Background. Title:Determinants of the consumer loyalty: a study of IKEA.

Abstract

Title: Determinants of the consumer loyalty: a study of IKEA.

Level: thesis for Bachelor Degree in Advanced Marketing

Aim: The purpose of this paper is to examine which factors determine the consumer loyalty behavior. Furthermore, I will focus on Swedish; more specifically, I will study the case of IKEA mall in Stockholm. Accordingly, I will pay main attention to the international business in this study.

Method: As far as I expect that study paper to be expository and clear, I decided to follow the qualitative method. I will conduct interviews in Stockholm in order to collect information and get a real feedback from consumers. In addition, the case study method will be helpful with an eye to think over gathered data.

Findings: While studying the consumer loyalty issue, such indicators as quality of services, communication with customers and commercial become significant for businesses. Besides that, reliability and commitment play a big role in success of a company too. Furthermore, Swedish market has its own distinctive features (for example the way of consumer classifying or realizing consumer loyalty strategy), what makes this case study specific. Lastly, some problematic issues of customer loyalty strategy are considered.

Contribution: I will highlight the customer loyalty strategy problematic in that paper and give an importance to specialty of the Swedish market. Consequently, the objective point of this study is to give an extensive view of customer loyalty strategy in the Swedish market.

Key words: consumer loyalty strategy, IKEA, Swedish market.

Content Table

1. Introduction ……………………………………………………………………………… 4

1.1. Background....................................................................................................................... 4

1.2. Consumer loyalty definition.............................................................................................. 5

1.3. Objective statement........................................................................................................... 5

2. Literature Review ………………………………………………………………..………. 7

2.1. Components of consumer loyalty...................................................................................... 7

2.1.1. Measurements of loyalty................................................................................................ 8

2.1.2. Consumer pyramid model............................................................................................ 14

2.2. Useful side of consumer loyalty...................................................................................... 15

2.3. Towards achieving consumer loyalty.............................................................................. 17

2.3.1. Does my company need it?.......................................................................................... 17

2.3.2. Ground basis of consumer loyalty................................................................................ 18

3. Methodology …………………………………………………………………………….. 20

3.1. Preserving the consumer loyalty...................................................................................... 20

3.2. Specialty of Swedish market............................................................................................ 22

3.3. Research aim.................................................................................................................... 23

3.4. Research method.............................................................................................................. 24

3.5. Information gathering...................................................................................................... 26

3.6. Information analysing...................................................................................................... 27

3.7. Foundation and trustworthiness....................................................................................... 28

4. Analysis ………………………………………………………………………….………. 30

4.1. Background of IKEA....................................................................................................... 30

4.2. Interview outcome of IKEA in Stockholm, Sweden........................................................ 31

4.3. Case analysis of IKEA in Stockholm, Sweden................................................................ 34

5. Conclusion ………………………………………………………………………….……. 37

5.1. Response to research problematic.................................................................................... 37

5.2. Recommendations for further study................................................................................. 39

Appendix …………………………………………………………………………………… 40

Reference................................................................................................................................ 42

Introduction

Background

There is no way to get away from it: customers have to be loyal and devoted to carry success to a company. They are those, who make company doors opened and who will stand up for that business. In our contemporary marketing reality, consumer loyalty becomes a " currency". That is why it is so vital to guarantee unique consumer experience each time across all channels.

Consumers, no doubts, are the lifeblood of every company. Satisfaction of their consumer wants and the guarantee of it is imperative condition. While the company worries about its consumers, consumers will not reciprocate in the same way. Hard market competition demands businesses to develop the bonds with consumers all the time. We can interpret that into effective consumer life cycle management by the way of invoking a positive feedback throughout all the consumer experience. (Ndubisi, 2007)

Whilst attracting of new consumers is substantial, businesses have to make an accent on saving of existing consumers and getting loyal consumers, who can provide sustained business work. The more active consumers come into communication with a company, the higher their chance to effect profit for a company. Actually, " Gartner" claims that 20% of the actual consumers in the firm create about 80% of the incomes.

Consumer loyalty is essential for the businesses in the contemporary market surroundings. Consumers became real assets, so the organizations could set up supplemented value from consumers simply if they focus on attention to consumers enough (Rowley, 2005). The advantage is reciprocal: both organization and consumers could be prized. From the organization point of view, first of all, improving consumer bonds with a business entails inestimable resource. Secondly, it helps organizations to select more helpful data about consumers (Ndubisi, 2007). In contrast, from consumers' point of view, firstly, loyal consumers help to decrease businesses’ expenses (f.ex. marketing, operational and more). Secondly, consumers can play a role of a " half-time employees" who can promote the brand among their friends/families/colleagues. These fellowship is a good example of how consumers will bring intangible utility to businesses (Bowen & Chen, 2001).

Consumer loyalty strategies have a great impact on businesses’ development. Contemporary market reality bring such challenges like strained rivalry, so businesses are compelled to create stable connection with their consumers to gain much revenue (Ndubisi, 2007). In obedience with Ndubisi (2004), it is becoming commonly popular to put an emphasis on problem of saving consumer-company relationship. In accordance to Bowen and Chen (2001), no doubts, there is a positive ratio between consumer loyalty level and profitableness of a company. Moreover, if an organization holds just 5 % more of its consumers, income grows up from 25 % to 125 % (Bowen & Chen, 2001). Consequently, developing consumer’s loyalty is a significant objective for organizations' managers.