According to Senge (2006), service innovation includes services, technology, and new organizational models, different form of leadership, new procedures and business models. IKEA used service innovation and its processes to increase its sales, operation, which promote a steady growth. However, IKEA innovative services not only create new and better service for consumers who needs a good impression, but also focus on how to allocate available resources in particular ways for consumers to use in order to co-create value with seller. The clients as resource integrators focus on service and logic which is the foundation of service innovation to co-create value (Carnegie, 1998). Given these factors, IKEA implemented an innovative process by mixing a novel combination of service, allowing customer to become co-producer while using technological innovation to package and sell their products (Frynas & Mellahi, 2011).
IKEA is a profitable company and a global leader in the furniture industry; therefore its success cannot be separated from a suitable and well-crafted marketing strategy. Setting the right service concept makes a great contribution for IKEA to enter a unique market place successfully. For example; IKEA view itself as a service provider, product retailer, while paying close attention to real-life solution problems still devoting themselves to providing a ‘better life’ for everyone who desire it (Frynas & Mellahi, 2011). Knowing what customers want and satisfying their expectations are important for a company, said Maxwell (2013). Phiri & Mcwabe, (2013) further agree that managing consumers’ expectation will always play an important role in managing an excellent service. They further add that ...
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... them to understand very early on that Chinese apartments were small and customers required functional, modular solutions; hence they made slight modifications to their furniture to meet the local needs. The store layout for example; reflects the typical sizes of apartments and also included a balcony (Inter IKEA Systems B.V., 2015).
IKEA had faced similar problems previously when it entered the United States. The company initially tried to replicate its existing business model and products in the US, but it had to customize its products based on local needs. For instance; American customers demanded bigger beds and closets; hence IKEA had to make a number of changes to its marketing strategy in the US. Nevertheless because of lessons learn in previous situations such as the challenges they face in China, better equip them the one in the US (Frynas & Mellahi, 2011).
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