The Founder of IKEA was Genius For This

Rory Sutherland talks about the IKEA effect in marketing.

Rory Sutherland, a leading figure in the fields of advertising and behavioral economics, has extensively studied human behavior and decision-making processes. One of the concepts he has explored is known as "The IKEA Effect," a phenomenon that sheds light on how people value and appreciate products more when they have invested effort into creating or customizing them.

The term "The IKEA Effect" derives from the well-known Swedish furniture retailer IKEA, which is renowned for its self-assembly furniture kits. When customers purchase furniture from IKEA, they are often required to assemble the pieces themselves using instructions provided in the packaging. Despite the sometimes challenging and time-consuming nature of the assembly process, customers often report a heightened sense of satisfaction and attachment to the finished product.

Sutherland's study delves into why this phenomenon occurs and what implications it has for consumer behavior and marketing strategies. One explanation is that the act of assembling furniture imbues the finished product with a greater sense of personal investment and ownership. When individuals put effort into building something themselves, they develop a sense of pride and attachment to the outcome, leading them to value it more highly than if it were simply purchased pre-assembled.

Furthermore, "The IKEA Effect" highlights the role of effort justification in shaping consumer perceptions and preferences. According to this theory, people tend to rationalize their investment of time and effort by attributing greater value to the end result. In the context of IKEA furniture, customers may perceive their DIY efforts as a form of labor or skill, which enhances their appreciation for the final product.

From a marketing perspective, understanding "The IKEA Effect" can inform product design, branding, and customer engagement strategies. By incorporating opportunities for customization, co-creation, or self-expression into their offerings, companies can tap into consumers' innate desire to invest in and take ownership of their purchases. This could involve offering DIY kits, customizable features, or interactive experiences that allow customers to personalize their products and feel a greater sense of connection to them.

Overall, Rory Sutherland's study on "The IKEA Effect" provides valuable insights into the psychological drivers of consumer behavior and the ways in which businesses can leverage these principles to enhance customer satisfaction, loyalty, and engagement. By recognizing the inherent value of effort and involvement in the consumption process, companies can create more meaningful and fulfilling experiences for their customers.

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[PhantomFilmAustralia]

I needed to sell an excellent condition car fast, and priced it at $1000. It wasn't selling. People thought the price was great but for that price, they were asking if there was anything wrong with the car. Then the day before deadline, I gave it the "Chivas Regal" treatment and priced it well over its worth. I got the opposite response, where several people were interested in the car but not for that price. Since I jacked up the price, I was negotiated down several thousand dollars, and made the sale that day for more money than I anticipated.

[maxxim]

To be fair, the assembling-the is a complete afterthought. The point of it was to save on storage and make it is easy to transport the furniture home. Simply a way to cut costs, that was it.

[randomshotz]

Chivas Regal did this with their Whisky. They thought having a nice brand and cool bottle for a cheap price would be a major success but nobody bought it as foreign + cheap made people think poor quality. They hiked the price 3x and started selling more bottles. Suddenly it was foreign, suave packaging at a premium price and therefore made the consumer think high quality.

[manladan]

Every time this guy pops up you’ve gotta watch it all the way through

[dawne]

I've been told something like this when pricing my jewelry. Too cheap makes people suspicious; like you said, too good to be true, something must be wrong.

[iainhunneybell]

“Price is one of the most important statements you can make about your product” … spot on ❤

[jasongold]

JCPenny used to always be running sales. 20-40% off . People shopped there for the great deals. Prices stayed the same, sale signs went away, so did the crowds. Now the stuff looked cheap.

The sales where never real. Only the illusion of a deal.

[kingstefano]

As a self employed electrician I really need to learn this. I always try be fair with prices but have been questioned many times weather I’m doing a proper job because other electricians have quoted 5 fold

[krishnayogi]

Is this guy a marketing genius or what

His videos are pure wisdom

[seastarbutterfly]

Picking strawberries by me is more expensive than purchasing at a store

[HarryBalzak]

This is so true. My buddy sold platinum jewelry online and when he priced things low, they wouldn't sell. If he marked them up 100% from where he was already making 30%, they sold like hotcakes. Same exact jewelry, but people preferred paying more.

[riccardoz]

Sadly now ikea is pretty expensive compared to 15 years ago ratio. And quality sinked also. And all my furniture are ikea, but of 15 years ago

[tacet]

Some US dessert cake company, betty crocker maybe, found this out when they made instant cake mix in the 60s where you just needed to add water, mix and bake. People didnt like it. They changed it to add milk and an egg (or something similar) and it was a success.
Saw this chap at a talk once and he schooled one of the founders of Extinction Rebellion about how to engage with people.

[InkaPley]

Definitely brilliant. Humans have always assigned deep meaning and connection to anything they have dedicated their time and or labor to ...

[GerblerM]

It's interesting, when I worked as a designer at a furniture showroom, I'd often overhear veteran salespeople talking to new hires - they wanted to emphasize how cheap our products were but the actual word "cheap" was basically a sin if they uttered it.

For whatever reason this phrase has stuck with me for over 15 years now but one of the salespeople said "We don't sell *cheap* sofas. Our sofas are *inexpensive*."

The difference between creating an environment where the customer thinks they getting a deal on quality, vs buying low quality goods can really be that razor thin

[paulfgraham]

I was selling my house 8 years ago and several agents gave me a valuation. I told each of them I wanted to offer it for quite a bit more than their valuation and all but one refused, saying I wouldn't get that price. I went with the one.

I got loads of offers and all were above the valuation they gave me. In the end, I sold it for only slightly less than the price I put it on for, and comfortably more than the highest valuation from an estate agent.

[weirdguy]

This happened in aviation. There was a computer called the Ground Proximity Warning System, GPWS, that warns you if you are too close to the ground. A competitor made a MUCH cheaper version, but it didn't sell very well. It was thought to be too good to be true, and mush be a terrible computer. So, they upped their prices closer, but still below their competition. It then sold very well.

[jonathanabgrall]

All my furniture is from Ikea or Ikea-like stores.

Not sure i agree with the CEO's statement. Having to use surgical precision to assemble something without breaking it cause it's all made out of cheap, brittle plywood with a vinyl coating does not contribute to my trust in the product.

Its just a reminder i can't afford stuff made out of actual wood :/

[RonCadillac]

I feel like this dude came out of no where and everytime I see him jes spitting facts!