economical advantages (for example the cus-
tomer life time value: Anderson and Jacobsen, 2002) maintaining the purpose of rela-
tionship marketing, others stress on its interactive nature (exchange of relational bene-
fits: Gwinner et al, 1998) or the role of psychological impacts (building up trust, loyalty:
Morgan and Hunt, 1994) achieving that. Grönroos (1994, p.9) sums it up as follows:
"Identify and establish, maintain and enhance and when necessary, terminate re-
lationships with customers and other stakeholders, at a profit so that the objec-
tives of all parties involved are met; and this is done by mutual exchange and ful-
filment of promises."
This is a key definition as it explains how all the above mentioned dimensions play to-
gether achieving vital relationship marketing and therefore profitability. It also shows
the customer centricity and the involvement of other stakeholders.
IKEA is chosen as a case study for relationship marketing. The Swedish world market
leader in furniture is a particular good practical example of how the different dimen-
sions of relationship marketing are applied in practice. There can rarely be found an-
other company with such a strong corporate culture and close interaction with stake-
holders.
In theory, this interaction with stakeholders is displayed in the ,,Six Markets Model"
(Peck et al, 1999). According to this model, relationship marketing is an on-going inter-
active process between the company and its stakeholders. While the customer, as the
company's main interest group within relationship marketing, is at the center all others
are attached to it. That means the other markets are sub-items. Aligned by customer's
needs and wants these markets help to enhance the company's service offering and
their customer relationships.
IKEA's most important partners doing so are suppliers and employees (as part of the
internal market). Achieving and keeping their promise to "create a better everyday life
for many people", IKEA rely on suppliers delivering them with reasonable materi-
als/products as well as on staff reflecting their service approach.
Therefore, this report takes the ,,Six Markets Model" as a starting point and focuses on
IKEA's predominant stakeholder groups: customers, supplier, and employees. Each
group refers to relevant theory reflecting the three different dimensions of relationship
marketing mentioned introductorily.
4
1 IKEA's main Stakeholders within Relationship Marketing / Scope of
Study
Maintaining relationship marketing, Peck's, Payne's, Christopher's and Clark's ,,Six
Markets Model" considers different groups which a company has to interact with.
The "Six Markets Model" consists of the supplier, internal (employee/ recruitment mar-
ket), referral, influence and predominantly the customer market. That is why it is dis-
played in a central position within the model. Hence, this report will focus on the cus-
tomer market as it best reflects the intention, nature and role of relationship marketing.
Attention is also paid to the supplier market and employee/recruitment as part of the in-
ternal market due to the fact that they directly determine the provided corporate service
offering and consequently also the companies interaction with customers.
The most indirect stakeholder group that a company has to deal with is the referral and
influence market. They cannot easily be influenced by the company and affect their in-
teraction with customers to a lower extent. Hence, these markets do not contribute
much to the customer focus of relationship marketing which is used in this report. Thus,
they are only roughly mentioned in the appendix.
5
The companies
indirect/ external
pressure group
Referral
market
Influence
market
direct/ internal
Supplier
market
Employee
market,
as part
of the internal
market
customer
The companies
pressure group
The companies
indirect/ external
pressure group
Referral
market
Influence
market
direct/ internal
Supplier
market
Employee
market,
as part
of the internal
market
customer
The companies
pressure group
Supplier
market
Employee
market,
as part
of the internal
market
customer
The companies
pressure group
The company`s
direct/ internal
Interst groups
interst
s
Scope of study
Appendix
Figure 1: Scope of study according to the "Six Markets Model"
1.1 Customer
Market
The customer market is in the centre of the "Six Markets Model".
Two main directions of marketing activities can be distinguished: acquiring new cus-
tomers and building loyalty among the existing customer base. Particularly in saturated
and highly competitive markets, such as the furniture business, the emphasis of rela-
tionship marketing activities is on building loyalty.
The building of strong customer relationships has been suggested as a means for gain-
ing a competitive advantage (McKenna, 1991) because loyal customers (Gwinner,
Gremler and Bitner, 1998):
- Lead to increased revenues for the firm
- Result in predictable sales and profit streams
- Are more likely to purchase additional goods and services
- Typically lead to low customer turnover,
- Sales, marketing, and setup costs can be amortized over a longer customer life-
time
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