The IKEA Effect

In business, we always try to provide all the conveniences to our customers for a smooth and seamless experience. The popular notion is that pampering your customer is the way to win their loyalty. But, Swedish IKEA, much similar to the mighty Viking lifestyle, doesn't care about the social (read business) conventions. The company simply hands over pieces of furniture to its customers and says “assemble these yourself!”.

Rude and suicidal, right??

Wrong! Because this is the way IKEA prioritizes the psychological and emotional needs of its target audience and this is also the reason behind the company's monumental success. The business fraternity loves to call it - “The IKEA Effect”.?

Here is what it means:?

Let's understand this with an example. It is not uncommon for biological children to be preferred over adopted ones by many parents, and evolutionary reasons like passing on genes are undoubtedly part of the explanation. However, psychological factors related to identity and bonding also seem to be at play. Specifically, the act of procreation offers parents an immense sense of personal creation - they see the child as made from them, of them, imprinted with their shared heredity. This appears to foster an outsized perception of ownership and attachment, with the child viewed almost as a feature of themselves.

This is the working principle behind their strategy of letting people assemble their own furniture, at least at the customers end. This is the IKEA effect.

The IKEA effect refers to the psychological phenomenon where people tend to value and love products more when they put in some effort to build or create them, compared to readymade products. The assembly process leads to feelings of personal ownership and attachment as people contribute their own labor. The effort invested makes their IKEA product seem more valuable. Constructing products piece-by-piece evokes a sense of achievement when finished, making purchasers proud of their handiwork in creating the final product. This user participation translates into brand loyalty and customers make repeat purchases to relive the experience.?

But this is not the end. The entire business model of IKEA is designed in accordance with basic human behavior and psychology.?

Here’s a complete breakdown of IKEA’s business model. Read here: https://ikanabusinessreview.com/the-ikea-case/