Marketing is the management procedure via which the goods and the services proceed from the concept to the consumer. Mainly marketing involves the coordination of the four elements, which together is known as the 4P’s of marketing, and they are product, price, place and the promotional strategy. However, marketing is built on thinking about the trading in relation to the customer’s needs and their satisfaction. Organizations teach consumers why they must select their products and services over the other competitive brands (Jobber and Ellis-Chadwick 2012). The other important factor in accounting is its marketing strategy that is the overall business plan that is required to reach the people and turn them into its customers. However, the marketing strategy of any organization carries the organization’s value proposition, the messages of key marketing, information regarding the target customer and the high-level elements of that organization. Marketing strategy thus, helps the organization in developing their products, helps in right pricing of their products, effective distribution, and support the organization with marketing communication (Baker 2014). The chosen organization is Aldi and based on the company this report has been prepared to discuss about the background of the company, its marketing strategies since it came into existence and the marketing options they will need to sustain and move forward in the upcoming years.
Background to the Company
Aldi Group is the dominant chain of grocery store in Germany and is among the top competitors in the international market of food industry. It was founded in 1913 by the two brothers Theo and Karl Albrecht and was a private group then (Bain 2015). However, it became successful as the Europe’s largest retailer as it went against practically every possible quality of super marketing from the traditional reticence to its Spartan ambience of the stores. This company runs an approximate 3,000 stores under the mane of Aldi, Hofer and the Combi in Germany, Netherlands, Belgium, Denmark, and Australia, the United States, France and United Kingdom back 1990. From the day of its establishment, Aldi operates in the names of ‘limited-assortment’ stores and ‘hard discounters’ in the grocery business. The concept that has taken up by Aldi features of low overhead and its restricted selection to the leanest and the meanest extremity (Brandes and Brandes 2012).
Aldi holds the choices at its stores at about 500 items, which is a different approach from the rest of the supermarket chains who are repeatedly increasing their product offerings and their selling space. The majority of these items of Aldi are packed grocery or dry products. However, around 95 percentages of Aldi’s products either are bartered in private or in packed labels and few of the products are produced explicitly for the chain (Wagner 2014). Aldi however acts in close association with their producers to design their commodities that are much economical to transport them, stock or sell, than any other branded products. Further, it has been seen that Aldi limits its customer’s choices and by this, they saves a lot of money. The stores of Aldi are small in comparison to its competitors who have much larger stores. Aldi does not sell fresh meat that actually helps in saving the company’s money because it helps in avoiding the cost of refrigerator and the high wages that are requested by the meat cutter unions (Cannuscio et al. 2014).
The Nature of Aldi’s Marketing Strategy
The sector of Australian grocery is both hugely concentrated as well as competitive which provides an important challenge to any newcomer. In spite of the attractiveness, which the Australian market has for its international players, no foreign owned retailers have accepted a successful Greenfield activity in Australia until which was achieved by Aldi. However, the most heavily condensed market in the world is the Australian grocery and the two of its leading players are Woolworths and Coles Myers that has been taken over 76% of the market. In 2001 joined the global grocery retailer called Aldi in this concentrated and competitive market environment in Australia. However, this was an interesting step to enter the Australian market which was difficult and complex with none of the foreign-retailer who are previously been trying to begin its presence from scratch in the Australian market. Moreover, by 2004 it was found that Aldi has 83 stores over four states and already had secured 4 percent of New South Wales grocery market. Aldi became a business of billion dollar with its paid up capital of $1.25 billion and an income which was between $500 million and $1 billion along with 200 stores which were anticipated all over Australia by the end of 2006 (Hughes et al. 2013).
The strategy that Aldi follows from the very beginning of its establishment mainly focuses on imparting products of high quality at cheaper prices (Kew and Stredwick 2017). Thus, they mainly follow the low price strategy, which consists of exclusive brand products, restricted range, focus and the policy of price challenge. The strategies are thus, discusses in details in the following points-
Exclusive brand products- the main emphasis of the Aldi groups marketing strategy is on their exclusive brand products. They build partnerships with the leading manufacturers so that they can produce their own branded goods. However, they have very few branded products like Vegemite to offer their customers and they are in their target list for replacement whenever they can source a low cost and high quality alternative (Terpstra, Foley and Sarathy 2012).
Restricted range- on its way to reduce the cost of its products Aldi’s capacity of doing it range to limited products. Aldi takes the lead from the market itself, they have specified that they are not in Australia to change what people want but they follow the marketing concerning that is successful that is the size or variation. Aldi however, search for suppliers who can help them with the products that require the attributes at much lower prices. However, according to their strategies they made those products available that are most popular like the availability of the products in their most popular sizes not in all the sizes. Therefore, the advantage that Aldi gets from this strategy is that like the other supermarkets, which stocks around 20,000 lines, Aldi only stocks 600 to 700 lines. It is therefore reducing costs by only stocking up one size of each product (Smith and Thomassen 2012).
Focus- the marketing strategy also includes Aldi’s stern focus on which it observes as their key job. Thus, they do not pursue the policies that other leading brands follows for enlarging their retails base by involving petrol, liquor, pharmaceuticals and online shopping facility. However, in one area Aldi deviates from the very stern policy of them selling only one essential product is that they have a habit of ‘surprise buys’ which actually makes the customers surprised when they sell batch of products in their stores, like television and computers for some fixed time. Aldi thus, prepared this kind of a scenario where they bring in a huge amount of goods that is matched with the cheap price and elevated quality policy.
Policy of price change- Aldi is the company who first came with this type of price changing policy so that they can pass minimum costs to their customers and the last to maximize prices when the costs maximizes. However, they pointed out this change to their customers by placing a note where this is mentioned on the cartons in every stores of Aldi.
However, Aldi has two important quality element added to their marketing strategy and they are-
- Value proposition- they never believe in compromising with their quality even though they sell their goods in cheaper prices. Thus, quality is maintained (Frow et al. 2014).
- Long-term approach- Aldi being an independent company with an increased ability to make their business settlements that can have a contrary impact on their short-term returns but can make a perception in their long-term goals (Dwivedi et al. 2012).
Strategic Marketing Options for Aldi moving forward
Aldi has been seen establishing its market in the international global markets but the dynamics of the markets changes very quickly. However, though Aldi has stride greatly to enter into the grocery market and taking over an outstanding market share but the ever-modifying market share can any time become an obstacle for them. However, Aldi cannot totally deny their competitors who are also working hard in enhancing their market share and utilizing the resources. However, it has organized itself to reach the competition with its competitors in Australia who are Woolworths and Coles Myers who market shares are quite high (Bailey 2017). Moreover, market share is always related to the product quality, which is its main determinant. Though qualities as well as other add on services also has a positive and high correlation when it comes to the business performance. However, based on its existing strategies it can be said that to hold on the market value and move forward with the growing competitors Aldi must focus on the enhancement of the quality of their products so that they can give more of a tough competition to the supreme supermarkets. There is also some risk attached to this kind of an approach because there are rapid modifications that takes over the business strategy that can guide to the loss of hold on the observing and managing their business (West, Ford and Ibrahim 2015).
Those businesses that do not follow a clear strategy will always face difficulties when targeting their customers. Aldi however, has a powerful scope in imparting value added services to their customers. Value added services could be provided by take up the facility of shopping online. Along with this, they can try home delivery services of the shopping items along with ‘click and collect’ services for their customers that can be easily executed in today’s emerging internet facility (Hiebeler, Kelly and Ketteman 2012). Other leading brands in the market have already taken up these policies and so Aldi must offer these services to their customers. However, presently many options are easily available to the customers due to growing competitors and so customers are getting both good quality and at cheaper prices. Thus, the main problem can be loyalty for grocery firms. To made the customers loyal to their product Aldi can uses different types of loyalty cards or take up point based reward systems so that they can ensure a stable market share. Moreover, Australia is a culturally diverse country and thus, to attract more customers their groceries they must add various range of products for Indian, Chinese, Caribbean customers. This will attract more customers, help in their market share and enhance the growth of the organization (Kumar and Reinartz 2012). Lastly, Aldi must keep a tract and upgrade their software system so that there is no price difference in the newspapers and the advertisements, which must be displayed in the customer’s receipt after shopping to make them, informed that how much they have saved from Aldi. Thus, if Aldi adds these to their existing strategy plan they will definitely flourish more and be able to satisfy their customers.
To conclude this report, it can be said that Aldi started its journey from 1913 with the founding brothers named Theo and Karl Albrecht. However, from being a small private group to a successful leading retailer at Europe, Aldi has achieved it through its marketing strategy, which includes the exclusive brand products, restricted range, focus and the policy of price challenge. Aldi marketing strategy mainly focuses on delivering their customers low priced products that are having high quality. Their main aim is low pricing but they do not believe in compromising with their product quality. However, their marketing strategy has made them spread their business globally in Germany, Netherlands, Belgium, Denmark, Australia, the United States, France and United Kingdom. Thus, there are two of its quality elements that are added in their market strategy which are value proposition and long-term approach. Moreover, with the growing competition and increasing options for the customers in the market it is important for Aldi to make some changes in their market strategy that can help them move forward with the time. Some of the options may be that they can attract customers by starting the facility of online shopping, reward points as well as increasing products keeping in mind the culturally diverse customers.
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