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The Art of Pricing: Decoding IKEA’s Unique Pricing Strategy

  Speaking of IKEA, many people will immediately think of its unique display style: placing the same type of products in the same area for centralized display, and then using carefully designed model rooms to string together a fixed “tourist route” to ensure Customers will not miss a single item. Products of the same type are placed together, making it easier for consumers to choose and buy, and the prices are also clear at a glance. But if you look closely at the labels, you will find that the price gap between similar products from IKEA is astonishing. Next to the 799 yuan storage drawer is the 79.9 yuan drawer combination, which is a price difference of 10 times. How come there is such a big price gap between the same type of products in IKEA?
  Is the weird price difference all designed by IKEA?
  To answer this question, many people’s first reaction is: different costs naturally lead to different pricing. For example, compared with the Fenby bookshelf priced at 299 yuan, compared with the Leerdo bookshelf priced at 2,299 yuan, the former is made of ordinary particle board, while the latter uses solid wood partitions. Particleboard is the cheapest type of board and is not as moisture-proof or nail-holding as solid wood. The size and design of the two bookshelves are also different. The more expensive Leerdo bookshelf not only has one more layer, is wider, and is also equipped with adjustable legs to keep it stable even on uneven floors.
  Differences in materials, size and design will all affect the cost of a bookshelf, and cost determines the price. But product pricing in real life is not that simple. Those price differences you see at IKEA are probably by design. This is because IKEA has its own unique product development strategy – pricing first and design later.
  Breaking through the traditional thinking of designing and producing first, and then considering pricing based on cost, based on this strategy, IKEA will first determine the price tag, and then let designers design products based on price, which is equivalent to using pricing to infer costs and design. For example, before designing the Triso five-piece bedroom set, IKEA first learned about the needs of local consumers from Chinese retailers, referenced the pricing of similar competing products on the market, and finally determined a price that was competitive in the market.
  Solid lines frame the price of the product, allowing designers to fully consider materials, accessories, storage, transportation and other aspects and control costs at the beginning of product design, ensuring that the final sold product price is affordable even if it is lower than the market price. vitality. This strategy not only gives IKEA’s products a sufficient advantage in market competition, but also leaves ample room for future price reduction promotions.
  Since it sets the price first, why does IKEA design a price difference? These prices actually constitute the price band of IKEA products. The wider the price band, the richer the product matrix, the wider the customer needs that can be met, and the greater the sales potential that can be tapped.
  IKEA’s differentiated product pricing reflects its group positioning to meet diverse consumer needs to a certain extent. Behind the huge price difference, IKEA uses its rich products to give consumers more choices and the possibility of creativity, allowing people to freely combine and match products at different price points. In these calculations and choices, they can find the “home” in their hearts. Optimal solution”.
  What’s exciting is not just the ultra-low price?
  Many times, once you enter an IKEA store, you will find it difficult to refuse some products at extremely low prices. IKEA’s low prices are not lower, but they are far different from similar products in stores and even market prices, making people have to buy them. IKEA founder Ingvar Kamprad calls these products “heartbeat products.” In each product series of IKEA, you will find at least one “passionate product”, such as a vase of 3.9 yuan, a glass storage jar of 7.9 yuan… The realization of ultra-low prices for “passionate products” is similar to IKEA’s “pricing first and designing later” ” cannot be separated from the strategy.
  In addition to cost control, the great thing about this strategy is that when the price and category are determined, there is often more than one design solution, and designers must be “picky” to meet the requirements of IKEA headquarters. Because of this, IKEA’s “passionate products” are not just cheap. To be precise, it is not that people find it difficult to refuse a 2.9 yuan mug, but that it is difficult to refuse a cost-effective product with good design, craftsmanship and other aspects.

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