Aldi: Overview, Expansion, Target Market, And Competitive Advantage

Expansion in different countries

Question:

Discuss about the Competitive Advantage Of Aldi Retail Company.

According to Wu et al. (2015), Aldi is a retail company that is present in countries like the UK, Germany and Australia as well. The company was first started in Germany and is named after its founder that is Albrecht Discount. The company is a supermarket and deals with all kinds of products so that it can cater to all the needs and preferences of the customers. It provides heavy discounts to the customers and is considered to be a medium type of supermarket. The company was established by Theo and Karl Albrecht in the year 1913 and its headquarters is present in Essen, Germany.

The researchers Trevena et al., (2015) stated that the company opened its first store in Australia in the year 2001 and has been expanding ever since due to the heavy demands of the products by the consumers. The company has a wide network of supermarkets that is present in the Eastern Seaboard of the country. The products are given at a cheaper rate, which has helped the company in building a better relationship with the customers and increase its customer base as well.   

The company provides top quality products, which helps them in building a large base of customers. The company also offers the products at a lower price so that it can cater to a large number of customers. The company maintains a lower cost of operations so that it can help them in keeping the prices low for the products that are being delivered to the customers. The company has a strong presence in the European markets and other countries as well, which has helped them in maintaining a better rate of profit in the market. The growth of the company has led in an increase in the share in the consumer market, which has also resulted in getting around 1.1 million new customers as well. The company has been named as the best supermarket over a period of four years consecutively, which has helped them in earning a better reputation in the consumer market (Shabanova et al., 2015).  

The company has not been able to create an impact on a global manner except for the stores that it has in different parts of the world. The consumers sometimes regard the stores where cheap and low low quality products can be found. The company works as a discount retailer but needs to increase prices of certain products such as bananas and milk products, as there has been a fall in the value of pound. The company is beyond the big four supermarkets and has not created a better impact than them such as Tesco has a market share of around 28 percent in the market and leads the consumer market as well (Yuan et al. 2015).

Nature of products and services

According to Shabanova et al. (2015), the company needs to invest more in the marketing so that it can stop the fierce competition that it faces from other supermarket stores. They need to think about expanding in to countries like Africa and Asia so that the resources can be tapped in these markets, which will help them in increasing their level of profits. The company can provide better alternatives to the products that are costly so that the consumers can buy those at a cheaper rate. This will help the company in expanding and developing the products so that it can expand in an efficient manner. The expansion of the company will help in creating more job opportunities, which will help in gaining the trust in the consumer market as well.

The company cannot cater to the needs of the customers who are looking for an overall experience in shopping. The recent takeover of Whole Foods by Amazon has increased their shares in the market, which will provide stiff resistance to Aldi due to the domination of Amazon on a global level. Companies such as Asda and Tesco provide better alternatives to the customers, which has resulted in increasing the trust among the customers and maintaining a large base of customers in the product market (Yuan et al., 2015).

According to Sun et al. (2015), the target market is the breakdown of the market segments so that the company can concentrate on a certain section of the society and increase its profit levels. This will help the company in achieving the maximum satisfaction of the customers by offering the products and services in an efficient manner. The setting of the target market helps the company in adopting better promotional techniques along with the setting of prices so that it can provide the products to the customers in a cost-effective manner.

Rothaermel (2015) was of the opinion that the target market can be divided in to demographic segmentation where the where they have to consider the various age groups of the customers who are interested in buying the products from the stores. The analysis of the demography will help the company in gaining a better understanding regarding the gender that is present in the market along with the age groups and the marital status of the population so that it can provide the products and services accordingly.

Sun et al. (2015) stated that the analysis based on psychograph will help the company in determining the likelihood of the present market in purchasing the services or the products that are being given by the company. The interest and the lifestyles of the people need to be analyzed in an efficient manner so that the company can be able to understand the needs that are present within the market. The opinions and the attitudes of the consumers has to be dealt in a proper manner so that the company can provide the services in an optimum manner, which will help them in earning a better rate of profit within the market.

Target Market

The target market for the company is that they cater to individuals who belong to different age groups and the stores contain all the necessary items that the customers would want to purchase. The customers are treated in an equal manner irrespective of their caste and creed when they enter the store for purchasing the product and the employees assist them if they face any difficulty in understanding the utility of the products.     

Trevena et al. (2015) stated that the introduction of products and services by the companies help them in gaining a competitive advantage in the market, as it helps the customers in getting a better shopping experience when they enter the stores. The use of efficient service procedures will help the company in gaining a competitive advantage, as the employees can associate themselves with the customers in a better manner.

Wu et al. (2015) stated that the company will be providing new services to the customers such as the products that will be demanded by the customers will be made available to the doorsteps of the customers within one day. This service will help the company in associating themselves with the customers in a better manner. The demands of the customers will be met by maintaining a better chain of operations so that the products can be delivered to the customers in an efficient manner.

Rothaermel (2015) stated that the services that the company provides to the consumers helps them in maintaining a competitive advantage in the market, as the customers get all the information regarding the products and its value as well. Since the customers in the modern world rely mostly on the fresh products, it helps the company in providing them all the necessary information so that they can maintain a better image in the market.

Shabanova et al. (2015) were of the view that the company serves different kinds of products to its customers so that they can cater to their needs and preferences. This has helped the company in diversifying its products so that the needs of the customers can be fulfilled. The standard of service that they give to the customers helps them in maintaining a high level of satisfaction as well. This has resulted in increasing the trust among the customers so that they can come back to the stores for other needs as well. the company operates on the basis of twelve hours and remains open all throughout the year so that they can provide the maximum level of benefits to them. The employees are given training on a continuous manner so that they can have a better understanding and provide the best services to the customers if they face any query regarding the utility of the products.

Competitive Advantage

Yuan et al. (2015) stated that the pricing policy of the company is innovative in nature, as most of the products have a lower price than the other supermarkets operating in the same area. The products are priced at a lower rate by the company due to the fact that they purchase the items directly from their suppliers so that it can be provided to the customers at a lower cost. The quality of the products are fresh that is delivered by the company, which helps them in gaining a competitive advantage over the other supermarkets that are present in the area. The company maintains a higher rate of bargaining power over the suppliers, as they buy the products in bulk quantities, which helps them in getting it at a lower price. This advantage is passed on to the customers and provides a limited amount of choices to them so that they can enjoy the products at a lower price as well.

According to Trevena et al. (2015), it is one of the important elements in the tools of marketing mix, which is regarding the channels of communication and the location of the stores so that it is viable for the customers to locate it in a proper manner. The delivery service that is provided by the company enables them in maintaining an effective level of communication with the logistics of the company so that the work can be carried out in an efficient manner. The delivery trucks collect the products and maintain a proper system of communication with the company so that they can be guided in an effective manner to the location of the customers. The customers are also made aware regarding the status of the products so that it can help in keeping a track of their products. This helps the company in maintaining a better relationship with the customers so that it can help in increasing their trust levels for the company.

Wu et al. (2015) were of the view that the company promotes its products and services in two ways that is above-the line and below-the-line promotional activities. The promotional technique known as above-the-line helps the company in increasing its share in the market. It helps in increasing the loyalty among the customers by communicating with them in a proper manner. This type of promotion helps the company in increasing its level of awareness so that the brand can be recognized in a better manner. It also helps the company in increasing its demand for the products so that the image of the brand can be improved in the market place.

Challenges faced by the company

According to Yuan et al. (2015), this method of promotional activity includes the paid advertising that helps in connecting with the mass audience. The mode of communication that is included in this type of promotional activity is radio, magazines, newspapers and television, which can reach to a large number of customers. The advertisements can be done through television, which will help in attracting a large number of people, as most of the customers watch TV during a part of the day. The use of leaflets can also be considered by the company, as it can be distributed among the customers so that it can help them in getting the valuable information, which will attract them towards the company.

Rothaermel (2015) was of the view that the below-the-line promotional activities are the methods in which the company can engage with the customers in a better manner. This will help the customers in targeting the specific audiences in so that it can help the company in gaining better level of controls over the communicative skills. This type of promotional activity can be carried out through social media by advertising the products and services in Facebook, Twitter and Instagram. This will help the customers in gaining better knowledge regarding the products and services, as most of the modern day customers are hooked on to the social media platforms.  

Shabanova et al. (2015) opined that the website of the company also provides important information regarding the products that are present in the stores so that the customers get to know the availability of the products when they are in need of it. E-mailing the loyal customers also help the company in retaining the customers, as they get to know the discounts that are being offered by the company regarding the products. The customers will also be notified regarding the special discounts that they would get during the festive season or on an annual basis. 

Conclusion

Therefore it can be concluded that Aldi needs to improve its services in the market so that the customers can be retained and can develop the trust over the company. This will help the company in increasing the base of customers so that the margin of profit for the company can be increased. The promotional methods that are used by the company will help them in informing the customers regarding the new services that are being offered by them to the customers. The services that will be provided by the company will help them in gaining a competitive advantage over the other firms that are present in the area, as proper techniques of communication will help them in carrying out the work in an efficient manner.

The company would target people from all the section of the society; the stores contain most of the products that are in demand among the teenagers as well as old age people. This will help the company in increasing its customer base in the market so that it can earn a better return by selling the products. The price of the items also plays an important role, as most of the items are priced at a minimum rate so that customers from all backgrounds can afford the products. This is due to the fact that the company procures the materials directly from the suppliers, which help in keeping the prices low so that it can be purchased by the customers.

References

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Shabanova, L.B., Ismagilova, G.N., Salimov, L.N. and Akhmadeev, M.G., 2015. PEST-Analysis and SWOT-Analysis as the most important tools to strengthen the competitive advantages of commercial enterprises. Mediterranean Journal of Social Sciences, 6(3), p.705.

Sun, H., Liu, J., Zhang, Z., Jia, T. and Sun, Q., 2015. Fresh Food Online Supermarket Format Development Research. In LISS 2013 (pp. 633-638). Springer, Berlin, Heidelberg.

Trevena, H., Neal, B., Dunford, E., Haskelberg, H. and Wu, J.H., 2015. A comparison of the sodium content of supermarket private-label and branded foods in Australia. Nutrients, 7(8), pp.7027-7041.

Wu, J.H., Neal, B., Trevena, H., Crino, M., Stuart-Smith, W., Faulkner-Hogg, K., Louie, J.C.Y. and Dunford, E., 2015. Are gluten-free foods healthier than non-gluten-free foods? An evaluation of supermarket products in Australia. British Journal of Nutrition, 114(3), pp.448-454.

Yuan, Y., Zhang, Y., Di, L., Wu, G.G. and Yang, Z.X., 2015, August. Research on large supermarket fresh food supplier evaluation and selection based on SWOT-Entropy Weight Fuzzy Comprehensive model. In Advanced Mechatronic Systems (ICAMechS), 2015 International Conference on (pp. 15-19). IEEE.