Value Co-Creation at IKEA

“An example of making an ordinary product extraordinary…”

What is value co-creation? According to the Business Dictionary, it is a business strategy focusing on customer experience and interactive relationships. Co-creation allows and encourages a more active involvement from the customer to create a value rich experience. In recent years, consumers are increasingly have helped companies, whether by creating advertising content, informing companies on what products they are interested in or advising companies on how to improve their customer service. Many companies are not encouraging consumers to share their thoughts and one of those companies is the successful retail furniture company IKEA. Rich D’Amico, the deputy marketing director at IKEA USA, states that IKEA is a company built on clear values. The two values relevant for value co-creation are simplicity and working together. In addition, IKEA constantly asks itself the following question: What can we do better? To answer this question, IKEA focuses on the needs of people and try to find a solution for them. According to D’Amico, IKEA relies on consumer insights to drive marketing and product ideas. One of the ways in which IKEA tries to understand the needs of the people better was through a campaign titled IKEA Home Tour. A team of five American employees of IKEA were sent on a yearlong road trip across the United States to give families from diverse backgrounds a home makeover using products from the local IKEA store. The road trip was filmed and the episodes were published via the YouTube channel of IKEA USA. During the IKEA Home Tour, the five employees would help with the planning, decorating and assembling of the furniture for the makeover. The home owners were also asked to provide their input. The IKEA Home Tour provided the employees of IKEA with valuable insights into the needs of people and the way IKEA products could fulfill those needs. The IKEA Home Tour allowed for a unique, inside perspective which would not be possible to gain from in-store contact. Not only did the IKEA Home Tour provide IKEA with valuable insights into the needs of the people, it also increased IKEA’s brand awareness and increased goodwill as the IKEA Home Tour visited people from a multitude of backgrounds (e.g., a homosexual couple). While we in the Netherlands may not find this extraordinary, the United States is relatively prude and for IKEA to show do this shows courage and openness. The trailer for one of the episode of the IKEA Home Tour can be found below: In addition to the example of the IKEA Home Tour (which is also discussed in another blog post), another example of how IKEA increases the consumer experience is through the creation of IKEA experience rooms. In general, IKEA experience rooms are designed in a uniform way and most of the furniture comes from the same collection. However, some minor changes are made in the experience rooms to attract different target groups. All experience rooms portray the needs of everyday life (e.g., cooking, sleeping and entertaining).  The experience rooms allows the customer to gain some inspiration of what they can do with their homes. The value of the experience rooms lies in customers becoming involved in creating and assessing solutions to special needs or everyday problems at home in the true reality. Customers share ideas and suggestions during informal conversations with one another and IKEA employees. Customers are involved and that they create their own experiences and not predefined ones. IKEA also encourages customers to do their own assembly and thus selling the furniture at discounted prices. A consumer may decide to buy all the items in the experience room. However, it is more likely that consumers will mix-and-match the items of several experience rooms to design their own room at home. IKEA has simplified this process by digitalizing all of its products for their design stands. For instance, with the help of IKEA employees, consumers can pick the cupboards they want, the size and the color. IKEA goes one step further by allowing customers to mix and match cupboards. For example, a customer may like the internal designs of cupboard A but like the doors of cupboard B and the handles of cupboard C. With the help of IKEA employees, the consumer’s dream kitchen can be assembled digitally, purchased and delivered. The experience rooms are a clear example of IKEA’s principles related to value co-creation: simplification and collaboration. A standardized cupboard is just a cupboard. However, this same cupboard, disassembled and reassembled with customer input can become a unique cupboard. Therefore, IKEA has shown how simplification and collaboration can make an ordinary product extraordinary without having to ask a premium. Other companies should take a good look at the IKEA business model and find ways to adapt it in a unique way to their own context. In this day and age, mass production is OUT, mass customization is IN! Sources

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