UNIVERSITATEA TRANSILVANIA DIN

BRASOV
FACULTATEA DE STIINTE ECONOMICE
SI ADMINISTRAREA AFACERILOR
Programul de studii
ADMINISTRAREA AFACERILOR CU
PREDARE IN LIMBA ENGLEZA

LUCRARE DE LICENTA

Conducator Stiintific: Absolvent:

Lect.Dr Raluca Todor Profirescu-Apostol Mihail

1
 LUCRARE DE LICENA
Marketing techniques used by retailers in
Romania
Study Case: SC IKEA ROMANIA SRL Vs
MOBEXPERT BANEASA SRL

Conducator tiinific: Absolvent:

Lect. Dr Raluca Todor Profirescu-Apostol Mihail
2
Introduction

The theme of my project revolves around the retail sector in Romania, not just the food
segment with which retail is usually associated with but the entire retail sector which includes food
retailer, furniture, electronic goods and online retailers.
The reason why I have chosen this theme is due to the fact that most people in Romania
believe that the entire retail sector is owned by foreigners and that there are very few to no
Romanian companies which actually succeed. Thus by pointing out the sectors in which Romanian
companies are dominant or have an equal market share with their foreign counterpart Romanian
entrepreneurs will know where to look towards in order to make a successful business.
This project will take an overview on four main retail sectors in Romania, food retailers,
furniture retailers, electronic goods retailers and online retailers. The emphasis will be placed on
the furniture retailers and how the furniture market is in Romania.
The two companies that this project will compare are MobExpert Bneasa SRL and SC
IKEA ROMANIA SRL, which are two of the countrys top furniture retailers.
I have chosen these two retailers because they use very different marketing techniques
to attract customers and have very different experiences with customers, products and ways of
attracting customers.
Another thing that this project points out is the differences between Romanian foreign
retailers in the study case between Ikea and MobExpert and how they adapted to the market and
which one has the upper hand in the Romanian furniture retailing market.

3
Absolvent: Profirescu Apostol Mihail Promoia: 2013 - 2016
Programul de studii: MM ,IE, BA BA
Coordonator tiintific: Lect. Dr Raluca Todor
Tema lucrarii: Marketing Techniques Used By Retailers In Romania

Studiul de caz efectuat la: SC IKEA ROMANIA SRL si MOBEXPERT BNEASA SRL
Rezumatul lucrari: The project will focus on the retail sector in Romania and how it evolved in
4 retail fields such as furniture, food, consumer electronics and online retailers.
The emphasis of the project will be the comparison between MobExpert and Ikea, a
Romanian retailer compared to a Swedish/International retailer.

Capitole Nr. Nr. Nr. Nr. referine

Nr Denumire pagini figuri tabele bibliografice
1 Introduction In Marketing 14 1 0 3
2 Retailers in Romania 10 1 7 4
3 Ikea and MobExpert Comparison Study 27 14 5 8
Case
4 Conclusions 2 0 0 0

Nr. pagini Nr.figuri Nr.tabele Nr. referine Anexe

Sinteza lucrarii de text bibliografice [nr.pagini.]
licenta
59 16 12 15

4
Contents
Cap.1. INTRODUCTION IN MARKETING ................................................................................. 6

1.1. BRIEF HISTORY OF MARKETING .............................................................................. 6

1.2. MARKETING THEORY INTRODUCTION ................................................................... 8
1.3. MARKETING TOOLS AND FRAMEWORKDS............................................................ 9
1.3.1. Marketing Mix............................................................................................................ 9
1.3.2. Marketing Mix Techniques ...................................................................................... 17
Cap.2. RETAILERS IN ROMANIA............................................................................................. 21

2.1. THE RETAIL MARKET IN ROMANIA ....................................................................... 21

2.2. TYPES OF RETAILERS IN ROMANIA ....................................................................... 22
2.2.1. Food .......................................................................................................................... 22
2.2.2. Consumer electronics ............................................................................................... 25
2.2.3. Online retailers ......................................................................................................... 27
2.2.4. Furniture ................................................................................................................... 29
Cap.3.IKEA AND MOBEXPERT COMPARISON STUDY CASE ........................................... 32

3.1. Furniture .......................................................................................................................... 32

3.2. Furniture: long usage goods ............................................................................................ 33
3.3. MOBEXPERT BNEASA SRL ..................................................................................... 34
3.3.1. General Information ................................................................................................. 34
3.3.2. Financial Status ........................................................................................................ 35
3.3.3. Marketing Mix used by MobExpert ......................................................................... 37
3.4. SC IKEA ROMANIA SRL ............................................................................................. 45
3.4.1. General Information ................................................................................................. 45
3.4.2. Financial Status ........................................................................................................ 46
3.4.3. Marketing ................................................................................................................. 48
3.5. COMPARING IKEA AND MOBEXPERT .................................................................... 54
Cap.4. CONCLUSION .................................................................................................................. 59

Sources .......................................................................................................................................... 61

5
 Cap.1. INTRODUCTION IN MARKETING
1.1. BRIEF HISTORY OF MARKETING

Compared to other disciplines that are business related such as accounting and
financing, marketing a relatively new branch that emerged in the early 1900s. The development
of marketing has been closely linked with the development of new technology such as production
lines and telecommunications development.

Such developments helped companies produce more products but also increase their
number of customers due to the wide reach of new telecommunications technology such as the
radio, televisions and the internet.

It can also be noted that marketing approaches change when a new

telecommunications technology emerges and the focus is shifted from environment to another, for
example the shift from television to the internet.

Marketing can be separated into 3 main stages:

The production orientation era

The sales orientation era
The marketing orientation era
a. The production orientation era

Dating from the beginning of the industrial revolution and ending at the beginning
of the 1900s the production orientation era represents the beginning of modern marketing.
Due to the high industrialization rate at the time, the improvements in transportation
and infrastructure combined with the increase in goods production meant that goods could sell at
relatively cheap prices. Thus there were very few marketing operation needed in order to promote
various products while the competitions was generally kept at a national level.
The purpose of this orientation is to sell goods to the customer not making him a
loyal buyer towards the company.

6
 b. The sales orientation era
The follow-up to the production era is the sales era which dates from the beginning
of the 1900s until the 1950s is the sales orientation era.
Due to the fact that new business emerged in this time the sales orientation era marks
the era in which competition between companies starts to emerge, ads and commercials start to be
created and brands are being established. This process was also accelerated by the emergence of
new telecommunications technologies such as the radio.
Throughout this era the consumption of goods shifted from domestic consumption
to offshore consumption, thus exports started to rise and companies which had a home monopoly
in their country started to face competition.
All these three elements that emerged in this period helped shape modern marketing
as we know it.
c. The marketing orientation era

The marketing orientation era started from 1960s and continues onward to the
present day. It is the era of marketing that had experienced the most change due to fact that the
technology change rate started increasing faster and faster throughout the years and the marketers
constantly needed to adapt.
In the 1960s most markets were getting saturated which products and the
competition between companies started to become more and more aggressive in trying to win
customers and to maintain them.
It also the era which marked the apparition of magazines, super markets,
teleshopping and internet shopping. The customer is bombarded with information from all sides
and is surrounded by ads.
The difference between this orientations compared to the others is that the customer
is the focus of the company, attention shifted from selling large amounts of products and not
retaining the customer to retaining the customer and making the most amount of money out of him.

7
 1.2. MARKETING THEORY INTRODUCTION
In the creation of a business there are many departments that need to work together in
order to make the business profitable. The main components of a business can be divided into 4
parts:

the management department ( which coordinates the whole business )

the finance department ( which does all the accounting and financial
operations )
the human resources department ( which has the task to manage the
employees development)
the marketing department ( which has the task to expand the company )

In the world of business there are multiple question that need to be taken into
consideration before starting a business such as:

What type of business do I want?

How much money to I need to start the business?
What are the products or services I will sell?
Who are my competitors?
Is there place on the market for a new entrant?

Thus marketing has been created to help businesses have a perspective about the
environment in which they are entering. The marketing department has the main role of expanding
the company awareness and to make possible the increase of the companys market share.

One cannot think of starting a business without making some basic marketing research
operations which are decisive in order to oversee the development of a business.

Marketing is a very broad term which covers a large area of activities, marketing is not
represented only by ads and commercials. Ads and commercials are parts of marketing which are
included in the promotion section, but they dont represent the entire purpose of the marketing
department.

8
 In one definition marketing represents all the activities of a company that are related with
buying or selling a good or a service. It includes advertising, selling and delivering products to
people. Companys try to get their clients attention by using slogans, packaging design, celebrity
endorsements and general media exposure.

In todays world most there is a saying that the right percentage to invest in marketing
from the companys budget is around 10%, although these number vary depending on the
companys field of activity, status and years of experience in the field.

For instance companies in the IT field can invest up to 50% of their budget in marketing
while electronics manufacturing companies such as Samsung and Apple invest only around 10%
because they rely on their brand name.

Another factor which influences the marketing budget allocations is the age of the
company, if the company is young it will allocate for of its budget towards marketing while
established and long running companies invest less in marketing.

1.3. MARKETING TOOLS AND FRAMEWORKDS

To ease the implementation of marketing there have been invented marketing tools and
frameworks in order to help businesses to deal with such problems and help sell and advertise their
products and services better .

The most popular marketing used is The Marketing Mix, which forms the basis of
modern marketing. Alongside the Marketing Mix there can also be mentioned the usage of the
BCG Matrix and Porters Five Forces Analysis.

In this chapter we will analyses in depth the Marketing Mix and see how it can influence
the wellbeing of a company.

1.3.1. Marketing Mix

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 The most used tool in the marketing department is represented by the marketing mix,
which was created in the year 1953 by the American Marketing Association president Neil Borden.
It has a crucial role for the marketers in order to develop their strategy and have a starting point.

The basis of this theory is represented by the 4 Ps of marketing which are mandatory in
order to implement marketing correctly:

Product
Price
Placement
Promotion

The marketing mix framework is a mandatory framework which must be used in order to
know how to target the market. Throughout the years this framework gave birth to other variations
of it such as: The 4Cs, McKinseys 7-S and the 7Ps. All of these variations are subordinated to
the original 4Ps of the Marketing Mix.

a. Product

Product represents what the firm is offering to its consumers, it can either be a products
like for instance a car or a service like for instance a vacation to Paris. It represent the main form
of income for the company and it is the element of the 4 Ps which receives the most attention and
development time. The product can sometimes represent the first contact between the firm and its
customers.

When designing a product marketers need take into account a multitude of factors such as:

Market demand
Accessibility
Ideas and Evaluations
Quality
Variety
Brand
Market trends

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 Market demand helps the marketers see towards which niche they should cater towards
and how successful it will be compared to other ones.

For example: due to the high piracy rate in Romania and the freedom of the internet, an
site such as Netflix which provides shows and movies for a fix monthly sum will have no success
due to the fact that there is no demand in this area.

Accessibility refers to the ease of use at which consumers can use that product and how
it can affect sells.

For example: in the 1980s computers where not that popular as they are they are today
due to the fact that they took a multitude of complicate commands to execute a simple task, this all
change which the advancement of technology and operating systems such as Windows or Mac Os
which made it very easy to use computers.

Ideas and Evaluation represent the all the ideas that where left standing in the designing
process of a product while the evaluation of a product tests it in order to see how it stands compared
to its rivals.

Although there are more than a dozen ideas that emerge when it comes to manufacturing
a product but the problem remains in implementing the ideas and the limitations of the producer.

Quality represents the standard of a product compared to its counterpart on the market,
it shows how well the product can satisfy the need of the customer and how it can influence to be
loyal to the company.

Variety represents the range of products and product variations that a company can offer
to its customers, it can also show the adaptability of a company. Variety can help maintain
customers even more than quality.

The brand of a product represents the company which is making the product, it
represents a distinguishable producer compared to the rest on the market and the level of quality
and the values associated with that producer.

11
 For example: very few people would have been interested in buying a smartphone in
2007 if the first was not made by Apple, having its rich history in the tech field Apple established
a very good brand name and exploited it for selling its new products.

Market trends help products to be created in such a way that they tailor towards the
market demand, in this direction products can either follow a trend in product creation or attempt
to create a new market by setting a trade.

For example: prior to 2007 phones ware simple devices with limited functionality, that
year saw the release of the first smartphone, the iPhone 1, which after its success it set a trend in
mobile devices which will be followed by other mobile phone developer at the time such as Sony
or Samsung.

The only way a company can retaliate against its competition is by creating better
products or services than its competition. Even though at their core, regardless of the market, all
products and services are basically the same, its the market which the products, services target and
the competition that makes them adapt in an attempt to distinguish themselves from the
competition.

b. Price

Price is the element that shows the value which is attributed for the product based on its
costs and advertising that was put into it. The price must be made in such that it attracts customers
to buy the product but it can also cover the cost that were necessary to make the product and manage
to create a profit.

The price of a product can be affected by things such as:

Vouchers
Liquidations
Discounts
Bonuses

Vouchers represent special price drops for certain items for a limited amount of time,
they come in various forms such as credit cards, coupons or other alternative method used by the

12
producer. Vouchers are also targeted toward specific customers and can be seen as a short term and
long term increase of profit.

For example: An 85% price drop voucher can be received from a store if the customer is
loyal to the store and regularly buys from it.

Liquidations are the products that have not been sold by the producer in the proposed
period of time and are sold at low prices in order to get rid of the remaining products.

Example: H&M makes a liquidation week for its summer clothing line up in order to
make room for its autumn line up.

Discounts represent a drop in the initial price of a product which is available to any
customer, it is used in order to stimulate the consumer to buy more products and to rapidly increase
sells for a long period of time.

Example: Hochland makes a 30% discount for its bacon flavored melted cheese in order
to increase its market share.

Bonuses can be represented by either an additional feature, service or product attached

to the one bought. In some cases the bonus might be a complementary product or service for the
initial one.

For example: Microsoft offer 24 hour support for their windows products for every client
who has bought them.

c. Placement

Placement revolves around the distribution channels for the product, where is the best
place to commercialize the product in terms of retailers and the position of the company on the
market compared to its distributors. The marketers must carefully choose the place in which they
commercialize their products regarding to the types of products they are selling.

It includes elements such as:

Distribution
Retail Locations

13
 Delivery
Download
Logistics

Distribution refers to distribution channels and how the products reach their destination
to the final consumer. There are multiple ways that a product can reach the consumer and how it
can be exploited to the advantage of the company.

Some example of distribution channels are:

Producer Final Consumer

Producer Retailers Final Consumer

Producer Wholesaler Retailers Final Consumer

Producer Agents/Dealers/Brokers Final Consumer

Retail Locations involves the physical locations at which the products are sold and the
retail partners whit which the producers operate. Depending on what types of products the producer
sales this element can be neglected or can pose a serious question towards the future sells.

For example food companies dont need to worry about this element because food stores
are very frequent but for electronics or furniture producers the location of the store can greatly
impact sells.

Delivery refers to the personal shipment of goods by retailers to the final customer
through a delivery company or through their own delivery network. Mostly used by online
companies which sale physical goods such as Amazon and Emag.

Download applies only to software electronic products such as computer program, video
games and operating system. It is the newest form of distributing a product and it is also restricted
only to the internet.

Logistics represent the planning, execution and control of the transport network that is
used to ship the products to their customers or retail chains.

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 d. Promotion

Promotion is the first line of attack for a company, it represents the first encounter
between the company and the customer. Promotion revolves around ads and commercials which
the company makes in order to increase their market share. It requires a significant amount of
investment and it can decide whether the company will lose or gain customers.

Promotion includes elements such as:

Advertising
Personal Selling
Sales Promotion
Sponsorship
Sales Calls

Advertising implies the creation of commercials and product adds which are meant to
increase consumer awareness and increase the sells of a company. It is the most common and
widely used method of increasing product awareness and has a multitude of mass media channels
through which it can be distributed.

Examples of advertising channels and methods:

Banners
Posters
TV Commercials
Internet Adds

Personal Selling refers to the door to door way of selling products by using a sales
person. It was very wide used in the 40s and 50s prior to the increase in popularity of the other
communication devices at the time such as the telephone, the radio and the TV.

Sales Promotion are price drops, also known as discounts, which are applied only to a
particular set of products in order to increase sales and eventually retain new clients which will
help increase the market share.

15
 Sponsorship shows the implication of a company in social event, sports, shows and
much more in order to increase the awareness of the public and also improve the image of the
company.

Sales Calls allows the promotion of a product by calling the average consumer on their
personal phone and presenting them the offers at hand. Although this was one of the first ways of
promoting a product, which was first used in the 1950s, nowadays this promotion technique is
very rarely meet.

Throughout the years the 4Ps marketing have remained unchanged, but there have been
added other Ps. Thus the 7Ps have appeared in marketing, which added People, Process and
Physical Evidence. The 7Ps are mostly used by service companies.

Another derivate of the 4Ps which appeared in the 1990s is the 4Cs which are:
consumer, cost, communication and convenience.

The 4Ps of marketing remain unchanged throughout the world and are valid in every
business domain regardless off all the external factors that influence the companys marketing.

The Image below shows an example of the marketing mix matrix.

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 1.3.2. Marketing Mix Techniques

There are a number of marketing mix techniques which are specific to each of the 4Ps.
These are marketing techniques which focus the business on one of the 4Ps, these techniques have
various purposes but the main is the increase of market share and revenue.

a. Product

The core of the marketing mix is considered the product, it is the P in which the most emphasis
should be put on and can dramatically influence the other 3.
Examples of product techniques:

Branding
Differentiation

Branding means creating unique products that are very distinguishable in the customers mind
by making a heavy use of the image and name of the product. It can also reflect he quality of the
product and its attributes but most of all it represents a standard on which the companies products
must reach.

For Example: Microsofts operating system, the Windows operating system, is very popular
and used worldwide with over 80% of operating system used on computers being part of the
Windows family. The popularity of this operating system made it a standard in the industry with
the multitude of software made to run on the Windows operating system.

Differentiation shows the efforts which revolve around making a unique product that will
allow the company to make a brand, usually differentiation is the first step which is taken in order
for branding to take place.

For Example: Apple made in 2007 the first iPhone and set out a trend for mobile manufacturer
to start making smartphones. The first iPhone represents the first step in differentiating Apple from
17
other phone manufacturers at the time and also creating a new market, thus the first iPhone paved
the way for the iPhone brand.

b. Price

Out of the four element of the 4Ps, the price is the only one which generates the revenue and
thus the turnover of a company. The price is also the only element of the mix which can sustain the
other 3 elements, it must also reflect a balance between the supply and the demand of the product.
Examples of pricing techniques:

Penetration Pricing
Psychological Pricing
Optional Pricing
Premium Pricing
Skimming Pricing

Penetration Pricing: This pricing technique revolves selling the products at very low prices
in order to penetrate the market and gradually increase the prices as the market share of the
company increases.
Psychological Pricing: Used to establish an emotional relation with the customer by using
prices such 0.99 instead of 1 .
Optional Pricing: Used to retain customers this technique revolves selling other extras
alongside the main product.
Premium Pricing: Refers to setting the pricing of the product at the highest value possible in
order to reflect the exclusivity and the quality of the product. Usually used by brands.
Skimming Pricing: Setting the price of a product at a high value during its early states on the
market and gradually dropping the price of that product to increase the marketing share to
consumers with tighter budgets.

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 c. Placement

Placement can be expressed in a multitude of forms and media and can be applied to
products and to advertising the product.

Store Placement
Media Placement

Store Placement refers to the way the products are placed in a store and can affect the buyer,
for instance first shelf products or products that are placed at the center of a shelf can have a bigger
change of making a sell to an unknown customer.

Media Placement refers to products which are strategically placed in any other media form
than a standard commercial or an ad, it is very subtle way of making a commercial which goes into
the sub consciousness of the buyer.
For example: In the 1999 movie The Matrix Nokia made a subtle add with its new 8120 to
create the image that whoever owns the phone is a very important person.

d. Promotion

Promotion is the element of the 4ps which needs to stimulate awareness towards the
potential buyers, without promotion the average consumer will just ignore the product.
It also act as a stimulant which depicts how the product can affect the consumers life.
Here are some examples of promotion techniques:

Contests
Social Media
Product Giveaways
After-Sale Customer Surveys

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Contests: This marketing promotion techniques is very commonplace when it comes to promoting
the products of the company and also the products of other companies. A contest can make the
brand of the company more popular and will not affect sales in a negative way.

Social Media: Through the usage of social media sites such as Facebook, Twitter or Google +
companies are tracking the behavior of the consumer depending on his or her preferences and know
in what types of ads that person is interested in.

Product Giveaways: Most often used for new products which enter in the consumables category
such as food, detergent or cigarettes. These products are given away for free in samples in order to
test them and provide them with an incentive to buy that product based on their experience with it.

After-Sale Customer Surveys: These types of surveys are made after the customers purchases
the product, usually if the customers frequently buys products from the same company and brand.
The customer is asked to complete a survey in order to see the level of satisfaction
regarding the product and the results are used to see in which areas the product can be improved.

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 Cap.2. RETAILERS IN ROMANIA

2.1. THE RETAIL MARKET IN ROMANIA

Due to the fact that Romania was under the influence of communism until 1989 the
country had little to no experience with marketing, the free capitalist market or what a competitive
market meant because all of the companies were held by the Romanian communist government.

After 1989 Romania opened its gates to foreign companies which sought in
Romania, just like in the other former European Communist countries, a great opportunity for
expanding their markets. Romania was not the only country in this position.

One sector that provided a great opportunity for expansion, for foreign companies,
in Romania was the retail sector which prior to 1989 was owned by the state and had a considerable
lack of product diversity with products trying to imitate foreign one such as Coca Cola or Pepsi.

It is during the 90s until the mid-2000s the retail sector starts to develop the first
supermarkets appear, the first foreign brands start to appear and notions such as supermarket,
hypermarket, discount and cash & carry stores start to appear.

As in most former European communist countries the retail sector is dominated by

foreign retailers which acquire local brands and rebrand them under their name or establish a strong
foothold due to their considerably large economic power.

Due to the Romanian buying habits and the fact that the average GDP per capita is
low compared to other countries in the EU such as Germany or France, there is a limited number
of retailers in Romania. Most retailers avoid Romania due to the low buying power and the fact
that people are always searching for lowest price due to their incomes.

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 2.2. TYPES OF RETAILERS IN ROMANIA

Due to fact that the market in Romania presented very little difficulty for foreign
retailers to enter it, a multitude of different retailers started to enter in the country at that time which
covered different branches of retail.

In Romania there are present all types of retailer stores which include:

Supermarkets
Hypermarkets
Discount Stores
Specialty Stores
Cash & Carry
Malls
Online Stores

The focused in this chapter will be on these five retailer branches:

Food
Consumer electronics
Online retailers
Furniture

2.2.1. Food
a. Overview

Romania has a multitude of foreign supermarket chains which entered the market
through various acquisitions or merges. The concept of supermarkets and foreign retailers attracted
Romanians, which made them grow rapidly in size, eventually almost overtaking the traditional
Romanian neighborhood stores which were very popular prior to 1989.

In Romania there are over 20 retailers from various different European countries and
retailer groups.

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 Top 5 Romanian retailers by total turnover and the number of stores they owned in 2014.

Name Total Turnover Type Number of stores

(in billions of Euro)
Kaufland 1.8 hypermarket around 120
Carrefour 1 supermarket, around 190
hypermarket
Metro 1 cash & carry 31
Auchan 0.9 hypermarket 33
LIDL 0.8 discount around 190

The top 5 retailers in Romania by net profit in 2014.

Name Net Profit Type

(in millions of Euro)
Kaufland 92 hypermarket
Carrefour 26 supermarket, hypermarket
Auchan 13.6 hypermarket
Mega Image 12 supermarket
Profi 6 supermarket

The leading food retailer in Romania is the German hypermarket Kaufland which
entered the Romanian market in 2005 and grew in 10 years to become Romanias biggest retailer
in terms of net profit and total turnover.

The chart below shows the evolution of Kauflands total turnover throughout the years
and the growing number of stores. This char also shows how Kaufland managed to reach a 2.4
billion euro total turnover in just 10 years from its entry on the Romanian market.

23
 The Evolution Of Kauflands Turnover And Store Numbers From
2005-2015 (In Millions Of )

2400

1778
1643
1445
1318
1112
874
778
641
3 16 17 232 31 37 45 58 71 81 89 102 107

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Store Turnover

By reaching a total turnover of 2.4 billion euros in 2015, Kaufland managed to become
the first retailer to reach this total turnover number in Romania.

The growth of Kaufland is owned to their strategy which is focused on product discounts
and cheap prices, Kaufland took advantage of the fact that the Romanian GDP per capita is lower
than in Germany and adjusted the prices in such a way that will benefit them.

Alongside Kaufland, in 2010 the sister of Kaufland, LIDL, entered the market which
further increased the profits of the Schwarze Gruppe which owns booth stores.

b. Marketing Techniques

Romanias food retailing market is dominated by foreigner which knew how to adapt on
the local market and how to use their reputation to their benefit.

Seeing that the average GDP per capita in Romania is of 7.200 , which is 6 times
smaller than that of 42.000 in Germany, retailers had very little to experience with.

Due to these conditions there where very few marketing methods used to attract
customers which will eventually generate results in time.

24
 One popular marketing technique used by food retailers in Romania is the discounting
pricing method, naturally Romanians are attracted by low priced goods due to their low incomes,
which is used by every large food retailer in Romania. It is very common in large hypermarkets
such as Kaufland, Carrefour, Corra which make frequent discounts to customers.

Discounts in these stores are regular and are changed depending on the seasons or the
holidays and buying behaviors of the customers, alongside psychological pricing methods.

Other ways by which these retailers want to tract their customers is by using special
promotional coupons which grant special prices by the stores.

Another practice which is used is the cultural approach by which the retailers get
accustomed to the local culture and try to make a profit out of it. For instance the traditional fast
foods which are placed at the entrance of stores such as Kaufland.

2.2.2. Consumer electronics

a. Overview

The Romanian electronics market was a very fresh territory to explore during the 1990s
and early to mid-2000. Due to the fact that prior to the 89 revolution there were very few options
when it came to buying consumer electronics and the options for each article where very few.

Thus Romanians grew attracted to new technology which meant that foreign consumer
electronics retailers can easily come in the country or that national consumer electronics chains can
be easily made.

Most consumer electronics retailers are of Romanian origin with very few foreign
retailers to compete against. The most popular consumer electronics retailers are Flanco, Altex,
Domo, Media Galaxy.

25
Romanian Electronics retailers by number of stores as of 2014.

Name Year on the market Number of stores

Domo 1994 1000
Flanco 1990 108
Altex 1993 78
Media Galaxy 2004 15

Romanian Electronics retailers as of 2014 by Total Turnover and Net Profit.

Name No of Employees Total Turnover Net Profit

Altex 1800 350 mil 870.000
Flanco 1100 150 mil 480.000
Domo 1025 137 mil -16.000.000
Media Galaxy Included in Altex Included in Altex Included in Altex

Media Galaxy is owned by Altex and thus all its employees, total turnover and net profit
is incorporated into Altex as a whole.

As of 2016, Domo has sold all of its physical stores in 2015 due to the high debt
accumulated and has moved its entire operations to the online site which is the last remnant of the
old company.

The traditional consumer electronics stores in Romania are had serious profit loses
during the recent crisis of 2008 2013 and had started to stabilize at the end of 2014. Having dealt
with this danger the new threat now comes from the only consumer electronics stores who do not
need to depend on a physical store to make sells.

b. Marketing Techniques

Due to fact that the frequency at which people usually change their electronics is about
2 5 years , even more depending on the electronics, there are very few opportunities throw-out
the year that these retailers can take grasp off.

26
 The only certain period of time at which these retailers make price drops and discounts
is during Black Friday, otherwise thy can only use the buying behaviors of their customers in order
to see which products they can focus on.

Popular pricing techniques used by these retailers are skimming and optional pricing.

2.2.3. Online retailers

a. Overview

Romania is considered one of the fasted growing countries in terms of internet

consumption, it has been ranked number 5 in 2013 by internet speed and rank 11 in 2015. Although
Romania fell after the top 10 countries with the highest internet speed, it has 9 cities in the top 15
cities in the world with the fastest internet connection.

As of 2015 Romania has a total population of about 19.500.000 of which 51.66% of

the population has access to internet, 10.073.700. Making it the 7th country in the E.U. by total
number of internet users.

With these conditions in mind it was only a matter of time until the concepts of e-
shopping and e-commerce started to appear in Romania. Amongst Romanians the most popular
online stores are eMag, EvoMAG, Cel.ro, Pc Garage and Fashion Days.

Most of the Romanian online retailers specialize in consumer electronic but in recent
years there has been a drive to start other online retail stores specialized on clothing or sporting
equipment and so on.

The biggest online retailers in Romania are specialized in selling consumer

electronics, the biggest online retailer beeing eMag which has recorded a total turnover of around
500 million .

27
Online retailers by total turnover as of 2014

Name Domain Founding Year Total Turnover

eMag PC Components, 2001 500 mil
Electronics, Phones,
Food
Fashion Days Clothing 2011 46.5 mil
Cel.ro PC Components, 2004 32 mil
Phones
Pc Garage PC Components, 2008 28 mil
Phones
evoMag PC Components, 2005 20 mil
Electronics, Phones

Online retailers by net profit as of 2014. It can be observed that eMag is the leading
the branch of online retailers by having a total turnover 20 times larger than its closes competitor.

Another thing which can be seen in this table is that online retail is dominated by
Romanian based companies which are dedicated to online selling, their stores being used more as
showrooms then actual stores. This shows a very different picture of the retail market in Romania
comparing the online segment with the food segment in terms of retailer provenience.

Every retailer with operations in Romania has a website dedicated to the Romanian
market, the downside is that very few retailers allow online shopping on their sites.

b. Marketing Techniques

Due to the fact that these stores operate only online there are not restricted to
experiment to as much with promotions on products than physical stores. There are a multitude of
marketing techniques which can be applied by these retailers.

Consumer electronics sites such as eMag and EvoMag profit a lot by events such as
black Friday and holidays by setting up special prices to electronics, events such as these generate
considerable profit increase for these stores.
28
 Because there is a movement of creating an online store for each physical store, eMag
united with Mega Image to bring the concept of online grocery shopping in Romania. Thus making
way for other marketing techniques to be applied in online environments. Discounts will be more
persistent because of this marge and the usage of psychological pricing will be more visible due to
the fact that it is applied more to food than anything else.

2.2.4. Furniture
a. Overview

The Romanian furniture market is a very dynamic and important sector for Romania
due to the fact that it has a potential to generate large amounts of revenue and because of the added
value of wood on square meter. Another important factor which is crucial for the furniture market
is the accessibility and location of the wood resources, Romania having a large amount of wood
reserves which can be easily found, depending on the location, thus there is no need for wood to
be imported and a local furniture production can be maintained.

In 2013, according to the Italian Center of Wood Research (CSIL), Romania is classed
on position 13th in the world for furniture exports, 28th on production and 48th on furniture
consumption. The 48th position in the world for furniture consumption is due to the fact that most
Romanians buy furniture very rarely due to the small wages compared other richer European
countries such as Sweden, Germany and France.

In 2013 the total value of furniture imports was about 351, 2 million euros while the
total value of exports was about 1,421 billion euros. Very few furniture producers are owned by
retailers and provide products for only one producer.

In 2015 the Romanian furniture market was estimated at around 700 million and had
a total of only 3 foreign furniture retailers which are Ikea, Jysk and Kika. The other retailers on the
market are Romanian ones, with the biggest one being MobExpert. This means that there is a bigger
percentage of Romanian retailers on this market compared to for instance the food retailers market.
The furniture market is dominated by No Name furniture retailers which are very small compared
to the large retailers.

29
 The top foreign furniture retailers by total turnover 2014:

Name Total Turnover Number Of Stores

MobExpert Holding SRL 120.000.000 33
SC IKEA Romania SRL 87.662.000 1
Jysk Romania SRL 22.880.830 30
Kika Mobilier SRL 11.753.000 1

In terms of total turnover the MobExpert has a bigger turnover than all the foreign
companies combined, but this does not guaranty a total victory for the Romanian furniture retailers.

The top foreign furniture retailers by net profit in 2014:

Name Total Net Profit Year of Entry

SC IKEA Romania SRL 2.526.600 2007
Jysk Romania SRL 377.750 2007
Kika Mobilier SRL - 477.450 2008
MobExper Holding SRL -950.000 1993

The foreign retailers are making larger sales than their Romanian counterpart despite
having a much smaller turnover.

It can also be noted that from the four top furniture retailers in Romania MobExpert is
the oldest one and also the only Romanian owned retailer on the list. It also has the advantage of
having the most stores in Romania and more experience on that market.

It is very difficult to answer the question Who owns the furniture retail market in
Romania, on one side it can be said that the foreigner are dominating but on the other side it can
be said that the Romanian retailers own it due to the fact that there is substantial number of
producers that dont operate under any brand name.

30
 Another downside of this is the fact that nobody owns the precise percentage of market
share each company owns due to the fact that there are only 5 well-known brand names and the
rest are no name Romanian producers and retailers.

b. Marketing Techniques

Due to the fact that furniture is classed as a long term value good, marketing
techniques are usually varied and prompt to changes.

For instance furniture retailers can use discounts which are very similar to those
found in supermarkets in order to get clear of excess stock which occupies to much space in the
depo. Usually these types of discounts can range from 30% up to 70% in some cases in order to
sell the excess stock fast.

Bundle techniques can also be used for buying a complete set of furniture at a very
low price or to an extra free furniture good or a price discount for a good that the customer will
buy in the future.

There is also present the use of seasonal promotions which last for a certain period
of time and holidays such as Christmas and summer promotions and recently even Black Friday
has recently been adopted as new promotion period for these retailers.

31
 Cap.3.IKEA AND MOBEXPERT COMPARISON STUDY CASE
3.1. Furniture

Since early times humans have always tried to make storages spaces and decorate the spaces
which they inhabit, the need to have a comfortable place to sleep and have a place to store items
developed and grew in time. Thus furniture started to emerge as an industry which grew and
transitioned through a multitude of time period until modern furniture emerged.

In todays world every household and human environment has furniture, furniture has been
an essential part in the lives of people because it helps store all or at least most of their belongings
and provide comfort as well. Furniture is an indispensable aspect for humans and it can be used to
reflect a number of aspects about a person like tastes and social status for instance.

Furniture is an abstract term and refers to a multitude of furniture pieces which can be used
in different purposes or have a multitude of purposes and usages.

Some examples of furniture pieces are:

Beds
Chairs
Tables
Sofas
Desks
Cabinets

Nowadays there is a multitude of options when it comes to choosing furniture and what style
should the furniture tend towards with styles ranging from modern to classical furniture to even
multipurpose/modular furniture which can help make most of a rooms place.

32
 3.2. Furniture: long usage goods

By its nature furniture is a long usage good, this means that it has a very long lifespan
compared to other goods, but the lifespan is also variable because it changes depending on the
furniture type and its usage though out time. For example a bed can last from 5 15 depending on
how it is maintained while a chair can last 3 years.

Thus these products need to be marketed in a different manner than consumable products
which have a very short life cycle compared to them, like food for instance, these products also
require a more considerable amount of money then consumable goods to be bought.

Just like the life span of the furniture pieces the prices for furniture also vary depending on
the type, for instance a standard chair can cost 10 while a more a bed can cost over 1000 . The
prices of furniture articles change depending on the type of furniture article, the material used to
make that furniture piece and the quality or brand which it reflects.

Taking a look at most furniture commercials it can be seen that the main theme of every
furniture commercial revolves around the comfort that furniture brings and has a tendency to reflect
the general idea of how a perfect house can be. Furniture must also be reliable and resistant in order
to reach a long lasting lifespan.

Another element which is used for furniture marketing is the customization of products with
options regarding the material which is used on the furniture and the color pattern.

The marketing used to promote furniture is similar to the one used to promote other long
usage goods such as cars for instance, it must shows that it is reliable, solid and offers comfort to
its customers while easing their life.

Thus people that want to buy a long usage good such as furniture can be influenced by a
number a different factors before buying it, such as cost/quality ration, reliability, how solid the
good is and from which materials is the furniture piece made of and the brand name. All of these
factors play a crucial role when it comes to these goods because they are bought at very low
frequency compared to consumable goods.

33
 3.3. MOBEXPERT BNEASA SRL
3.3.1. General Information

MobExpert was founded in 1993 by the Romanian business couple Dan and Camelia ucu.
The first MobExpert store was opened in 1993 in Bucharests Unirea Shopping Center which only
offered for sale imported furniture.

In 1994 the company opened its first furniture factory which at first produced office desks
and chairs, the factory will later start producing sofas and modern furniture. In 1995 the company
started developing its own chain of stores and to introduce new imported products from various
European manufacturers.

The company started in 1996 the acquisition of various furniture manufacturing companies,
it acquired stocks from Samus Dej, Ilefor Targu Mures and Mobstrat Suceava. 1996 marked the
year when the company first started producing its own furniture.

MobExpert is the largest furniture retailer in terms of number of stores in Romania, being a
regional leader with a total number of 30 stores as of 2015. The main idea that started MobExpert
was to sale European quality furniture in Romania at accessible prices.

MobExpert has two brands under its command:

MobExpert
MobExpert Office

MobExpert store are hyperstores or stores that provide house furniture and house decorations
while MobExpert Office are stores which sale furniture only for offices and businesses. The total
number of stores owned by MobExpert under any brand is 33 and the company has a total of 2000
employees.

In Romania there are a total of 10 hyperstore and 20 regular stores, the first hyperstore
outside Romania was opened in 2007 in Sofia, Bulgaria and the first MobExpert Office outside
Romania was opened in 2005 in Belgrad, Serbia and Sofia, Bulgaria. All MobExpert stores

34
combined make up for a combined surface of 11.000 square meters and represent an investment of
almost 76.000.000 .

MobExpert has further plans of expanding even more in the Balkan region and become a
regional leader in furniture retail.

3.3.2. Financial Status

MobExpert Bneasa SRL

When it comes to market position MobExpert is classed on the 2nd place when it comes to
market share and profit in Romania only, its main competitor being Ikea and Elvila.
MobExpert can be considered a furniture retailer with international reach due to the fact
that it has 3 stores outside Romania, but its stance as an international furniture retailer is very low
compared to other international furniture retailers such as Ikea.
In this section we will take into account the financial status of MobExpert Baneasa SRL
which undertakes its activities in the same area of Bucharest as the Ikea store and also of
MobExpert Holding SRL which oversees all of the MobEpert stores.

The evolution of the Total Net Turnover throughout the years for MobExpert Bneasa SRL.

Total Net Turnover for MobExpert Bneasa SRL

(in )
20000000
18000000 18050000
16496000 17233000
16000000
14000000 14367000
12000000 12654000
10000000
8000000
6000000
4000000
2000000
0
2010 2011 2012 2013 2014
Total Net Turnover 12654000 14367000 16496000 18050000 17233000

It can be seen that the total net turnover of MobExpert has grown throughout the years, it
had a steady growth from 2010 until 2013 with a small drop in 2014.

The Evolution of the companies Net Profit throughout the years MobExpert Bneasa SRL.

35
 Net Profit for MobExpert Bneasa SRL
(in )
1800000
1600000 1600000 1637000 1656000
1400000 1432000
1200000
1000000
800000
600000 575000
400000
200000
0
2010 2011 2012 2013 2014
Total Net Turnover 575000 1600000 1637000 1432000 1656000

In terms of net profit the company almost tripled their sales from 2010 to 2011 and
maintained had a slight growth in 2012. The profits dropped in 2013 by a small number and grown
again in 2014 to a bigger value then that in 2012

By comparison the table below shows the profits of MobExpert Holding SRL which owns
MobExpert Bneasa SRL to show an overview regarding the whole company profits throughout
the same period of time.

Net Profit for MobExpert Holding SRL

(in )
5000000
2641600 3557900
0 -440700 -951500

-5000000

-10000000

-15000000 -15575000

-20000000
2010 2011 2012 2013 2014
Total Net Turnover 2641600 3557900 -15575000 -440700 -951500

Regarding the whole company MobExpert had a good position on the market in 2010 with
a 1 million euro growth in 2013 followed by a dramatic drop in profits in 2012. Although there is
growth in 2013 and 2014 the company as a whole has a very bad financial situation in terms of
profit compared to the store in Bneasa.
36
The average number of employees throughout the years for MobExpert Bneasa SRL.

Average number of employees

(MobExpert Bneasa SRL)
180
171
160 164
155
140
120 122
114
100
80
60
40
20
0
2010 2011 2012 2013 2014
Total Net Turnover 114 122 155 171 164

The number of employees had grown steadily throughout 2010 2013 and had a slight decrease in
2014.

3.3.3. Marketing Mix used by MobExpert

a. The MobExpert Product Range

MobExpert has a varied offer of products in its stores and it has a multitude of options for
its clients. The products that can be found in MobExpert stores are:

Furniture (living, dinning, dormitory, kitchen, bathroom)

Desks (office, home, children)
Sofas
Carpets
Illuminating objects (lamps)
Kitchen Items
Beds
Various Decorations
Garden and backyard articles

37
 From this list it can be deducted that MobExpert sells mostly furniture but it also sells
accessories or products which are related to furniture such as carpets and illuminating objects like
lamps.
Alongside its 30 stores in Romania MobEpert also opened its online store from which
customers can buy products and have them delivered to their homes or desired places. It also uses
the site to sell products which can only be bought from the online store in order to give consumers
an incentive to buy more from the online store then the physical store.
An interesting aspect which can be observed on MobExpert products is the fact that they
sale, for the most part, classical type furniture in design terms for instance, it does not sale modular
furniture pieces as an example.
The products are not modular this meaning that every product fulfills only one role and
cannot be used in a multirole way for instance.
The products have a luxurious appeal to them and are made using various material such as
solid wood, oak and beech tree wood which is used for storage spaces, beds and tables for instance
and cloth and leather which is used on sofas for instance.
The material has a great impact on the quality and the price of the products due to the fact
that materials such as solid wood and leather are very expensive and add significant value to the
final product.
In the case of some products there is also the option of client customization which only
involves choosing the color of the furniture piece and the aesthetic materials used like cloth or
leather for instance, some furniture pieces may have only 3 color options while some have over 20.
By looking at the MobExpert array of products it can be observed that the company sells
classical furniture made out of traditional materials such as leather and solid wood with very few
modern materials. Thus it is addressed towards the upper level of the society, the high class which
are looking for classical furniture that can reflect a status of wealth.

38
 The image below shows an example of MobExperts client customization options.

b. Placement & Logistics Of MobExpert

MobExpert has a total number of 33 hyperstore which can be found in Romania, Bulgaria
and Serbia.
In Romania there are 30 MobExpert stores which are split into two categories, hyperstores
and regular stores. The MobExpert stores have a nationwide reach having a least one store in one
of the countrys main areas and has at least one store in every major city or county in Romania.
The biggest concentration of stores is in the southern part of the country near the Bucharest
area while and the second biggest concentration of stores being in the Transylvania region
especially in the area around Cluj.
Bucharest has the biggest number of MobExper stores in the country with a total of 4
followed by the county of Cluj which has 2 stores in the county, every other county or city has
operated only one MobExpert store.

39
 The map below shoes in detail the distribution of MobExpert stores in Romania.

Due to the fact that the stores spread around the country it is very easy for the company to
deliver furniture on a nationwide level.
A logistical advantage of MobExpert consists in the fact that it owns 9 furniture factories,
which operate under 1 of 7 names, in 4 production centers in Romania, the production centers are:
Bucharest, Dej, Targu Mures and Suceava. These factories are the main providers of furniture for
MobExpert, they provide all of their products, and in some cases addiction providers are contracted
for short term work for the company.

The factories owned by MobExpert are:

Name Specialization
SamusMex Production of living and dormitory furniture
ErgoMex Production of chairs and office chairs
MoldoMex Producer of solid wood and chairs
MuresMex Producer of modern living, dormitory and kitchen furniture.
Office furniture
ConfoMex Producer of leather and cloth sofas and chairs
StudioMex Producer of living, dining and dormitory furniture in modern
stile using classical material.
SoftMex Producer of various types of mattress.

40
 By looking at what the factories owned by MobExpert produce and what they sell it can
be said that the company prefers to be self-sustainable in terms of providing their own self-
produced furniture with little to no intervention by external producers. This is possible due to the
fact that they have a fortified position on the Romanian market and can easily manage their
factories and what they produce in order to adapt fast to customer trends and needs.

Every MobExpert store is a furniture showroom which needs to captivate the client,
usually all stores have products which are there only to be shown to the customer, the exposed
products are the same on a nationwide level. Only the biggest MobExpert stores which are the ones
in Bucharest for instance have the capability of showing all the products which are shown on the
website.

The clients that buy from MobExpert cant just buy the desired product and walk towards
home with it because the stores have a very limited capacity and there are very few items which
can be bought and taken or delivered towards the clients house on sight.
The order is placed and the customers must wait for his delivery to arrive at his house
because the company has only two logistical center in the country, one in Targu Mures and one in
Bucharest.

MobExpert invested around 28 million euros in 2007 to relocate the ConfoMex,

StudioMex and MuresMex in the industrial part located in Targu Mures and also to construct a
12.0002 meter Logistic Center in Targu Mures.
In July 2009 after a 10 million euros investment the second Logistics Center located in
Bucharest was finished. The Bucharest Logistics Center has 12.0002 meters, similar to the one in
Targu Mures, and manages all the import operations of the company.
After the construction of the two logistics centers the company managed to decrease the
duration for over 70% of the companys orders to maximum one week.
The company has its own logistics fleet of vehicles comprised of trucks and vans which
are used for supplying the stores with furniture and delivering customer orders.

41
 For the management of logistical operations the company uses the CROS software from
the Romanian company CRIsoft.

It can be observed by the location of the investments that MobExpert gives a great amount
of attention to the Transylvania region and the southern part of Romania, especially Bucharest. It
can be concluded that these two areas offer the biggest amount of buying power when it comes to
furniture.

Regarding the layout of MobExpert stores, every store has its own unique layout while
maintaining the same number of products which are on display in every store. The store in Brasov
for instance has a circle design while the stores in Bucharest have a rectangular design layout. Each
MobExpert store can be access and exited from any entrance the customer wishes and besides a
small deposit there are no other additions to the store such as kid playground or a restaurant.
c. Promotional Techniques Used By MobExpert
MobExpert promotes its products both in the online and the offline environment, with
commercial spots, magazines and fliers for offline environment to online commercials and ads.
The most popular element which remain with the consumer after the commercials end is
the slogan of the company Suntem cu totii diferiti. Din fericire. The slogan tries to imply that the
store has a very large array of products which can satisfy anybody.
The magazine can be viewed online on the site or it can be viewed in printed physical form,
it has separate magazine segmented on different furniture types. Alongside the magazine the
customer can also use an online manual for furniture maintenance.
The company also has different promotional approaches for different products during the
year, it also uses seasonal approaches for holidays such as Christmas and Easter and in recent years
had adopted the Black Friday promotions.
Another way of attracting clients is buying the promotions which lead to price drops, on
which MobExpert can retain customers. In the case of MobExpert there are the promotion which
are seen on their main site, with discounts between 10 25%, and the MobExpert Outlet site which
sales limited stock products which have very large discounts, can go up to 70%, compared to the
main site.

42
 Besides the promotions and discounts it has a special offer for clients which buy a product
that has a 12 year time payment, the customer receives no commission with the credit card payment
if the card belongs to one of 5 banks with which the company works. The customer can also buy
any product he wants regardless if it is on promotion or not.
One thing that can be observed is the fact that MobExpert has no TV commercials for the
offline environment which means that at first the company preferred to use the classical approach
of word of mouth to solidify and increase its reputation.
To celebrate its 20 years of existence in Romania the company posted a video on their site
which celebrates its activity and achievements, the video ends with the slogan Fabricm cu
mndrie n Romnia de 20 de ani.
In terms of social media promotion MobExpert uses the Twitter and Facebook platforms
on which it has only 2 pages, MobExpert and MobExpert Office, the most emphasis being on the
Facebook pages because of their higher traffic and popularity in Romania.

The image bellow shows the results of the Facebook search when typing in MobExpert.
Out of the three results only 2 are official pages MOBEXPERT and MobExpert Outlet.

It can also be seen that MobExpert posts ads and videos about their products on their
Facebook page in order to make clients aware of new products and promotions. The changes which
43
happen on the Facebook page regarding the offers and the ads of the company also happen on the
site, the changes on the Facebook page are closely linked to the one on the site.

d. Pricing Techniques

MobExpert has a wide amount of products at various prices, and does not have a certain
pattern when it comes to setting prices. In the image bellow it can be observed that the company
does price cups for products during certain periods and has a products that can only be found on
the online store.
The image below shows the options available for desks and their promotions.

Taking into consideration the fact that MobExpert is a well-established brand in Romania
with an activity of over 20 years it can be said that the company had enough time to experiment
with a multitude of pricing techniques for its products.
By looking at their catalog and prices it can be observed that MobExpert can be easelly
classified as an premium furniture retailer with prices ranging from 50 lei up to 5000 lei for chiar
for instance, it all changes depending on the product type, style and material.

44
 MobExpert uses premium prices which to a certain extent are similar to the prices of their
competitors such as Ikea and Elvila some regards. The company opts for a classical approach to
furniture making the statement that their furniture reflex a standard of living.
Product line pricing is also used for different variants which are from the same line, an
example is the Expert desk line up in the picture above, with some of them being available only
online.
Skimming prices are used for products that reach best seller status and Premium pricing is
used by the most expensive products in a certain class.

Every category of products sold by MobExpert has a different price range, below there
some examples of furniture pieces and their price ranges.

Furniture type Price range

Chairs ( Office, Home, Children )
Desks ( Office, Home, Children )
Sofas ( Leather, Cloth, Extensible )
Beds
Tables ( Dinning, Kitchen, Living )
250 3000 lei ( 55 670 )
190 2500 lei ( 45 560 )
700 15000 lei ( 250 3300 )
500 5500 lei ( 112 1225 )
170 8800 lei ( 38 1960 )

3.4. SC IKEA ROMANIA SRL

3.4.1. General Information

Ikea has a total number of 328 stores as of 2015 and operates in 51 countries, it has a total
number of 155000 employees. Ikea is a new comer on the Romanian furniture retail sector, having
entered the market in 2007. The biggest competitor for Ikea in Romania is MobExpert which have
a considerable large number of stores compared to only one in Romania, the Ikea store in Bucharest
has a surface of about 24.0002 meter.

45
 Ikea was founded in 1943 by Ingvar Kamprad, it first started selling furniture through mail-
order sales until 1958 when the first Mobel-Ikea store was made. The first Ikea stores which opened
outside Sweden were in Norway in 1963 and Denmark in 1969, since then the company started
expanding in Europe and opened its first store outside Europe in 1974 in Japan. Since then the
company has started to expand at a worldwide level with stores in 51 countries.

Since 2008 it is considered the worlds largest furniture retailer.

On the 21st of March 2007 the first Ikea store opened in Bucharest, Romania, making it the
first and only Ikea store in Romania. The store is placed in the Bneasa area of Bucharest.

The company plans to extend even more in Romania with plans of opening a second Ikea
store in Bucharest, Romania and targeting other large cities in Romania.

According to an interview from the Romanian CEO of Ikea the company plans to build a
number of stores of around 9, about the same number as in Poland, in order to increase the presence
of Ikea on the Romanian market. Romania is seen as one of countries which can provide great a
potential of development for Ikea in south-eastern Europe.

3.4.2. Financial Status

The Evolution of the Total turnover throughout the years

Total Net Turnover (in )

90000000
88000000 87660000
86000000
84000000
82000000
80000000 80130000
78000000
76000000 75400000
74000000
72000000
70000000
68000000
2012 2013 2014
Total Net Turnover 75400000 80130000 87660000

It can be seen that Ikea has increased its total turnover in Romania from 2012 to 2014 and
it keeps on having an increasing trend.

46
The evolution of the company Net Profit throughout the years

Net Profit (in )

3000000
2520000
2000000
1000000
0
-480000
-1000000
-2000000
-3000000
-3570000
-4000000
2012 2013 2014
Total Net Turnover -3570000 -480000 2520000

Ikea tries to maintain an increasing trend when it comes to net profit and has recently
started to make a profit in 2014 after two years of losses. These loses can be pointed out to a
multitude of factors such as the low buying power of Romanian people, the economic crisis of the
late 2000s which greatly affected furniture retailers in Romania.

The average number of Ikea employees throughout the years.

Average number of Ikea employees

500
472 473
450
400
350 366
300
250
200
150
100
50
0
2012 2013 2014
Total Net Turnover 366 472 473

It can be observed that Ikea increased the number of employees in Romania from 366 in 2012 to
472 in 2013 and 473 in 2014, it continues to have an increasing trend.
47
 3.4.3. Marketing
a. Product

Ikea has a large array of products at its disposal, it is very well known for the fact that
Ikeas products are sold in such a way that every customer can buy the product and assemble it at
home using the guides provided by Ikea.

Ikea sells products which cater to large array of customers no matter the income,
everybody can find a furniture piece which suits their needs and has a convenient price.

The products which can be found in the Ikea catalog are:

Desks
Beds and Mattresses
Chairs & Sofas
Exterior furniture
Kitchen furniture
Children and baby article (furniture, clothes, toys)
Mirrors
Home, Bathroom and Kitchen Appliances
Different accessories for different spaces of the house

Ikea sells a large and very diverse number of furniture types which is made in such a
way that the retailer can satisfy a large amount of customers and make sure that there is anything
for anybody.
The company is well known of the fact that it makers furniture which can be assemble
and disassemble by will anytime the customer needs to but it is also known for the fact that it makes
modular furniture pieces which can change their purpose.
Modular furniture is a modern approach regarding furniture which is easy to assemble
and disassemble by the user and can be used in a multirole way oppose to classical furniture pieces
which only fulfills one role.

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 For example in a modular furniture design for a bed, small drawls can be used as
depositing spaces and as stair to the bed in the same time while the area below the beds mattress
can be used as a depositing area as well maximizing the usage of space in a house.
Alongside these products Ikea also sells products which do not belong in the furniture
category such as its special Ikea Family line which caters towards the family and sales products
such as toys, books, backpacks.
Another feature which is present in every Ikea store is the way in which the stores are
planned, the main idea being that once the customer enters the store he or she must walk through
the whole store in order to get out of it.
Ikea stores also have two distinct feature compared to other furniture retail stores, the
restaurant which mostly serves a variety of traditional Swedish and Romanian food, vegetarian and
childrens food. For example the bestselling product of Ikea Bucharest is not the furniture but the
food, especially the hot dogs, with a total revenue of 7.150.000 generated in 2014.
The other feature of every Ikea store is a playground for kids so that parents can leave
their children there while they explore the store freely.
b. Placement

IKEA has a worldwide chain of 328 stores which cover 51 countries and is considered
from 2008 onwards the number 1 retailer of furniture worldwide. For Ikea to keep maintaining
their status of the worlds top furniture retailer it must have a very large and organized logistical
system which can help with resupplying the stores with products.

Every Ikea store has its own deposit of products where it stores its products which are
really to be given to the customer as soon as they leave the store. The idea which stands behind
every Ikea stores is the fact that customers can come into the store, see what they want and take it
home from there without having to wait for the product to be delivered at their location. Besides
the option of taking what you need and going home which involves to be physically in the store,
customers can also command furniture online through the Ikea site which offers all the array of
products which can be found in the store.

Ikea has its own independent logistic department in Romania, in Bucharest, which
oversees all of its activities involving the logistical side from supplying the deposits to delivering

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order to clients. It has its own fleet of vehicles which is used for both supplying the store and for
delivering client orders.

A number of around 40 furniture manufactures provide products for Ikea in Romania,

the producers are mostly confidential out of which only 7 of them are known.

The table bellows shows the producers and what do they produce for Ikea.

Name Specialization
Sortilemn Gherla Restaurant and kitchen chairs, children
furniture, other
Gilmet Baby beds, bottle supports for kitchens
Cesiro Various types of plates
Ecolor Furniture
Plimob Chairs
PrincoGrup Beech panels
Nikmob Solid wood furniture, bedroom furniture, small
size furniture, childrens beds.

The furniture producers which provide the products that Ikea sells are not owned by
them, they are independent producers off various furniture products which work for Ikea on a
contract basis.

Due to the fact that Ikea has only one store in Romania it is easy for the company to
have contractors work for them and provide them with their furniture than having their own
factories and be self-sustainable. This is due to the fact that Ikea has not solidified its position in
Romania yet to operate their own factories.

Another aspect of placement can be considered the layout of the Ikea store, every Ikea
store is basically a huge showroom for furniture in which everybody is free to explore the store
how they wish. Every store has only one entrance and one exit and they cant enter the other way
around.

50
 The layout of the every Ikea store works on the principle that once the client gets in to
the store through the entrance he must walk down the entire store in order to get to the exist. This
puts a constraint on the customer which works to the advantage of Ikea, trying to attract the
customer and attract him in order to buy an article.

c. Promotion

Being an international brand Ikea uses a multitude of methods of promoting its products
through online and offline channels, the experience accumulated in years with interacting with
different consumer behaviors and cultures helped Ikea to adapt to changing circumstances.

Ikea places a very big emphasis on making its marketing, making it relatable to every
person and convincing consumers that they know what they want.

Looking at the offline environment Ikea uses magazines, fliers, commercial spots and
TV ads to attract its consumers, it is well know that the Ikea has a very large catalog magazine
which has over 300 pages and shows all the products it has to offer.

The Ikea catalog magazine can be viewed in printed physical form for it can be viewed
online on the official Ikea site, besides showing all the products the magazine also offers suggestion
regarding home furniture placement and designs, stories from their customer base and sometimes
recipes for foods which can be found at the Ikea restaurant.

TV ads are worth noting due to fact that they have variety, are original and unexpected.
The TV ads are also addressed to different countries so for example the UK will have different Ikea
commercials compared to Romania.

In terms of online promotion Ikea uses classical internet ads, video ads which also appear
on TV, social media such as Facebook and twitter. Notable is the fact that for every country in
which Ikea is present a Facebook and Twitter page catered to that country is created, this shows
that Ikea wants to be connected at all times with its customers and speak on their language as well.

The image below shows the different Facebook pages addressed to the various countries
in which they have their operations showing the social media involvement of Ikea.

51
 Ikea takes into account the culture of the countries in which in operated before doing
any promotional activities, making all of their promotional activities unique from country to
country which reflects is status as a worldwide retailer.

Events are also a part of the Ikea promotion strategy which are usually catered towards
international holydays such as Childs Day or national holydays such as The National Day of
Romania.

These events are promoted on the Ikea website in order for them to increase the
connection which the customer and attract various customers which have these holydays in
common.

d. Price

IKEA is a well-known international furnishing brand due to its quality but also due to fact
that it has accessible prices, IKEA can be considered a family friendly brand due to the fact that it
has a wide range of prices.

52
 It uses various pricing techniques such as economy, product line, psychological pricing.
The most focus is placed on the economy pricing due to the fact that it has relatively cheap prices
and suits the family friendly idea behind the company.

Due to the fact that the prices are mostly placed in the economy range, IKEA does not
need to do discounts or do promotions for their products due to the fact that most of them are
already cheap by default and there is no need to cut even more out of the prices.

Accompanying the family friendly prices is a large array of products, giving the
customers the opportunity to choose from a large array of products even if they are lower priced.
As an example, a price range for an table at Ikea ranges between 40 1600 lei ( 9 355 ), this is
a relatively low price range considering that a table can cost up to 8000 lei ( 1780 ) at other retail
stores.

In the table below are some example of IKEA products and their prices ranges:

Furniture type Price range

Chairs ( Office, Home, Children )
Desks ( Office, Home, Children )
Sofas ( Leather, Cloth, Extensible, Modular )
Beds
Tables ( Dinning, Kitchen, Living )
10 1150 lei ( 2.5 255 )
70 700 lei ( 15 155 )
200 10000 lei ( 45 2220 )
250 3400 lei ( 55 755 )
40 1600 lei ( 9 355 )

By looking at the prices it can be concluded that IKEA has very cheap prices for Romania
and even E.U countries, taking into account the comparison with the average GDP per capita, which
are accessible to everyone.

Thus IKEAS target market segment are people from all classes of society with the bigger
focus being on lower to upper class people society which have very little money to spend on

53
furniture. People that cant afford furniture transportation and want to have it immediately and are
more likely to assemble it by themselves.

Thus Ikea looks as a very interesting and accessible retailer for Romanians which want
to buy furniture at affordable prices.

3.5. COMPARING IKEA AND MOBEXPERT

This subchapter will focus on comparing the marketing mix of MobExpert with that of
Ikea, it will analyze the differences between the two retailers and the similarities and differences
between them.

The table below is used to compare the marketing mix of the two companies by awarding
points of 1 or 2 to each selection of the marketing mix and calculating the total number of points
and how much has one compared to the other.

Criteria Company Name

MobExpert Ikea
Product
Quality 2 1
Diversity 1 2
Price
Payment methods 1 2
Price accessibility 1 2
Promotions & 2 1
Discounts
Distribution
Online delivery
Delivery speed 1 2
Geographical 1 2
coverage 2 1

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 Promotion
Advertising 1 2
Promotions & 2 1
Discounts
Brand awareness 1 2
Store Design
Layout 2 1
Additions to the store 1 2
Total Points 18 21

By looking at the results it is clear that overall Ikea has the advantage compared to
MobExpert at the marketing mix.

The Advantages of MobExpert in comparison to Ikea are:

Promotions & Discounts

Product Quality
Geographical Coverage
Store Layout

The Advantages of Ikea in comparison to MobExpert are:

Product Diversity
Payment methods
Price accessibility
Online Delivery
Distribution Speed
Advertising
Brand Awareness
Additions To The Store

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 By to comparing the two, bot taking into account the different market segments which
these cater towards, it can be said that one fairs better than the other.
Ikea has its advantages in product diversity, payment methods, price accessibility, online
delivery, distribution speed and advertising while MobExpert has its advantage in product quality,
store layout, promotions & discounts and geographical coverage.
Overall Ikea is a better choice than MobExpert for buying furniture due to its price
accessibility and wider array of products, ease of usage for the customer, cheap prices and delivery
time.
On the other hand MobExpert cant be disregarded due to its bigger presence and
geographical position although it offers more expensive with classical design furniture made by
using traditional material.

Another comparison for the two retailers, outside the one from the table above, can be
made by only focusing on the sales per square meter from the two stores which are placed in the
Bneasa area.
The Ikea store has 26000 square meters while the MobExpert store has 8000 square
meters. In 2009 Ikea had of 2970 euro (13400 lei) per square meter while MobExpert had sales of
1570 euro (7100 lei) per square meter with a difference of 1400 euro per square meter.
While in 2013 MobExpert made sales of 2220 euro (10000 lei) per square meter while
the Ikea store made sales of 3060 euro (13800 lei) per square meter.
Ikea registered more sales than MobExpert in the Bneasa area while having a bigger
store. This comparison takes into account the overall sales of the stores, due to the fact that Ikea
has a restaurant and the revenue from it is placed in a whole with the one from the furniture. This
makes the process of creating a clear winner difficult but overall Ikea dominates MobExpert at
least in the Bneasa area of Bucharest.
By comparing the two companies as a whole taking into account only net profit will
make a clearer image about the situation.

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 Net Profit of MobExpert Bneasa SRL in comparison to Ikea
(in )
3000000
2520000
2000000
1637000 1432000 1656000
1000000

0
-480000
-1000000

-2000000

-3000000
-3570000
-4000000
2012 2013 2014
MobExpert 1637000 1432000 1656000
Ikea -3570000 -480000 2520000

By looking at the table above it can be seen that Ikea had made a good 2014 comeback
from their loses in 2012 and 2013 while MobExpert Bneasa kept a more stable net profit.

Net Profit for MobExpert Holding SRL

compared to SC Ikea Romania SRL
(in )
4000000
2000000 2520000
-480000
0
-951500
-2000000 -440700
-4000000 -3570000
-6000000
-8000000
-10000000
-12000000
-14000000
-16000000 -15575000
-18000000
2012 2013 2014
MobExpert -15575000 -440700 -951500
Ikea -3570000 -480000 2520000

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 The table above shows the overall situation of Ikea in comparison to the net profit of
all MobExpert store, it can be seen that although MobExpert had for 2012 and 2013 the upper hand
in Bneasa area, the whole company had bigger loses than Ikea which are still present in 2014.
Thus it can be concluded that Ikea is the most profitable furniture retailer in Romania.

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 Cap.4. CONCLUSION

The Marketing Mix forms the basis of marketing and all successful marketing endeavors
are obliged to use otherwise the company is doomed to failure.

Marketing has underwent through three major stages before it took the shape of modern
day marketing: production orientation era, sales production era and marketing orientation era.

The Romanian Retail market has a balanced number of foreign and Romanian retailer.
The food retail is dominated by foreigners and the online retail segment is dominated by
Romanians while in the furniture retail segment there is a balance between the foreign and
Romanian retailers.

The food retail segment houses the bigger retailer in Romania by total turnover,
Kaufland, which is very likely that will reach a 2 billion euro total turnover in 2015. Making it
the biggest all around retailer in Romania by total turnover.

Romania has an adequate supply of wood to maintain a furniture production industry,

around 75% of the furniture produced in Romania is exported while the other 25% is used for
internal consumption. Making Romania a big furniture exporter comparing the percentages with
the internal consumption.

Furniture is long usage good due to the fact that it has a very variable life spam, from 3
20 years, depending on how the furniture is maintained and thus it need to be marketed
differently than consumable goods such as food or even clothes which have a smaller lifespan.

Alongside the four big brands of furniture retailers in Romania, such as Jysk, MobExpert,
Ikea and Kika, there is a great number of No Name furniture retailers and producers. This makes
it very difficult to conclude who owns the furniture retail market in Romania due to the high
amount of No Name retailers which are spread throughout the country.

The two biggest furniture retailers in Romania by total turnover are MobExpert and Ikea,
Ikea has a bigger net profit than all of the MobExpert stores combined due to its accessible prices
and the ease of assembling furniture.

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 Both Ikea and MobExpert target two different market segments, with Ikea being a cheap
and family friendly furniture retailer which lets the customer mount the furniture by themselves
while MobExpert targets the upper class of market segment with classical style furniture made of
expensive material such as solid wood and leather and not letting the customer mount the furniture
alone.

By comparing only the MobExper Bneasa store and the Ikea store which are placed in
the Bneasa area of Bucharest it can be seen that the net profits of both stores are starting to
resemble one another.

There is a very tight competition between MobExpert and Ikea in the Bneasa area of
Bucharest where the different on sales per square meter between the two competitors have a
difference of under 1000 euros in the last 3 years.

MobExpert has a greater geographical advantage throughout Romania compared to Ikea

and has 2 logistic centers in the country while Ikea is limited to only one location which acts like
a store, a logistics center and deposit.

Ikea managed to reach a greater number of sales with only one store in Romania than
MobExpert which has 30 stores in Romania in period of under 10 years.

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Sources

Ph.Kotler & G.Armstrong - Principles of Marketing 15th Edition

Philip Kotler - Marketing 3.0 - 2010

Consumer Behavior Building Marketing Strategy, 11th edition

www.acrm.ro/index.php/ro

www.capital.ro/ikea-intra-in-balcani-pe-la-baneasa-23264.html

contently.com/strategist/2014/11/07/how-ikea-became-kings-of-content-marketing/

ecommercenews.eu/ecommerce-per-country/ecommerce-romania/

www.economica.net/ikea-vs-mobexpert-diferenta-de-vanzari-a-ajuns-sub-1000-de-euro-pe-
metrul-patrat_83972.html#n

www.infowood.ro/

www.ikea.com/ro/ro

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area_pe_piata

www.mobexpert.ro

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