Today, the IKEA Group can be considered one of the most successful companies in the world. Apart from generating more than 21.5 billion Euros in 2009, many facts and figures emphasize the organization’s success over the last 69 years. For instance, the IKEA Group now comprises 267 stores in 25 countries, with 1,220 suppliers from all over the world and constantly growing sales – even in times of difficult economic situations (like the late-2000s financial crisis).
But what exactly is the secret of IKEA’s success? How does the Scandinavian home goods company sell so much more to its customers in comparison to its competitors? And why do people even use phrases like “shopping experience” when relating to their time spent in one of IKEA’s retail stores?
In behavioural economics, many experiments have been conducted to find out about psychological factors influencing consumer behaviour and buying decisions. The results of these experiments, which have taken into account aspects like store design, pricing strategies or demographic differences, provide companies with many suggestions for the sake of increasing sales.
In order to analyse IKEA’s success, this essay will first present key aspects concerning the “psychology of shopping”. Afterwards, these findings will be applied to the IKEA Group and specific parts of its retail stores. Moreover, the so-called “IKEA Effect” will be explained in the context of psychological biases.
Table of Contents
1 INTRODUCTION
2 THE PSYCHOLOGY OF SHOPPING
3 IKEA
3.1 BUSINESS IDEA
3.2 STORE DESIGN
3.3 THE IKEA EFFECT
3.4 FURTHER PSYCHOLOGICAL ASPECTS
4 SUMMARY
Objectives and Topics
This essay aims to analyze the commercial success of the IKEA Group by applying principles of behavioral economics and the psychology of shopping. It explores how specific retail strategies and store environments influence consumer behavior, purchasing decisions, and brand loyalty.
- Psychological factors in retail and consumer behavior
- Impact of store layout and maze-like design (Gruen Transfer)
- The role of self-assembly and the "IKEA Effect"
- Strategies for increasing conversion rates and customer satisfaction
- Behavioral differences influenced by gender, age, and sensory perception
Excerpt from the Book
3.3 The IKEA Effect
As already mentioned in chapter 3.1, one of IKEA’s most unique business ideas is related to the fact that customers have to assemble their own furniture. In 2011, MICHAEL I. NORTON, DANIEL MOCHON and DAN ARIELY from the Harvard Business School published a paper on this issue. In their studies they have found that there is a significant increase in valuation of self-made products (cf. NORTON, MOCHON & ARIELY, 2011: 2). First of all, they go back in time and talk about “instant cake mixes [which] were introduced in the 1950’s as a part of a broader trend to simplify the life of the American housewife by minimizing manual labor” (ibid.: 3). Despite this simplification, American housewives refused to buy these mixes until “manufacturers changed the recipe to require adding an egg” (ibid.).
In NORTON’s, MOCHON’s and ARIELY’s studies, they encouraged consumers to build IKEA boxes, fold origami and construct sets of Legos. Finally, all three experiments demonstrated a huge correlation between labour and the valuation of the product. NORTON et al. showed that “successful assembly of products leads to value over and above the value that arises from merely being endowed with a product, or merely handling that product” (ibid.: 18). Although there is no possibility of being creative when assembling IKEA products (in contrast to origami or Legos), NORTON et al. emphasize feelings of pride and enjoyment while working and after assembling your own furniture. In relation to IKEA’s business idea, they labelled their overall findings the “IKEA Effect”.
Chapter Summaries
1 INTRODUCTION: Provides an overview of IKEA’s historical growth and defines the scope of the study, which focuses on the psychological factors behind the company's success.
2 THE PSYCHOLOGY OF SHOPPING: Examines general behavioral science concepts in retail, such as conversion rates, interception rates, and the impact of store atmosphere on consumer time and spending.
3 IKEA: Analyzes the specific application of psychological strategies within IKEA stores, covering business philosophy, store architecture, the IKEA Effect, and additional sensory marketing techniques.
3.1 BUSINESS IDEA: Outlines IKEA’s vision of providing functional, minimalist furniture through cost-efficient production and flat-packing logistics.
3.2 STORE DESIGN: Discusses the maze-like floorplan, the Gruen Transfer, and how specific pathing forces customers to encounter more products, leading to higher unplanned purchases.
3.3 THE IKEA EFFECT: Details the psychological phenomenon where consumers assign higher value to products they have assembled themselves, based on Harvard Business School research.
3.4 FURTHER PSYCHOLOGICAL ASPECTS: Explores additional tactics such as touch-and-trial policies, the role of children's play areas, and the strategic use of restaurants to enhance the overall brand experience.
4 SUMMARY: Synthesizes the findings, confirming how IKEA effectively leverages psychological biases to drive sales while suggesting minor areas for operational improvement.
Keywords
IKEA, Psychology of Shopping, Behavioral Economics, Conversion Rate, Store Design, Gruen Transfer, IKEA Effect, Consumer Behavior, Self-Assembly, Retail Strategy, Unplanned Purchases, Customer Satisfaction, Marketing, Brand Loyalty, User Experience
Frequently Asked Questions
What is the core focus of this research?
The paper explores the psychological mechanisms that contribute to the global retail success of the IKEA Group, focusing on how store design and customer involvement influence shopping behavior.
What are the primary themes discussed?
Key themes include consumer psychology, retail architecture, the relationship between labor and product value, and the strategies used to maximize conversion rates and unplanned purchases.
What is the main objective of this study?
The primary goal is to analyze why IKEA is highly successful compared to its competitors by explaining its sales approach through the lens of behavioral science.
Which scientific methodology is applied?
The paper utilizes behavioral economics and retail research theories, referencing studies by experts such as Paco Underhill and researchers from the Harvard Business School.
What topics are covered in the main body?
The main body examines IKEA's business idea, the influence of its maze-like store layout, the psychological significance of self-assembly (the "IKEA Effect"), and various sensory engagement strategies.
Which keywords best describe this work?
Important keywords include the IKEA Effect, consumer behavior, store layout, behavioral economics, and retail psychology.
How does the "Gruen Transfer" affect IKEA shoppers?
The Gruen Transfer, or scripted disorientation, is achieved through a maze-like layout, lack of clocks, and controlled lighting, which encourages shoppers to wander longer and make more unplanned purchases.
Why is the "IKEA Effect" important for the company's success?
The IKEA Effect increases the perceived value of products because customers feel pride and ownership after assembling the furniture themselves, which strengthens their bond with the brand.
How does IKEA cater to different demographics like families and children?
IKEA integrates family-friendly features such as wide aisles for strollers, dedicated children's departments ("Children's IKEA"), and supervised play areas like "Småland" to facilitate a more relaxed shopping experience for adults.
- Arbeit zitieren
- Sebastian Baumann (Autor:in), 2012, IKEA and the Psychology of Shopping, München, GRIN Verlag, https://www.hausarbeiten.de/document/203725
