Learning as we go: the challenges of entering a new market
Whenever we enter a new market, the decision is backed up by research and careful analysis, as well as gut feeling. While working as Country Marketing Manager in South Korea and later in India, Ulf Smedberg was involved in setting up the IKEA business in these two markets. We asked him to share his experiences and to describe the lessons learnt along the way.
How did you prepare to enter these new markets?
“Our first and arguably our most important step was to understand the culture of the country and the aspirations of its people. We researched what life at home is like for local consumers and tried to get a feel for their needs, expectations, hopes and dreams. Only then could we start to position the IKEA brand and create an offer that makes sense in that context.”
What did you observe in India and South Korea and how did this affect your approach?
“Well, in India we saw a lot of optimism with people believing in a brighter future, no matter how tough their current circumstances were. So, when preparing to open our first store in Hyderabad, we tapped into this by saying you don’t need to be rich to have a better tomorrow. We asked, ‘Why talk about tomorrow, when you can start today?’ Our campaign highlighted life’s simpler pleasures – like being part of a family and spending time with the kids.
“In the run-up to our Seoul launch, we heard many South Korean people saying that they were suffering from the pressure to perform – all the way from kindergarten to university and beyond. The new president had just stated her ambition to ‘make the nation happy’. This gave us a perfect opening to talk about how, even with limited means, you could make life at home more comfortable and enjoyable… and be happier. We tapped into this ongoing cultural shift and within a year, we had won two awards – one for best employer and one for best campaign to promote a happier life.”
What is the most challenging aspect of entering a new market?
“The main one is figuring out how to pitch a relatively unknown brand to a new market. In addition to that, we may face legal or cultural barriers. For example, until 2011 there was a law preventing foreign retailers from entering the Indian market. And before opening in South Korea, we faced strong opposition from local furniture companies who were afraid our low prices would drive them out of business. Fortunately, whenever we enter a new market, there’s usually a boost in overall interest in home furnishings to such an extent that the whole industry benefits.”
“It’s not enough to respect and accept a country; you have to love it and embrace its values!”
– Ulf Smedberg
What did you learn from these experiences?
“One key thing is that to gain acceptance, we have to communicate our intentions clearly to all the relevant stakeholders; to prove that the IKEA brand is not after short term profit, but genuinely interested in investing in the country long term.
“Specifically, in South Korea, we learnt not to underestimate the forces working against us. We have to take people’s fears seriously and build relationships to combat them. In India, we applied this lesson and succeeded in positioning ourselves as a good neighbour – a company that would make a genuine contribution to society.
“We also learnt that face-to-face meetings are a great way to promote the IKEA brand prior to a store launch. The small meeting points we set up in malls in Seoul and Hyderabad received 300 000 and 250 000 visitors respectively. And everyone who signed up for IKEA Family was invited to a home furnishing workshop, and these were also a hit.”
And what was the key learning?
“The more thoroughly we prepare, the better it goes. It’s not enough to respect and accept a country; you have to love it and embrace its values!”