What conditions must always be met before you say “yes”?
IKEA designs the price tag first. It keeps them on course.
Their purpose is to “create a better everyday life for many people.” IKEA wants to produce democratic design: products with flair at a price most people can afford. They know that even people on a limited budget want a beautiful home, a comfortable home, a place that feels like, well, home.
Beginning with the price tag first keeps IKEA aligned with their purpose. For example, the design process for a particular chair started with a target price of $139. Once the price was established, considerations for how customers would use the chair were factored into the design. Then material selection and form were defined, along with how the chair would be packaged. Packaging for IKEA is key, impacting both pricing and product design. The more chairs that can fit into a shipping container, the lower the price for the customer. In designing the chair, after multiple trials and many months, a final tweak in the angle of the chair’s arm decreased the packaging cost significantly and the target price was met.
Minimizing waste and creating functional yet desirable items to fill peoples’ homes continues beyond product development into the IKEA store experience. The self-service environment lowers cost, passing the savings on to the customer. IKEA punctuates the store experience by placing an oasis for nourishment (a “do-it-yourself” cafeteria) smack-dab in the center of the store, serving Swedish meatballs, inexpensive hotdogs, and cinnamon rolls.
By deciding to design the price tag first for their products, IKEA stays on course to what endears them to their customers. IKEA’s sensible Scandinavian approach to design and pricing draws their core customers: young, just-starting-out singles and families who have much more energy than cash.
- Do you have clarity like IKEA about your customers?
- What unique value you deliver to their lives?
- What do you always consider first in product and service development?
- What conditions must always be met before you say “yes”?