Design of Products and Services: Ikea’s Product Design

Design of Products and Services

IKEA’s Product Design

IKEA became a successful business company through its mission to make high quality products that are sold at inexpensive prices. IKEA is able to maintain its low cost leadership through its unique business model that connects the needs of its main target customers who have limited income and living spaces to what its designers and manufacturers could possibly produce. As dictated by its mission, IKEA’s product designers and developers always start their work from the price issue. IKEA adjusts the construction size of its products in order produce, package and transport its products in the most efficient way. IKEA also puts lots of effort in improving and minimizing the costs of its materials.

Every year, IKEA introduces around 2,000 new products, all with new improvements, to its current product range which contains about 10,000 products. One of IKEA’s largest costs in product development and production is logistics. However, on one pallet, IKEA could receive additional 33 percent profit just by changing the size of the product. This advantage enables IKEA to be able to alter both its design and production to become more cost efficient.

By keeping a narrow range of articles to be sold in large volumes, IKEA is able to keep its costs and thus prices down. Its customers have also inadvertently contributed to lowering the prices of IKEA’s products by collecting, transporting then assembling the products by themselves.

IKEA is one of the companies that openly talks about co-creation with customers as a key driver for its product innovation and creativity. IKEA’s continuous desire for innovation and to act as a solution provider have provided the perfect environment for IKEA to dare to rely on consumer insights to drive its marketing and product ideas. For example on an initiative Home Tour, IKEA sent five American employees on a yearlong road trip to provide house makeovers for several families by using...