Scribd Logo
Upload

Welcome to Scribd!

    • 232 views

    Facilitator: Prof. Arun Sharma: CB A - Group 8

    Uploaded by

    gulshan mishra
    1. The document discusses research conducted on the "IKEA effect" in India, which is the phenomenon of people overvaluing products or experiences they had a hand in creating. 2. Studies tested the IKEA effect in various contexts like furniture assembly, crafts, and digital products to understand when and why Indians demonstrate increased valuation of self-made products. 3. The research found the IKEA effect does not generally work as well in India as in Western markets, due to cultural, economic, and preference differences among Indian consumers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Facilitator: Prof. Arun Sharma: CB A - Group 8

    Uploaded by

    gulshan mishra
    232 views13 pages
    1. The document discusses research conducted on the "IKEA effect" in India, which is the phenomenon of people overvaluing products or experiences they had a hand in creating. 2. Studies tested the IKEA effect in various contexts like furniture assembly, crafts, and digital products to understand when and why Indians demonstrate increased valuation of self-made products. 3. The research found the IKEA effect does not generally work as well in India as in Western markets, due to cultural, economic, and preference differences among Indian consumers.

    Original Title

    IKEA Effect

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    1. The document discusses research conducted on the "IKEA effect" in India, which is the phenomenon of people overvaluing products or experiences they had a hand in creating. 2. Studies tested the IKEA effect in various contexts like furniture assembly, crafts, and digital products to understand when and why Indians demonstrate increased valuation of self-made products. 3. The research found the IKEA effect does not generally work as well in India as in Western markets, due to cultural, economic, and preference differences among Indian consumers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    232 views13 pages

    Facilitator: Prof. Arun Sharma: CB A - Group 8

    Uploaded by

    gulshan mishra
    1. The document discusses research conducted on the "IKEA effect" in India, which is the phenomenon of people overvaluing products or experiences they had a hand in creating. 2. Studies tested the IKEA effect in various contexts like furniture assembly, crafts, and digital products to understand when and why Indians demonstrate increased valuation of self-made products. 3. The research found the IKEA effect does not generally work as well in India as in Western markets, due to cultural, economic, and preference differences among Indian consumers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 13
    At a glance
    Powered by AI
    The passage discusses the IKEA effect and how effort impacts valuation.

    The IKEA effect is when people value objects they helped create more than identical mass-produced goods.

    The study used control and experiment groups to measure willingness to pay with and without effort. It also conducted interviews.

    Facilitator:

    Prof. Arun Sharma

    CB A_GROUP 8
    Gulshan A039
    Aashna A043
    Mayank A058
    Kevin G028
    Jagriti H036
    Yogesh I050
    THE IKEA EFFECT

    1. Effort Justification
    2. Increased Valuation only on Successful Completion
    3. Degree of Difficulty of the Task
    4. IKEA Effect vs. Endowment Effect
    5. Sunk Cost Fallacy

    IKEA, The Swedish Furniture Makers The Origami Study Betty Crocker Cake Mix Study
    METHODOLOGY

    Control Group Questionnaire

    Willingness to pay when no effort is there

    Experiment Group Questionnaire

    Willingness to pay when effort is there

    Telephonic Interview to gain further insights


    Testing IKEA Effect in Low-Involvement Goods; Mundane Process

    As per our study, people choose Convenience over DIY when the
    result is Standardised
    Here, customers and consumers have a huge overlap: mostly
    consumed by young people (school-going, or college-going)
    They don’t have to showcase their skill to anyone, but to satisfy
    immediate craving/hunger
    These points differentiate our study from Betty Crocker Cake Mix Study
    Testing the IKEA Example (Standard final product)

    The IKEA India store features IKEA’s first in-house furniture-assembly team, with 150 full-time employees.
    IKEA created the optional service after research indicated many Indians would be unlikely to buy bookshelves
    and tables they had to screw together.
    DIY seemed to be replaced with LUHY (Let Us Help You) with home-delivery (using e-vehicles) and assembling
    services (tie-up with UrbanClap).
    Testing IKEA Effect when Process is Interesting & Value-Adding

    MAKE IT & KEEP IT


    Less than 350 350 400 450 500 More than 500

    2% 6%

    READYMADE TEACUP
    31% 24%
    Less than 350 350 400 450 500 More than 500

    1%
    12% 11%

    18%
    19% 19%

    35%

    When the workshop is free, and people can


    keep their creations and use it over time, they
    22%
    get to flaunt it to their near and dear ones!

    The Classic IKEA Effect is at work here!


    High-Involvement Product with Tedious Process
    but high degree of Customisation

    Taking a tour is a more personalised experience, with different


    people having different expectations from their vacations

    Here, we found people were more likely to pay higher for a tour
    they research and plan totally on their own!
    Testing the Successful Completion Criteria

    As per our research, even though people did not meet


    their desired goals within stipulated time period, majorly
    people were ready to pay part payment. This proves the
    claim made by researchers that willingness to pay
    decreases if results of the effort put are incomplete or not
    upto satisfaction.
    Endowment Effect vs. IKEA Effect

    39.3%
    It is clear that people
    would be more likely to
    sell an owned, inherited
    60.7%
    property than the one
    they built themselves.
    Testing the Sunk Cost Fallacy

    The IKEA effect contributes to


    the Sunk Cost Effect, which
    occurs when people continue to
    devote resources to sometimes
    failing projects they have
    invested their labor in.
    After devoting resources
    towards something,
    people tend to carry on
    with it, even if they
    might not want to!
    IKEA Effect in Online Shopping?

    Spin the Wheel Offers

    Increased Customer Engagement leads to Lower Cart Abandonment

    Conversion Rate can increase up to 25%

    Free Delivery Flat 10% Off*


    Buy One Get One Free* Shop for Rs. 100, Get XYZ Free
    25% off on Brand A Cashback of Rs. 250

    Source: https://www.youtube.com/watch?v=ylV96PrDxv8
    IKEA Effect in Digital Marketing?

    When we think about the contemporary digital products we enjoy the most and engage with most actively, they all seem to
    have some degree of personalization or customization to them that keeps amplifying our engagement and loyalty!
    They ask for what we like (our labor) to get us to love them more!

    Every time we create Guardian’s new


    a new playlist, we mobile app and
    become a bit more new website that
    Every time we add a movie to
    committed to Spotify (among other
    “My List” or get a good
    and less likely to things) lets you
    algorithmic recommendation, we
    switch to competitors customize your
    become a bit more committed to
    content experience
    Netflix and less likely to switch to
    competitors.

    Source: https://larsdamgaard.com/can-the-digital-ikea-effect-increase-user-engagement-and-brand-loyalty/
    Conclusion & Marketing Implications

    • The IKEA effect clearly does not work as well in Indian market as it does in the Western markets.
    • Following being the major reasons:
    • Culture Difference
    • Affordable labour
    • Preference to convenience
    • “Why should I also do the effort and also pay more/equal for the same?”
    • Diminishing Returns

    ▪ Customised end product ▪ Standardised end product (IKEA products)


    ▪ High involvement products ▪ Products with Low involvement in decision making
    ▪ Process is interesting and value adding ▪ Process is trivial and mundane
    ▪ Being part of the making process is something one ▪ Opposition provides convenience
    can flaunt ▪ Repeat purchases
    ▪ For age group < 30 years ▪ Effort leading to incomplete or undesired output
    ▪ If available at a price lower than comparable readily ▪ Product priced higher than readymade product
    available product

    You might also like