IKEA Business Case Study: How to Earn 40 Billion$ Every Year by Selling Furniture? (IKEA Effect)

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VIDEO INTRODUCTION:
The “IKEA Effect”: When Labor Leads to Love
It is due to the IKEA effect that an individual perceives the value of self-made products (even though they might be amateurs) equivalent to that of products made by experts. When someone does labor to complete a task, they tend to love and value it more.
This can be understood by an example:
When instant cake mixes were introduced in the 1950’s as part of a broader trend to simplify the life of the American housewife by minimizing manual labor, housewives were initially resistant. These mixes made cooking too easy, making their labor and skill seem undervalued. They completed the task simply but did not value it because it involved almost zero labor.
To counter this, manufacturers changed the recipe and instead added one more step, now to complete the cake adding an egg in the mix was a mandatory step. This small change of introducing labor appeared to be a crucial move that lead to the sales of the cake mixes.
So if you want the magic of the IKEA effect to work you need 3 things
1. The task should not be too easy
2. The task needs to have labor
3. The task has to be completed successfully
More on this in the video, watch till the end and drop a comment if you liked it.
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Mom slapping Kid video credits: / @abdurz0073
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#ikea #ikeaeffect #furniturestore

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Firstly, the ease of supply chain management greatly reduces the company’s expenses enabling it to offer affordable furniture with top notch quality and secondly the customer engagement with schemes like DIY where in customer pours in a bit of effort to build something which they can be proud of later on and most importantly easy self shipping….man IKEA really gave a serious thought on the departments as well let alone the furniture

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Ingvar Kamprad Elmtaryd Agunnaryd Just love the way Ingvar Kamprad named his company I.K.E.A! Also this DIY culture is missing in India, even for small tasks like drilling a hole to hang a photo frame or basic tasks people call a professional to do it, even now I see people calling a professional to assemble even basic IKEA furniture I hope this trend changes but then again the question of killing the poor persons job. I hope one day we can move forward when majority of people get decent work and put an end to "cheap labour" forcing people to adopt the DIY culture and invest in power tools to build stuff!

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Just my two cents. As someone from Sweden, I can say that the analogy with the cake mix is a bit flawed. The success of flatpack concept is more rooted in the Swedish culture more than tapping into the emotion. This is to be self sufficient in most aspects of life (compounded by the high wages for all kinds of labour). So Ikea did not make customers assemble furniture to provide them some kind of delight, its just an ordinary thing they expected people to be okay to do by themselves as long as Ikea provided a much cheaper offering. Supply chain management is of course one of the main cornerstones no doubt.

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Logistics part reminds me of Apple reducing phone boxes which in turn can ship 2x units and make more profits. (Increased profits ) (Efficient supply chain) (Reducing e-waste) killer move👏🏻

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It surely increases profits and supply chain efficiency for them but the whole carbon footprint burden is being transferred on to Amazon where people are going to buy chargers a lot and we all know how inefficient Amazon packaging is…So no need to make Ho Ho about e-waste because it is definitely going to increase because of this

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The fact that I did not come to know why exactly people visited IKEA Hyderabad in such big numbers really makes me cringe hard

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What if people would not have figure out, how to assemble it? Then probably we would have watch this video as "The fall of IKEA!!"

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That was once the case but then started improving their designs and now they are coming out with 5mins assembly furniture. Do check it out. It's super crazy level innovation 🌟

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😂

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By the way they can simply start a youtube channel and post the videos of the assembly of furniture

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