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Describe the Marketing Planning and Market Segmentation of Aldi for Australian market.

Internal Analysis

The process of planning is considered, as the first step of management. It is a process of reasoning, thinking, rationalizing and incorporating theories and models. This is the foundation of a project, plan or an entire organization. The process of marketing planning is important for every organization to the formulate objectives and goals of the organization that has to be achieved in the specified time. According to Kotler, planning is a process of making a decision about the actions that have to be taken in the future (Kotler, 2017). It is a process in which an organization reconciles the company’s resources along with the organization’s opportunities and objectives. The marketing planning can also be looked at as a blueprint or a roadmap of an organization, which defines and stages different marketing activities that have to be performed in the decided time period. In this report, the marketing planning of the organization Aldi, which is a short form of Albrecht Discount, will be examined. The organization Aldi stepped into the competitive and concentrated market of Australia in 2001. This international organization that spreads more than twenty countries all over the world and was first established in Germany, made an adventurous move by stepping into the Australian market. When the organization stepped into Australia it was considered as a very risky move as none of the other foreign organizations were able to build their mark in the complex Australian market. But, Aldi survived and prevailed in entire Australia with 83 stores by the year 2004. It is an organization that conducts million dollar business in Australia and by the end of the year 2010, the organization has 210 stores in entire Australia, with the organization objective of opening around 20-30 stores in Australia every year. The organization has a market share of 12.6% by the year 2016, with more than 473 stores, with the organization expanding more into the regions of Western Australia and South Australia. The organization Aldi has new strategies that include redesigned shelves, clearer signage and also wooden produce bags. The organization also has an efficient energy lighting system with extended chillers in their outlets. All these attributes will help the organization in attracting more customers as they are creating a more comfortable, accessible and pleasant shopping environment for the customers. With these additions in the organization, the company would not hike the prices of their products. All these changes have helped the organization to carve a niche for themselves in the Australia market where brands like Coles and Woolworths already have a huge dominance for decades before the organization Aldi stepped into the Australian market. In this assignment, the marketing planning of the organization Aldi will be analyzed, to understand the important tactics that helped the organization in building such a huge popularity in Australia. This has been conducted through examining the internal and external analysis of the organization and further conducting a macro-environmental analysis and a SWOT analysis. The report has been concluded with the market segmentation strategies of the organization.

Aldi Vision

The vision of the organization Aldi is that the customers, no matter wherever they live should have the right and the opportunity to purchase high quality grocery products of daily life at the lowest possible price. The organization’s vision is very simple and this simplicity has affected the market of Australia resulting in a shift of customers from the competitors brand to Aldi (Beaton-Wells & Paul-Taylor, 2017).

The organization has followed their three core values in formulating their mission too. The mission of the organization Aldi is similar to their vision that is to provide high quality products to the customers at very low prices.

The organization Aldi has developed in the Australian market as the organization provides its customers with a different and unique shopping experience. This has given the organization the strengths and capabilities to take the market share from their competitors. The organization provides its customers with a wide range of products (Cameron, Sayers, Sacks & Thornton, 2015). The organization utilizes the private labels and the local produce of Australia. The consumers in Australia have shifted their focus to private labels as they have acknowledged the importance of these products. The organization also gives huge importance to the eco-friendly products to entice the customers and utilize the emerging trends of the sustainable environment and the new health conscious world. The supermarket Aldi offers the customers the following products and services-

The organization Aldi provides the customers of Australia with fresh products. This is adapted by the organization due to the evolution that has taken place in the Australian market. The Aussies give huge importance to the fresh food and there is an increasing interest of the customers on the quality of the food, especially the fresh ingredients and also on the seasonality of the food. The organization went through a complete transformation and this was also to create space for the new products that include fresh food, high quality meat, the popular seafood of Australia and the dairy products (Cameron, Sayers & Thornton, 2014). The organization also have given a massive importance to the healthy food products that are becoming more prominent in today’s fit world. The organization has formed flexible contracts with local Australian producers, for the benefit of the customers and the organization. The “Project Fresh” strategy has been very successful in increasing the number of customers for the organization, many native customers consider the brand inferior to its competitors (Chepulis, Mearns & Skinner, 2017).

Aldi Mission

The organization Aldi, have maintained a level of innovation not only in their products, but also in the display of the products. The organization has redesigned their stores and which is perfectly visible in their new stores. The earlier stores are also being transformed according to the new design plan of the organization (Ellickson & Misra, 2008). The organization’s new design includes wooden platforms to display products, better lighting facilities that make the presence of every product more prominent and attractive. They have also expanded into the Australian market by generating new stores through their retail chain in Australia. The organization has also extended chillers now for the product’s lifespan and quality. The one problem which most of the customers face while shopping in the supermarket of Aldi is the crowded check out the points. Though the new design has spent millions of dollars to control this problem, there are still a large number of complaints that are being registered in this aspect (Freebairn, 2018).

The organization Aldi, knows and understand the dominance that the organization Coles and Woolworths has in the market. The organization has to implicate unique practices and before their competitors. Australian is a place where a huge importance is given to the culture, society and the environment (Johnston, Stafford, Pierce & Daube, 2016). The organization has utilized all these traits in their strategies and have followed the Triple Bottom line principle for the marketing practices of the organization. The organization has worked forward towards building a socially responsible environment and an ecological friendly environment through its three core values that are consistency, responsibility, and simplicity (Makhitha, 2014). The organizational structure of Aldi also gives a huge importance to the communities, the environment and the sustainable development goals that are built for gaining benefits for the organization by creating a brand image that is responsible (Min, 2010).

The company’s strategy of fresh food has helped the organization to gain more profits. The organization in the year 2017, has pushed the sales to the mark of $8 billion. The organization has gained this huge success due to their “Project Fresh” strategy. The organization has also reduced their prices of 630 products, but still, they have received massive growth (Miranda & Kónya, 2008). The organization is looking forward to opening 100 more stores in Australia and for this reason, they have expanded to Western Australia and South Australia. Though this has worked in the favor of the organization as the “Project Fresh” strategy is very effective, but the organization is incurring a lot of investment in the new design and the marketing strategies. And the way they have reduced the prices of the products, this is not a good approach for the long run.

Aldi Products Overview

All these factors state that the strategies of the organization, who deals with a wide range of products are restricted by a number of factors that are not appropriate for the longer run (Price, 2016). The organization has the mission of providing high quality products at the lowest possible prices. The strategy of delivering high quality products at lower prices, has led the organization to reduce all the overhead costs of the product which will cut the profit margin of the organization by a huge volume. This cost leadership strategy for operating the organization in the competitive market is reducing the profits of the organization (Pritchard, 2009). The organization another strategy that is implicated is the competition strategy, which is the main driving force as the organization will not survive under the huge dominance that the organization Coles and Woolworths has in the market. The competition strategy has helped the organization to explore different areas which are now the strengths of the organization (Richards, Lawrence, Loong & Burch, 2012).

According to Roy Morgan researchers, the total share of supermarkets in Australia is $90 billion in which the contribution of Aldi is going to grow in the coming years. The contribution of Aldi in this $90 billion is around $11.9 billion, which has increased from 12.5 percent to 13.2 percent (Morgan, 2017). The market size of Aldi is increasing in Australia with each passing year (Sungku Kwon, 2012). The current market of Aldi in Australia is approximately 5.1 million and it is expected to increase due to the organization attribute of catalogue reach which is checked, by the maximum of the Australians. The organization is successfully creating a dominance on its competitors by the increase in the market size of the organization (Whyatt & Koschek, 2010). The main market share of the organization has also increased due to their “Project Fresh” strategy. This is a growing trend that helps the organization to attract customers and shift the customers from their competitors. But the Australian supermarket lacks customer loyalty, the customers can be easily shifted from one brand to another. This can be beneficial for the organization in the small run, but customer loyalty is one aspect that is considered as a paramount goal of each organization. The loyal customers are the true brand ambassador of the organization who attracts more customers towards an organization through mouth publicity. The other growth trend that has helped the organization in gaining more customers is the new designs that have been adapted by the organization to provide more customer experience by adding more convenience to their shopping.

Fresh Food

The organization Aldi stepped into the Australian market when organizations like Woolworths and Coles, already have a huge dominance and a large market share in the supermarket industry. The Aldi organization has carved its niche from a foreign organization to a prominent share in the market (Akkilic, Ozbek & Aldemir, 2017). The marketing activities of Aldi are equivalent to the Coles and the Woolworths, this has also made the competitors of Aldi, to consider the organization seriously, as it was successfully transforming the customers of another organization into loyal customers of Aldi. The current market share of the Coles and Woolworths is about 33.2% and 35.7% respectively. This is around 70% of the total market share

The organization Coles, have been existing in Australia since 1960, with its first stored opened in Melbourne. The organization has the second largest market share in the Australian supermarkets. The organization has a workforce of more than 100,000 employees and more than 807 outlets (Awan, 2014). In the year 2010, the Coles organization introduced a new slogan for the organization which was, “Down, Down, Prices are down”. The organization thought of attacking the discount supermarkets like Aldi, with this strategy. Coles have also gained a lot of prominence in Australia as the organization is associated with many events and is the official sponsors of many high end television shows like Masterchef Australia, My Kitchen Rules and many others (Brochado & Martins, 2008).

The organization which sits on the top mark in the supermarket industry is the organization Woolworths. The organization has stores in Australia that have been established in around 995 locations. The organization has huge credibility standards and thus their customers are very loyal. But the organization Aldi has challenged their leadership in the present market due to the rapid growth percentage of the organization. The organization Woolworths have also created their own brand that includes, “Select” and “Home Brand”. The customers get high customer experience at Woollies that forces them to revisit their stores again. This is due to the multiple strategy approaches of the organization (Cristóbal, Marimon, Daries & Montagut, 2011).

The organizations Coles and Woolworths have an approach to dealing with the growing competition and for handling their market, with the multiple strategies approaches. The organization Woolworths execute strategies like reward cards, that has helped the organization in attracting more customers (Dash, 2013). The Coles strategy of Flyboys has also been very beneficial for the organization in expanding their market size. But the organization Aldi has only a single approach to handle the customers that is through their low price strategy. The Woolworths slogan of the fresh food campaign helped the organization in gaining more customers and so with Coles, who attracted the customers with a tagline that stated that there is no freshness like Coles Freshness. But the organization has the best innovative tagline which stated that “Fresh Everyday”, where the products have been compared with the fresh and the new news that is printed in the newspaper. This helped the organization majorly as the customers were able to relate to the organization more easily than the competitor’s slogans (Davidson, 2009).

New Store Design

The macro environmental analysis has been conducted through the PESTEL analysis for the organization Aldi in Australia. The PESTEL analysis highlights the six key components that may influence the business processes of the organization. The PESTEL analysis includes factors like political, social, economic, technological, legal and environmental. (Finisterra do Paço & Raposo, 2010) All these factors have the tendency to affect the present or the future of an organization. In the case of Aldi the PESTEL analysis states-

There are a number of political and legal factors that may affect the marketing planning of the organization. They are-

  • Alteration in the tax policy of the government

There are two governing parties in Australia. With the changes in the ruling party of Australia, there will be definite changes that will be implicated in the country’ taxation policies. The organization is always facing this threat of uncertainty that may affect the organization Aldi immensely (Ge & Tassou, 2011).

  • Food Standards stated by FSANZ

The Food Standards Australia and New Zealand establish many guidelines for the grocery industry. All these form barriers for the organizations like Aldi, as it restrains the company’s process and states close supervision of the organization.

  • The employment policy of Australia

The organization always faces a threat from the employment policy of Australia as any alteration in this aspect, affects the overall functioning of the organization (Howell, 2011).

  • Government Policies for local produce

Australia is a place that gives a lot of importance to their local and private produce. The government intervention in the protectionism measures that includes the traffic to conserve the Australian produce, this will have an impact on the organization Aldi as the new guidelines included will affect the relationship between the organization and the suppliers (Juska & Woolfson, 2015).

  • The increasing concern towards packaged food

In recent years, the packed foods have gained a lot of concerns from the government. The bigger the concerns, the legal requirements to utilize such products will be even higher. This will also affect the policies and the procedures in the future, due to the intervention of the government.

Economical

  • The economy of Australia has been ranked as the sixth fastest growing economy in the world that has also enticed investors from all over the world to invest in Australia. This is a good opportunity for the organization to add new investors in the organization and expand more in Australia(Mayhew & Rosewell, 2009).
  • Also, the Australian dollar has also become stronger in the past few months that will also have a positive impact on the organization.
  • The organization Aldi low pricing strategy will be impacted by the high fuel prices and will further affect the competitiveness in the market. All these factors will have an adverse effect on the organization Aldi.

Social

  • Though there is a trend for healthy products and fresh food products too, there is an increase in the demand for packaged products too in the past few years. The task of catering to these fluctuating demands of different communities affects the strategic management of the organization.
  • The strategy of Aldi to connect with more local producers have helped in fulfilling the demands of people who look for local, healthy, home-made products. This can also be seen as a very effective opportunity in the future(Nemoto & Zuo, 2017).
  • There is also a culture of low spending that makes the job of discount supermarkets even tougher as they have to reduce more additional costs of the products.

Technological

  • Almost every organization, whether small or big is connected with online shopping trends. The Aldi Australia is also available online that has helped the organization to increase their market share(Ray Chaudhuri, 2014).
  • The organization is though available on the internet, but it lacks behind in internet marketing when compared to the other organization. This has to be included in the marketing planning of Aldi.
  • Technology is not restricted only to the internet and the official website of the organization. The organization Aldi has to adapt certain new technological platforms that will help the organization, is becoming more prominent in the market.

Environmental

  • Australia is known to be one of the most eco-friendly nations that also have a diverse population composition. The increasing concerns in the world due to environmental problems also plays a very important role in the organizational planning process. It is important to adapt methods that are eco-friendly and supports sustainability.
  • The organization Aldi used paper bags and is against the use of plastic. This has presented the organization as a company who is concerned about the environment and the planet earth. But still, the contribution of the organization is less towards the environment in comparison to its competitors(Shi, Gu, Chhajed & Petruzzi, 2016).

Strengths-

  • Pricing

The organization main aim is to provide high quality products at the lowest prices. The organization has survived due to this approach. The daily use products of the customers are sold in the supermarkets of Aldi at lower prices in comparison to the mainstream retailers, which is the main success factor of this organization.

  • Strong Ecosystem

The organization Aldi has created a powerful ecosystem that has helped in altering the critical parameters that are associated with food retailing. The world and the market have evolved massively and has shifted from just pricing to the customer experience that is delivered through shopping convenience, availability at multiple locations and the availability of merchandise easily.

  • “Project Fresh” Strategy

The organization Aldi, has incorporated a unique strategy that has helped in shaping the organization from a different perspective in the customer’s eyes. This has helped in enhancing the brand image, from a foreign organization to a socially responsible and an environmental friendly organization.

  • A Wide Variety of Products

The organization Aldi, is offering a wide range of products. The organization is providing fresh foods, local produce, foreign products, health products, and many others too. This has given the organization an edge above its competitors as the organization has connected with the local community and has made it a part of their organization (Sonderegger, 2011). This has generated a lot of reliability for the organization in the market. The organization is more trustworthy and this has formulated and transformed the organization’s image in the market into a positive organization. Also, this has created a huge brand awareness for the organization.

The weaknesses are referred to the areas in which the organization requires improvement as the organization is lacking in those departments. The weaknesses of the organization Aldi are-

  • Low Profit Margins

The main objective of the organization, around which all the strategies are planned and executed is to provide the customers with products at the lowest price. This is a problem which most of the discount stores face is the low profit margin. Due to this reason the organization, Aldi is dependent on sales that should occur in high volumes. This problem further creates issues in the supply chain as the organization often behave badly with the suppliers for maintaining consistent margins.

  • Problems At the Checkout Counter

This is one issue that is reported by more than 50% of the customers who are regular to the Aldi supermarket. The organization has tried controlling this issue, but the improvement is taking at a very slow pace which is reducing the customers at Aldi. The organization has to retain its customers and for that, it is very crucial to rectifying this problem (Arioglu, 2015).

  • Poor Penetration in groups that belong to high-income

The supermarkets like Aldi are preferred by people who belong to the low income group or the medium income group. The probability of finding the high-income group people in such market places is very rare. The organization has to cater to the people of high-income group, especially when its competitors penetrate in those groups.

Opportunities-

  • Customers Preferences

There has been a continuous rise in the needs of the customers. This will keep rising continuously and this is the biggest opportunity that the organization has in expanding their market share in Australia. The changing needs of the customers have also changed the attitude of the customers. The customers today are willing to pay high costs for better services. Aldi being the discount supermarket can utilize this trend in their favor and can increase the prices of their products.

  • Aldi new positioning strategies

The organization Aldi initially catered only to the low income group and also the medium income group. The company has implicated a change in the organization and changing their pricing strategy to affordable prices for all. This will also help the organization, to attract the groups that belong to the high income group (Chen, Llena-Nozal & Förster, 2014).

Threats-

The organization Aldi also faces some threats that are the factors that can be the barriers to the growth of the organization. The threats which the organization face are-

  • Growing Competition

The organization Aldi has challenged the bigger organizations like Coles and Woolworths. But the market share of these organizations is so high that at times keeping up with these organizations has an adverse effect on the company low price policy.

  • The Government intervention

Be it the packaged food or the fresh food, the growing intervention by the government and the FSANZ in the grocery industry has affected the organization, Aldi as the continuous changes have affected the supply chain and the relationship between the organization and the local producers (Du & Yang, 2014).

After the various analysis process that has been conducted to recognize the strengths and the weaknesses of the organization, the organization Aldi will segment the market accordingly, that is in sync with the organizational attributes and objectives. The organization gets a rapid growth only through the process of the proper segmenting process as it is very important to know the audience that is being targeted by the organization. In the process of segmenting it is also important to know the customer in and out. Every customer has different needs and desires which may differ due to the demographic factor, geographical factor, psychographic factor, and behavioral factors (Letendre, 2009). The market segmentation of Aldi will also be conducted under the factors that have been mentioned above.

The organization Aldi has over 473 stores in entire Australia. The positioning of the major stores is in the suburban and the rural areas in Australia. This has been conducted by the organization to also reach the intricate areas of Australia. The organization main objective is to give each customer the opportunity to produce high quality products, also at the most intricate locations. This has been adapted by the organization as a part of the differentiation strategy, where the organization main aim is to provide a unique shopping experience to their customers. The organization has to expand in the other and new areas of Australia too, where Coles and Woolworths have a dominance in the market. This differentiation in geographical locations will be very beneficial for the organization as it will help in the expansion that will ultimately increase the market share of the organization in Australia. This geographical segmentation will also help the organization in covering the places where IGA and other supermarkets have more control. This will be beneficial for the organization as taking over the less power organization is much easier than the bigger one. The new strategies will also focus on catering to customers who live in cities and the high urban areas in Australia, it is due to the organization’s objective of targeting people who belong to the elite class (Nguyen & Stuetzle, 2012).

This is one of the most popular ways of segmenting the market and also the most effective one. This type of segmentation is also considered as the simplest form of segmentation. This type of segmentation is conducted on the basis of age, income, gender, occupation, family size, race, nationality, and religion. For the organization Aldi, who has the main aim of providing high quality products at the lowest possible price. So, the immediate target group on the basis of this demographic income factor, are the consumers belonging to low income groups and the medium income groups. The new trend of spending less that is gaining a lot of prominences will also cater to the people which low incomes. The new changes that have been identified in the analysis are also pushing the organization to also target, the consumers with high income. This is important for the organization as the competitor’s targets all the income groups and it is the main reason for their high share of the market. The organization Aldi is a German organization. There are German communities that exist in Australia. The organization can also use this demographic factor for attaining more customers (Rusek, 2018).

The Psychographic segmentation is conducted on the basis of the consumer’s lifestyle, their interests and activities, their opinions, and feelings. This type of segmentation takes into consideration the psychological behavior of the customer and the purchasing attitudes of the customers. The new consumer lifestyle has the latest trends like the customers are conscious towards the environment and also the growing trend of fitness. These two trends are the new lifestyle attitudes of the customers. The Aldi organization has to segment the market on the basis of these two aspects, by targeting customers who are fitness freak and others who want to conserve the environment and encourage sustainable activities that preserve the environment. The Aldi also have to showcase, their corporate social responsibility activities for targeting the customers. The segmentation conducted through the psychographic factor also involves the process of analyzing the purchasing power and the purchasing traits of different customers for different products. As the organization, Aldi deals with a wide range of products this is very crucial to know the customers’ behavior and the different aspects that will help in changing the opinion of the customer towards the organization. The change has to be a positive shift towards Aldi (Turkensteen, Sierksma & Wieringa, 2011).

The market segmentation that is conducted on the basis of behavioral aspects is very similar to psychographic segmentation. The behavioral segmentation analysis the customers as an individual and his various behaviors, attitudes, and reactions for the usage of the product and the decision making process to buy the product. The organization Aldi has to divide the market on the basis of the behavior of the customers. The organization can segment the market on the type of behavior the customer showcases towards the pricing and the quality of the product. The organization Aldi has the main objective of providing a high quality product at the lowest possible prices. Now, the organization can segment the market by dividing the customer who wants good products at cheaper prices. Also, the people who are looking for fresh foods, healthy food products, local produce of Australia, all these display different behaviors of the customer like health is a priority mindset, local produce of Australia is best and many others. This type of segmentation is very useful during the festival times, as the customers have a wide range of behavioral aspects that push them to make a purchase, the organization can maximize its customers by utilizing this technique during the times of festivals, especially during Christmas (Zolin, 2016).

Conclusion

The organization Aldi has shown a lot of potential in the supermarket industry of Australia. The organization has challenged and has shocked the strong pillars like the Coles and the Woolworths. The organization is witnessing a rapid growth due to the steadiness and the consistency of the organization. The main strengths of the organization that is the low pricing strategy have helped the organization in increasing the market share in Australia. The organization follows only one strategy for marketing planning and for the market segmentation. But with the increasing competition in the market, there is a need for including multiple strategy frameworks for the organization. As the multiple strategies will help in better market segmentation and will execute ideas that will be addressed to a specific group. A single strategy plan cannot work with all the identified segments. This is furthermore, important for Aldi as the organization is still trying to expand their market in Australia and when the competitors are already well established then this has to be implicated instantly. The strengths and opportunities identified during the analysis have to be used for the betterment and the growth of the organization. The threats and the weaknesses identified has to be transformed into strengths and opportunities and for that, it is very crucial for the organization to implement more strategies that help in tackling the root cause of problems in the organization Aldi.

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