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Ikea Represents a New Wave in China, a Branded Experience 

Sampson Lee | Aug 6, 2006 44 views 3 Comments

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I recently had two unpleasant buying experiences at stores in China. One was at Ikea, where I went to buy office furniture, and the other one was at Staples, whose online store I visited to buy a magazine rack. One was an example of how most businesses operate in China, and the other—which turned out to reinforce my loyalty—is a new style for the market: a branded experience.

Most businesses in China are delivering non-branded and un-branded customer experiences. A lot of companies in China are providing standardized good customer services, and they do not earn any loyalty from their customers. Staples is a good example of this.

Ikea, however, is an example of where business in China could go.

The hassle
The shop floor design of Ikea forces you to walk through every single display area. You have to spend hours there, even you just want to buy a single piece of furniture. Customer services are very limited, and once you’ve selected items from the huge storage area, managed to put them in or on your cart, waited in the long queue to check out and arranged any delivery and installation, you still wait for another week to get your furniture fixed and ready for use.

In China, there’s even another stop if you need an official invoice of your purchase. It is an inconvenient and time-consuming in-store experience.

Now consider my experience with Staples. Two days after my purchase at the Staples web site, I received phone call saying the store could not deliver the goods as promised because of a stock shortage. Not long after we got off the line, someone from Staples delivered the magazine rack to our office. We were all puzzled. But we unpacked the goods, only to discover that the magazine rack was not the color we ordered. Moreover, a few screws were missing. We called the hotline, and the customer service representative said she would check with the manufacturer.



Two days passed with no reply. We could only call again. This time the CSR said all the hassles might have been because of incomplete information and miscommunications within Staples. Lucky us. We fix the magazine rack ourselves with screws from the company toolbox.

Every time I shop at Ikea, I swear I won’t be back again. But I keep coming back. On the contrary, it seems unlikely I will buy again at Staples. Why, if both delivered unpleasant experiences, does Ikea still win my loyalty?

"Peak-end rule"
In what has come to be known as his "peak-end rule," Noble prize-winning psychologist Daniel Kahneman pointed out people could remember only two things during an experience process: how we feel at the peak (no matter whether the ultimate experience was good or bad) and at the end. These peak-end feelings summarize our whole experience process and are stored in our brain at a subconscious level. These feelings will eventually direct our next buying decisions; whereas, the proportion and duration of pleasure or pain throughout the whole experience process do almost nothing to our memories. We remember only the peak and the end.

Think about my experience at Ikea. Though my disappointments make absolute sense, it’s actually my peak-end experience that takes charge and drives me to go back again. So what’s my peak-end? To me, it’s the value of the products for the money I pay, the free-to-trial shopping experience and the effective display that demonstrates practical and efficient use of the products. What’s more, Ikea’s canteen is good, as is the 10-cent ice-cream I buy at the exit counter! In my case, my peak-end memories override any unpleasant feelings and evolve into a positive experience that drives me back.

What do I remember of the peaks and end of my Staples’ buying experience? My peaks—all bad—are the last-minute, out-of-stock notice; the unexpected delivery; the discovery of the wrong color; the need to install it myself; the missing screws; and the company’s poor problem-solving capabilities.

But "peak-end" does not explain the whole picture. It’s the branded and non-branded customer experiences that Ikea and Staples delivered that eventually lead to my entirely different psychological and behavioral responses.

Ikea is one of the few exceptional businesses in China who are creating branded customer experience. A branded customer experience works to amplify your brand through intentional and consistent delivering of on-brand experiences across all touch-points. Only when you’re branded can you differentiate; only when you’re differentiated can you have loyal customers.

There are three essential elements: the peak and end (most memorable) experiences; brand values; and consumer needs. To optimize the branded experience, you have to deliver your most unique brand values and meet (or exceed) the most critical needs and expectations of your target customers through peak and end experiences.

If Ikea’s brand values are its competitive pricing; the product value; effective and practical product applications; and a unique shopping environment, then the company has maximized its branded customer experience by integrating all of these in the customer experience process.

Staples’ brand values are its product varieties; a one-stop solution; and easy and convenient shopping. And, yet, my experience was anything but a one-stop solution or easy and convenient shopping. So, at the peak-end, the experience contradicted Staples’ brand value. That’s an "un-branded customer experience."

A lot of companies in China are providing standardized good customer services, and they do not earn any loyalty from their customers. The problem is they do not have differentiation at all. Doing what everybody is doing cannot help you to differentiate from your competitors. These "non-branded" customer experiences will not enhance your brand equity but, instead, just waste your company resources.

Or even worse, with an un-branded customer experience, you may actually raise false hopes through promising high-quality products and services in your advertising and, in reality, delivering well short of that. Then you damage your brand and customer equities.

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3 Responses to Ikea Represents a New Wave in China, a Branded Experience

  1. Graham Hill June 25, 2007 at 2:03 am (992 comments) #

    Sampson

    As you point out, the customer experience is influenced by the peak emotional point and by the ending. It is also influenced ny the emotional trend (getting better, about the same or getting worse) too. And in reality, by a whole load of other contextual factors as subsequent research has found out. Many of these contextual factors are sub-consciously processed and thus not available to you when thinking about the experience. Or when rationalising why you patronise IKEA despite having had a poor experience.

    The peak-end-trend rule should NOT be treated as a hard and fast rule at all, but as a very rough guide to experience assessment.

    Having said that, you are right. IKEA does need to get to the roots of Íts problems and fix them at source. One of those things is obviously POS marketing to remind customers that they are the ones who are normally expected to build their own furniture. It’s so easy that my 12 year old son can do it. It is one of the reasons why IKEA furniture is comparitively cheap.

    Graham Hill

  2. Sampson Lee May 16, 2012 at 10:25 pm (68 comments) #

    Actually I’ve missed some details of that IKEA experience.

    When we were shopping in IKEA, there were two young men (not IKEA staff, they are self-employed freelance labour force) approached us and said that they could deliver and install for us. They are much more helpful and pro-active than IKEA’s staff, plus they know the products better than them. They helped us to locate stuffs, put them on the trolley and check out, then delivered stuffs to my office plus installed all stuffs within the same day, but they only charged a fraction than IKEA. IKEA should thanks for those individual entrepreneurs. Theirs value-added services definitely make me feel better. I felt more comfortable and relax because they saved my time and brought me more convenience. In other words, they make my life easier. But if you ask me if it affects whether I go back IKEA again or not, I’d say “no”. But would I buy more per transaction with their value-added service, probably “yes”.

    As Graham Hill said: “We Don’t Need More Pain”. Should IKEA change her brand experience to rectify the pain points at ‘The Round Tour’, ‘Staff Service’, ‘Search Stock’, ‘Pick Stock’, ‘Delivery Arrangement’ and ‘Installation Arrangement’?

    Sampson Lee

  3. Sampson Lee May 16, 2012 at 10:29 pm (68 comments) #

    Graham

    IKEA management is facing a strategy dilemma in China.

    Despite the selling price of IKEA in China is the lowest amongst the globe and has been reducing more than 50% over the last five years, the mass in China still regard the price of IKEA expensive and they are not buying. This may explain although she has an average daily traffic 15,000 per store, only three more stores were opened since the first one in Beijing at 1998. The irony: although 18% of IKEA global procurement is from China (IKEA annual report 2006), the sales revenue of IKEA China only accounted for less than one percent of IKEA’s world total.

    In the short run, IKEA still could maintain the sales growth in China from the fast emerging middle-class, but to the mass — her primary target customer — IKEA is delivering an non-branded (price is expensive) and ineffective experience (not buying and not loyal). What should be her mid-to-long term strategy in China? IKEA strategy dilemma: should she still stick with the mass or shift her target customer to middle-class? IKEA has to answer the question who are her Target Customers then decide the corresponding Target Brand Values, before she could consider whether she has to change or redesign her Brand Experience.

    Ian Duffy, IKEA Asia Pacific President, regards price reduction is the best competitive strategy of IKEA in China. Do you agree?

    Sampson Lee

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