Marketing strategy is nothing but the formulation of plans and procedures, which an organization needs to follow, for achieving the goal of increasing the sales, which would lead to an increase in revenue and thereby develop a competitive advantage. The strategy requires to consider short, medium and long term goals activities related to the field of marketing, analyze the intial strategic position of a company, then formulate, evaluate and select the appropriate strategy, which would contribute to the goals of the company and fulfill the marketing objectives (Armstrong et al. 2014).
Aldi, the organization considered for the report is a common brand for two leading global supermarket chains. The company was founded by two brothers, Karl and Theo Albrecht in 1946, when they had taken over their mother’s store in Essen, which had been operating since the year 1913 (Brandes and Brandes 2012). The business got split into two separate groups in the year 1960, which later became Aldi Nord and Aldi Sud. Through this report, different marketing strategies which have been adopted since their inception would be discussed, with special focus on Aldi Australia and also discuss about the options which the organization, Aldi can adopt to achieve success over a long period of 10 years.
Thus the report would conclude that adopting the right marketing strategies is a must for any organization to excel and achieve the pre-defined goals and objectives. Aldi, being a global organization needs to take into account certain options which would definitely help them in tasting success and thereby maintain their position for a 10 year period.
Background to the Company
Aldi is a common brand for two globally leading supermarket chains, having over 10000 stores in 18 countries across the world with a combined turnover of 50 billion euros. The organization is based in Germany, with the chain being founded by two brothers named, Karl Albrecht and Theo Albrecht in 1946, after they had taken over their mother’s store in Essen, which had commenced operations from the year, 1913 (Fitzroy et al. 2012). The business got split into two groups, Aldi Sud and Aldi Nord, with headquarters in Mulheim and Essen respectively. Aldi Sud and Aldi Nord’s operations in Germany, have been separate, both legally and financially since 1966. There are 35 regional companies of Aldi Nord, with around 2500 stores located across the Eastern, Western and Northern Germany. Aldi Sud has 32 regional companies, comprising of 1600 stores across Western and Southern Germany (Hurth et al. 2015).
On a worldwide scale, Aldi Nord has their operations in France, Denmark, Poland, Iberian Peninsula and the economic union in Western Europe, better known as the Benelux countries, whereas Aldi Sud operates in Australia, Ireland, Hungary, Great Britain, Austria, Switzerland and Slovenia. Aldi Nord and Aldi Sud both operate in United States, having around 1600 stores as of the current year. Aldi Nord owns Trader Joe’s chain and Aldi Sud carries out their operations in the name of Aldi (Jones, Comfort and Hillier 2012).
Aldi primarily started to expand globally in the year 1967, when the grocery chain, Hofer was acquired by Aldi Sud in Austria. The first store opened by Aldi Nord, was in Netherlands, in the year 1973, followed by other nations across the world. Aldi opened their United States chapter, by setting up the first store in Iowa, in the year 1976 and Trader Joes got acquired by Aldi Nord in 1979 (Kapferer 2012). Aldi began expanding rapidly after East and West Germany got unified to form one single nation. Post the retirements of the two brothers as CEOs in the year 1993, the company had come under the control of two private family foundations named Siepmann Foundation and Marcus Foundation. Where, Siepmann Foundation handled the operations of Aldi Sud, Markus Foundation took care of Aldi Nord (Kasai and Chauke 2017).
2. Marketing Analysis
Market analysis refers to assessing the market from both qualitative and quantitative point of views. This takes into consideration the size of a market both in terms of volume and in value, the segments in which the customers can be divided, their buying patterns, the competition involved and the economic environment related to entry barriers and related regulations.
i) Nature of Aldi’s Marketing Strategy or Strategies Since It Began
Aldi, the global supermarket has been operating in Australia since 2001, having over 400 stores providing employment to over 9000 employees. The company has been focused in providing customers with limited range of high quality grocery products, offered in substantially low prices, thereby giving the customers, smarter ways to get their shopping done. Keeping in line with the strategies formulated, Aldi has always looked to target the low income group of customers, who get attracted through the displays put up in their stores. The strategies followed by the company in Australia, were similar to the ones adopted by them in Germany, with slight modifications (Levsen 2015).
Aldi was officially rated by Grocery Choice as the best value supermarket and the cheapest for basic staple products in Australia. If the year 2008 is considered, Aldi was regarded as one of the top ten retailers in Australia. The company carried out their businesses in Australia through limited partnerships with the profit or loss figures not getting revealed. More than 1 million customers visited the stores of Aldi in a week in Australia, as of 2008, with the estimated sales figures of $2 billion. The company had literally carried out their operations without making any substantial profit for years. Aldi’s two of the biggest competitors have been Coles and Woolworths, who are primarily into the businesses of credit cards, hardware, hotels and petrol (Peck et al. 2013). Through their strategy of offering quality grocery products at low prices, they have won the hearts and minds of customers across Australia and in an attempt to compete with Coles and Woolworths and grab more market share, they have started to expand their reach to middle income group people.
Aldi has always given a sense of familiarity to their customers, as and when they have entered the stores. They have ensured to make their brands very easily recognizable. Another exceptional strategy which the organization follows, is to provide the customers with minimum choices. Each item has one or two types, thus enabling people to spend less time in selecting their preferred product, thereby getting rid of the price variables. The company ensures that their floor sizes are kept small, compared to their competitors, which invariably makes shopping a simple affair for the customers, without their precious times getting wasted (Peck et al. 2015). The simpler shopping experience with customers getting exactly what they want, without getting distracted by other brands have been ideal strategies executed by Aldi for the people of Australia. As far as the pricing is concerned, Aldi’s products have been found to be on an average, 19% cheaper than the branded items offered by Coles and 28% cheaper than the items offered by Woolworths. This is where Aldi scores more than other supermarkets.
What has set Aldi apart from other stores, is their ability to position themselves better on the minds of the customers. They carry out their job of doing business in a different manner compared to the competitors. Their own brand labels with limited product range help create a sense of uniqueness. Differentiation, focus strategy and cost leadership combine to form their strategy for positioning. They have done away with the concept of self-service checkouts, which still exist in Coles and Woolworths.
ii) Strategic Marketing Options For Aldi Moving Forward
For any organization to remain successful over a substantial period of time, commitment and quality plays a huge role. Getting established and earning accolades from customers on a global level is one thing, maintaining the stature through providing quality products within affordable price range over a 10 year period is a different thing altogether. Business environment is changing rapidly and this calls for changes in the marketing strategies, which managements of every organization needs to make, in order to have an edge over their competitors for maintaining their image in a highly competitive work environment. The same applies to Aldi, which has already started expanding their operations since February 2016, by opening more stores in South Australia.
Aldi has set themselves apart from Woolworths and Coles by being advantageous to customers in terms of pricing and sticking to their policy of providing quality grocery products for affordable or low prices. Their usage of private labels, make up 20% of supermarket brands. The expectation is, that the private labels are supposed to grow to 35% of all grocery and food sales in Australia by 2020-21. The change could be seen in customers’ attitudes where they are increasingly getting inclined towards favoring groceries labeled by private companies, compared to bigger brands. The appeal which Aldi stores generate, has helped to create fans out of their regular customers (Dwivedi et al. 2012)..
Aldi’s ability to position themselves differently on the minds of the customers, compared to their competitors Woolworths and Coles, would help to keep them in good stead for carrying out their operations across the world profitably. Business is run by the values and the ethos developed over time by constantly providing quality products in affordable prices, thus earning the trust of the customers. These practices help customers in developing belief and understand the organization’s style of doing business. If they want to carry out their business in same wavelength, as they have been doing since their inception, for the next decade, then Aldi has to stick to their unique strategy of providing quality products in affordable prices and continue to win the hearts and customers. Happy customers, in terms of the ease with which they do their shopping and the low prices they get charged for quality products, go a long way in deepening their relationship with the organization and thereby lead to growth and expansion (Perrone and Wodonga 2015).
Aldi can have a sustainable edge over the customers over years to come, if they can expand their business to locations, untouched by their competitors. Their low pricing strategy, combined with quality products would help them immensely to achieve success by earning more profit. Over the years, the company has excelled by positioning themselves to low profile customers, gradually moving into the middle income group segment. Continuing with the same strategy would work wonders for the organization. A proper market survey of the new places, where they would like to explore, will go a long way in understanding customers’ psyches and thus targeting would become a lot easier.
Through this report, the marketing strategies adopted by Aldi and the strategic marketing options which they can adopt to remain successful for the next ten years have been discussed in detail. Right marketing strategy is a must for any company to excel and create a sustainable advantage over their competitors and be successful. The unique strategy of providing quality products in affordable prices has helped establish trust and authenticity among the segment of customers, who primarily belong to low income group. In an attempt to compete on similar ground with two of their competitors, Coles and Woolworths, Aldi had even targeted the middle income group people. Their ability to provide customers with the ease of shopping through small outlets and providing only one or two varieties of products help save precious time and energy for the customers. This helps the customers to get attracted towards Aldi’s stores, thus leading to higher sales and revenue. They have certainly created a position for themselves in the grocery products segment. This report has also drawn the conclusion on the different options which Aldi can adopt to be successful over a period of 10 years. They can certainly keep on following the strategy of providing quality products in affordable prices to attract the customers’ attention and could also look to expand their reach by opening stores in locations, not yet covered.
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