The Ikea Effect: How Ikea Has Changed The Way Of Shopping?

What’s first name comes to your mind when you decide to go furniture shopping? If not anything else, the idea of visiting “Ikea” definitely pops into your head. That’s the power of Ikea’s marketing strategy that they have imprinted on their targeted audience’s minds. Ikea being the fourth most valuable furniture retail brand worldwide has managed to unlock the psychology of their customers, making them successful in operating 445 stores globally and 50 e-commerce markets. Their marketing strategy is nothing short of remarkable where Ikea incessantly implements to amplify its brand presence. So let’s unearth what’s the Ikea effect is all about!

Ikea Effect Is A Form Of Cognitive Bias

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The Ikea effect is a form of cognitive bias that prevents individuals from perceiving things from a logical mind. In other words, it is a type of cognitive biases where the customers derive a sense of satisfaction from the end outcome by building their products with effort and labor.

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How Did It All Start, In The First Place?

 

Michael Norton, Daniel Mochon, and Dan Ariely, author of a research paper at Harvard Business School, first presented the concept of the “Ikea Effect.” 

Their paper “The Ikea Effect: Labour Leads To Love” discussed how building something by yourself leads to a greater sense of value.

They presented the study with an example of cake mixes offered to mothers to minimize their effort at baking cakes for their families in 1950.

Surprisingly, the cake mixes wasn’t a success and failed even after the benefits it had were impeccable. 

The product’s poor performance was that the women thought it was disrespectful towards their efforts and decreased their value of labor at baking cakes.

Shortly after, the manufacturers came up with a formula that’d allow housewives to add other ingredients to the cake like an egg; their sales blew.

Why It happens & The Psychology Behind The Ikea Effect?

The Ikea Effect is somewhat identical to another cognitive bias termed the “Endowment Effect.” In the endowment effect, people feel certain items possess high value if the object belongs to them or they feel a sense of ownership to it.

For instance, a Mercedez car owner would prefer to sell the vehicle at a higher value, wherein the buyer could bargain purchasing it at a lower price.

Here, the car seller thinks from an emotional perspective because they feel ownership over the car. This emotional response is known as the endowment effect.

Here are the psychological reasons behind the “Ikea Effect.”

1. Labor Leads To Love

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Research in 2011 about “The Ikea Effect: Labour leads to Love” explored how the Ikea effect influences people to spend more money.

In addition, the study delved into how participants value items they constructed together compared to items built by someone else.

A bidding phase later followed the study wherein the participants folded origamis first and then bid it to buy with those origamis of experts.

The experiment concluded that participants felt their creations were of higher value compared to others. However, it also indicated that the effect dissipated if too much time went into assembling their products.

2.  The Ikea Effect Influences How Much You Buy

Later, two groups of participants again took part in the same study where one group built Ikea boxes entirely, and another group only did it halfway, leaving it incomplete.

The conclusion derived from the experiments was evident enough in conveying that those who finished constructing the boxes showed more value towards the creation. Therefore, they were ready to pay for it to keep it with themselves.

What’s The History Of Ikea?

IKEA stands for Ingvar Kamprad Elmtaryd Agunnaryd. Ingvar Kamprad was a teenager when he managed to succeed and build the world’s biggest furniture company that we now have known as Ikea. 

With this, he also succeeded in revolutionizing the way retailers function, primarily by adopting the new style of flat packing to sell a piece of furniture in parts. 

The brand came ‘alive’ from a simple sale of wallets, picture frames, and watches. Now it is a home furnishing empire with stores across countries that still expand its products’ innovation.

The three main principles of this company follows are:

  • Quality in the self-service, 
  • Innovation in selling exciting pieces of furniture and creating an unforgettable entertainment experience for its customers.

So, the question is, how has Ikea “infected” the way we shop?

Read on to learn Ikea’s marketing strategy and how Ikea has changed the way we shop.

Ikea’s Marketing Strategy

Ikea’s marketing strategy mainly focuses on its products, price, and brand presence. Their products are easy to set up, making it seamless for their customers to buy furniture and set them up according to their needs. They are famous for their sofas, dining chairs, bar tables, tools, and benches, among many other products.

Therefore, it further allows their customers to choose from a variety of products. Moreover, Ikea never compromises their product quality, giving their customers the chance to choose from their classic collection of unique pieces.

On the other hand, the brand also provides quality products at a reasonable price. Their pricing point is framed keeping in mind to be compatible in the market. In addition, they minimize the cost of packing using cardboards that ultimately helps them reduce their overall price.

Ikea’s Digital Marketing Strategy

Ikea has a commendable history of adapting its marketing strategy to the changing trends in the market. The digital marketing strategy of Ikea focuses on getting their customers’ insights in real-time through clicks and expressions.

Recently, the brand discovered their customers wanting a sustainable approach to utilize their product, for which Ikea introduced a new service called “Buy Back.”

The initiative enables its customers to sell the old Ikea products to its retailer and then resell it to other customers. Ikea promised to show their customers and co-workers that sustainable living doesn’t have to come at a considerable cost.

How Ikea Uses Psychology To Change The Way We Shop?

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1. Ikea Uses ‘Open The Wallet’ Items

The bags containing tea lights or candles have a psychological effect on the customers. It influences customers to shop more than they believe is enough to buy.

Even though these items may appear casual, they often include an eye-catching cup to go or other attractive pieces of décor. The other retailers from the USA also use the concept of “open the wallet.”

They promote cheap materials and products in October for customers, hoping to continue buying them from November till December. 

“Ikea’s famous yellow and blue bags are there to entice you to shop more than you need,” says Johan Stenebo, a former Ikea employee and author of “The Truth about Ikea.”

2. Ikea Offers Prices That Are One Cent Shorter

According to researchers from Colorado, buying something worth $9.99 instead of $10 turns a window shopper into an actual shopper. 

In this study, the researchers asked the participants to evaluate two identical pens at different prices. One was for $2, and the other was $3.99. 

However, 44 % of the participants chose the higher-priced pen. This effect is called the left-digit effect.

It is a pricing technique that has a psychological impact on buying by “odd prices,” even though the counterparts are significant of lower prices.

3. They Offer You To Buy A Lot Of Accessories

If a mother wants to buy toys for their kids, Ikea offers a container for all the stuff that the visitors will buy. They give customers a container in a specific size and shape, but enough to fit the toys into it.

One can also use these containers or boxes for anything like food ingredients or lunch leftovers. They are visible to see everything inside and never forget to buy something that you need.

4. Ikea Offers Products That Are Sustainable To Environment

Ikea ‘behaves’ environmentally and sustainably by selling plastic bags that enable their customers to reuse them, recycling bins where they can drop their used batteries, light bulbs, and other packaging.

However, Ikea’s sustainable development approach continues to move far beyond the stores. The products are evaluated not only for their price but also for their environmental impact.

In addition, each phase of the production is firmly assessed, including the materials used in manufacturing the product.

These requirements are formulated in the code of Ikea that is also known as IWAY (the Ikea Way). And, in this code about environmental standards, Ikea’s intentions on ecological protection can be ‘felt’ and seen as trustworthy.

5. Ikea Offers Price Comparison Between Products

Ikea offers the possibility of comparison between two similar products with different prices. So if a couch or a sofa at Ikea is priced at $300 and placed next to furniture that is quite similar, but it costs $200, then the customer will be influenced by the “compromise price effect.”

And the customer may tend to buy the furniture at a low price, believing that they made a good deal. Many retailers and online stores also practice this Ikea effect or sale ‘trick’ of price comparison.

However, it is the world’s largest furniture company, so the popularity and uniqueness of its products create an intriguing price comparison.

6. Prioritize Their Customer’s Needs

One of the tops reasons Ikea being so successful is because they listen to their customer’s needs.

They conduct regular market research to unearth the deepest pain points of their customers. Through this, they develop products that solve their customer’s problems.

As a result, putting their customer’s preferences first helps their company grow by leaps and bounds.

Is It A Good Idea To Apply The Ikea Effect On Your Business?

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The impeccable marketing strategy is one reason why this brand is so successful in the global market.

Keeping that in mind, businesses should work towards involving their team members and employees in making decisions for the company.

Since the “Ikea Effect” revolves around feeling values with DIY’ing a product, implementing the same in your business imparts a sense of self-efficacy and worthiness in the employees’ minds.

Doing this allows your employees to build an authentic relationship, to feel emotionally attached to your business/company. In addition, this will also reap better benefits for the years to come.

Concluding Thoughts,

Ikea as a brand creates a unique and valuable shopping experience.
In this experience, Ikea making the products more innovative and accessible while also saving customers time and money.

However, as the world’s largest retailer company, Ikea also encourages its employees to treat their customers with respect, decency and make them feel valued and special.

So, following these principles and rules, Ikea is changing the way we shop and how we are going to shop.

Key Takeaways On The Ikea Effect

  • According to statistics, Ikea is the fourth most valuable furniture retail brand worldwide, with 445 stores globally and 50 e-commerce markets.
  • IKEA stands for Ingvar Kamprad Elmtaryd Agunnaryd and is founded in 1943 in Älmhult, Sweden. 
  • Quality service, product innovation, and providing customers an unforgettable experience- these are the principles Ikea follows to become successful at what they do.
  • Ikea’s marketing strategy focuses on products, price, and brand presence, leaving a lasting effect on customers’ minds.
  • Furthermore, Ikea has a history of learning from its mistakes and adapting to changing market trends.
  • Last year, Ikea introduced a new service called “Buy Back,” paving their customer’s way to sustainable consumption of products.
  • They evaluate their products not only concentrating on price but also on their effect on the environment.
  • Another reason Ikea is successful is that they have managed to penetrate deep into the minds of customer psychology to make them spend more on their products.
  • A study on “The Ikea Effect: Labour Leads to Love” discusses how building something by yourself leads to a greater sense of value.
  • The “Ikea Effect” is identical to a cognitive bias known as the endowment effect.
  • In the endowment effect, people feel certain items possess high value if the object belongs to them.
  • Moreover, the company also ensures its business is sustainable and environmentally suitable.
  • They offer its customers the possibility of comparison between two similar products with different prices.
  • Lastly, they listen to their customer’s needs, because of which they have become the top successful furniture retailer globally.

What is the history of Ikea?

The history of Ikea dates back to 1943, when Ingvar Kamprad Elmtaryd Agunnaryd, founder of Ikea, started a furniture business in Sweden.

What does Ikea mean?

IKEA is an acronym for: Ingvar Kamprad Elmtaryd Agunnaryd.

Ingvar Kamprad was a teenager when he managed to succeed and build the world’s famous furniture company known as Ikea. 

What is the Ikea Effect?

The Ikea effect is a form of cognitive bias. The customers derive a sense of satisfaction from the end outcome by building their products with effort and labor through this effect.

What are your favorite features of Ikea shopping? Let us know by commenting below. Also, do not forget to subscribe to us for more articlesYou can also follow us on our social media channels.

Ljupka is a freelance writer at AlignThoughts focused on Science and Technology.