Changes in the Marketing Orientation Within the Business Model of an International Retailer: IKEA in Malaysia for Over 20 Years

Changes in the Marketing Orientation Within the Business Model of an International Retailer: IKEA in Malaysia for Over 20 Years

Husam Rjoub (Cyprus International University, Cyprus), Chiemelie Benneth Iloka (Enugu State University of Science and Technology, Nigeria), and Vimala Venugopal (Taylor's University, Malaysia)
DOI: 10.4018/978-1-7998-8486-6.ch009
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Reported in this paper is an interview- and press release-based study that considers the market-driven and market-driving activities within the disaggregated components of a business model. This is based on an empirical study of IKEA in Malaysia over the past 20 years. Market orientation is perceived to be a position on a continuum, not a binary one. The components of the business model employed in this study were developed from Osterwalder and Pigneur. Findings show that over time the balance between driven and driving orientations of the company changed in a number of ways with respect to its business models. This chapter contributes by showing the disaggregated nature of market orientation of driving and driven activities and linking them to a given component of business model as well as reviewing what happened to the driven-driving balance over the course of time. This approach can widely be applied with respect to attempts geared towards understanding the dynamic nature of international retailing.
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1. Introduction

In every company's life, movements occur from introduction to eventual decline (for companies that fail to sustain their maturity stage). Different measures are put in place to ensure that the company moves towards its long-term goals. Such measures can also be a product of environmental influence. For instance, changes in cultural perspective can result in changes in a given company's business process. IKEA is no exception, and a review reveals that the company has undergone several stages since it was introduced in Malaysia. This paper aims to assess these changes from the sphere of market and marketing orientation and the potential influence that such changes on the company's overall performance. The essence of this book chapter is that it will allow for: a) enhanced understanding of how market and marketing orientation of international retailers change in the long run and b) application of measures that can improve the overall performance of brands in the international market.

Studies (such as Alexander & Doherty, 2010; Burt et al. 2008; Burt, Johansson, and The lander 2007, 2011a, 2011b; Chan, Finnegan, and Sternquist 2011; Dawson 1994, 2001, 2007; Dawson and Mukoyama 2014; Jonsson and Foss 2011; Lowe and Wrigley 2010; Pellegrini 1991; Swoboda and Elsner 2013; Swoboda, Berg, and Dabija 2014; Yu and Ramanathan 2012; Burt, Dawson, Johansson, and Hultman, 2020; Guven, Guven and Akkaya, 2021) hold the view that internalization of the retail sector has been the focus of scholarly discussion on retail strategy in the past two decades. In this research, similar to the view held by Burt et al. (2020), two features are made manifest. The first view, which is in line with the views held in other pieces of literature in the field of international marketing like (Gebrekidan, Hoc, and Syeda-Maosooda 2019; Pavlinek and Smith 1998; Rao-Nicholson and Khan 2017; Schmid and Kotulla, 2011; Theodosiou and Leonidou 2003; Venaik and Midgley, 2019). Which is the reoccurring theme; adaptation and standardization of activities in the international market, from a dichotomous view, is influenced by how the company adapt to – and standardize – the challenges coming from its head offices (at their country of origin) and their local operation centers (at the international market). The second note is that, notwithstanding the global internationalization of brands, few studies, except for Coe and Lee (2006, 2013) that analyzed Tesco in Korea and Burt et al. (2020) that analyzed IKEA in China, have been able to explore the internal dynamics of retailers over a prolonged period. Most studies have preferred a cross-sectional approach or comparative analyses limited to individual events within a given point in time.

Although the retailer's business model is pivotal for its overall success or the internationalization activities of the company, there is limited analysis in terms of how this influence can be produced, within this model, when it comes to creating value for the consumers. On a general note, there have been discussions (Afuah, 2004; Amit and Zott 2001; Eriksson et al. 2008; Osterwalder and Pigneur 2010; Zott and Amit 2010; Zott, Amit, and Massa 2011) that researches focused on business models in the retailing sector are limited (except for Haas 2019; Sandberg 2013; Sorescu et al. 2011; Yrjölä, 2014), and similar fate can be found in international retailing (except for Burt, Johansson, and Dawson 2016, 2017; Burt et al., 2020). In an industry that is market-oriented and consumer-focused, retailers' business model needs to address specific challenges that come with internationalization.

There is an existing link between market orientation, adaptation decisions, and standardization (Kohli and Jaworski 1990; Narver and Slater 1990; Slater and Naver, 1994), although it comes with a different view of the nature of the changes. While the focus of the view on adaptation vs. standardization is on the outcome of the activities, the marketing orientation perspective is more focused on the processes that have been employed to create these various activities (Day 1994, 1999; Jaworski, Kohli, and Sahay 2000; Kumar 1997; Kumar, Scheer, and Kotler 2000). The essence of the marketing orientation paradigm, mainly when it is focused on routines and processes, is that it can be used to highlight interactions and complexities that come with the processes under consideration. It also allows for varying levels of abstraction and disintegration. In this study, what is implied by market-driven, is the adoption of various processes that bring about outcomes in the area of the retail business model adopted in the local markets and in line with the local taste.

Key Terms in this Chapter

Positioning: The place that a company occupy in the consumers’ heart, reflecting their purchase decisions.

Customers: They represent the buyers (both active and potential ones) for a company’s products or services.

Marketing Orientation: The principles that guide a company’s marketing activities.

Communication Channel: These are the mediums through which a company encode messages for the customers. For instance, TV, Social Media, etc.

Customer Relationship: This is the rapport between a company and its customers, whereby positive rapport would amount positive customer outcomes.

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