Aldi's Marketing Strategy: Analysis And Challenges

Your task in this case analysis is to answer two questions by critically analysing Aldi’s market situation. Please do not just describe events, although you should read Aldi’s history to understand the background to your analysis. You should use the principles and concepts that you have learned throughout the unit to answer the following three questions:

1. What marketing strategy or strategies has Aldi has adopted since it was created? For Australian-based students, you might like to focus your analysis on the Aldi Australia experience. For students studying with partner institutions in New Zealand1, Singapore and PNG, your analysis will likely take on a more international perspective. Answer this question by applying one or more of the theoretical approaches discussed in the course.
2. What marketing options can you describe for Aldi if it wishes to remain a successful organisation throughout the next decade? Answer this question based on the circumstances that exist in 2016 and your best forecasts of relevant future industry factors.

These are wide-ranging questions and you should undertake extensive independent research into Aldi and its industry. You should explore different aspects of these issues and incorporate them into your report. This is a practical assessment of a real company, but you need to show an understanding of theory and research in your evaluation and suggestions.

Marketing is a simple term that can be addressed through offering right products at right place. However, marketing mix is the basic model to develop a marketing plan for any business. Product, place, price and promotion are the four basic elements of marketing plan for any business (Huang and Sarigöllü 2014). In order to offer a successful product application of marketing tool is important. Such marketing mix tool enables a business to achieve sales target, consumer satisfaction and profitability. This study deals with the marketing strategy of Aldi that is a well known retailer of UK. However, marketing has used by Aldi to develop their marketing strategy, which enables them to gain customer attention. It is important for all business organizations to carry out a market research before developing any market plan. A proper market research allows the business organizations to understand the current market demand based on which they can develop their business strategy. Aldi possesses different sales philosophy that makes them unique from the other competitors. This organization establishes their stores at the high traffic areas in UK to increase the customer entry in their shop. This is a unique business strategy of such organization. Hence, in this study the marketing strategy and relative challenges will be addressed in context of Aldi.

Aldi is one of the largest retailers in the global retail industry. However, it is a grocery market that established in UK.  It is a Germany based company and started its business in 1946 as food store in Germany. In the year 1960 this organization has expanded around 300 stores in Eastern Germany. The business of Aldi is differentiated into two categories one is called Aldi Nord and another is called Aldi Sud. In the recent years Adi Sud has expanded its market share in United Kingdom. Customers of UK focus on the quality of the product that is bring a big opportunity for Aldi to expand their business in UK. Aldi is renowned for its low price of the product. they have adopted every day low price policy  and also provide discount over their product. In the year of 1990 this organization has established 500 stores in UK.  Fresh food and groceries are the main products of Aldi. HRIBO in Germnay, Pickle in Great Britain and Knoppers in Belgium are the examples of branded products of Aldi. Aldi provides weekly special offer to the customers to enhance their sales and customer loyalty. Apart from the groceries they offer electronic products in a reasonable rate. Aldi uses different logos for their new brand that is vital part of their marketing strategy (Aldi.com.au 2017).

Aldi was established in 1943 in Germany as a start up organization Aldi focused on the customer retention strategy. For this reason they offered high quality product with low price. However, market entry strategy is also developed by them as a new organization. In order get entry in an existing market a startup organization has to face many challenges. One of the biggest challenges is to motivate the customers towards the product and to increase the belief of the customers (Aldi.com.au 2017). For this reason Aldi has carried out a market analysis to identify the issues that they might face. This organization has adopted go to market strategy to identify the potential customers and to gain competitive advantages in the new market. Go-to market strategy enabled Aldi to get a blueprint about how to deliver a product to the customers by considering the factors such as pricing and distribution.

Marketing Analysis

Aldi is a retail organization thus as a startup company it required to gather huge knowledge about the retail business. Hence, for this reason they have carried out a proper market research to reach the target customers. Therefore, they have used different channels to fulfill the different ranges of product demands in order to reach their target audience. On the other hand, a continuous research has been undertaken by Aldi to understand the psychology of their target customers. However, by observing the consumer behavior they come up with the development of new sales and extensive retail strategy. This ensured such organization that their products have penetrated in the target market (Srdjevic et al. 2012).

 Aldi follows marketing mix model that is the current marketing strategy of Aldi. Product, price, place and promotion are the four elements of the marketing mix. Aldi prefers indispensible investment rather that the superfluous investment in order allow their customers to get maximum saving form their purchasing. On the other hand, Aldi focuses on the limited opening hours in their UK stores. Aldi provides quality products and they follow product differentiation. Next the pricing strategy of Aldi includes low price since its beginnings. Such low pricing strategy of Aldi enables them to increase the customer’s number and to gain competitive advantages in the global market. Cost leadership strategy is applied by Aldi to increase their sales. According to this strategy Aldi offer more local products rather than branded products that are affordable to the customers belong from all classes.

Aldi has established their stores at high traffic areas, which enables them to deliver product easily to the target market. Therefore, promotional strategy of Aldi includes online promotion in the recent years. Their main motto of business promotion is to ensure the consumers that can save money from purchasing Aldi’s product. “Only cheaper” is a slogan that is used by Aldi during their product promotion. In order to get sustain competitive advantages Aldi provides excellent customer service to satisfy their customers. Therefore, they give their concentration to meet the demand of existing customers rather than the new customers as according to them it is easy to retain the existing customers rather than the new customers (Srdjevic et al. 2012).

The key challenge for the Organization is to offer the same level of convenience for its customers both who are online and offline. The offering of the click and collect option will be costly for the traders and this poses a challenge for the Organization. Aldi is feeling the pressure due to the increase in the price competition (Huang and Sarigöllü 2014).

Aldi has record sales with a yearly growth of 12%. The organization has attracted new customers into their stores in the current year and has a sale of £66M in the sales of every month. The Company announced its plan to invest £300M into the stores in U.K. in the coming three years (Aldi.com.au 2017). This investment will enable the Company to establish around 70 new stores by the end of the coming year (Armstrong et al. 2015).

Part 1

The food and the groceries is the largest item of a household budget and the low price of the groceries is a noteworthy supplier for the reduction of the living of the households. The customers flock at Aldi for the value and fresh food appeal. The discounters are popular among the young people and the large family units (Aldi.com.au 2017). There is much more of the positive tone for the company Aldi then its competitors Coles and Woolworths. (Aldi.com.au 2017).

Aldi is a common brand of the foremost worldwide discount supermarket chains and has more than ten thousand stores in around eighteen countries. The business organization is based in Germany and was established by Karl and Theo Albrecht in the year 1946. The Aldi Sud operates in many countries and Australia is one of them (Huang and Sarigöllü 2014).

Strengths	· There is the claim that the Business Organization serves products of top quality. It offers its products and services at very affordable prices. · The business organization The operating costs are low of the organization (Görener et al. 2012)
Weaknesses	· The company is relatively small-sized compared to the other brands that are available. · At times, the company has been alleged to be a store that provides for cheap and low quality items.
Opportunities	· There is the requirement to invest in the field of advertising so as to beat the competition with its rivals. · There is an opportunity to expand in the growing economies as Africa, Asia and so on.
Threats	· The company is able to cater to provide for the complete shopping experience to the consumers. · The other traders and the retailers have a huge variety and amount of the stock-keeping units.

The concern of Aldi is the stability of the rules and regulations as the governments are changes after every three years. The ARA that is the Australian Retailers Association encourages, promotes and protects the retailers by providing them with support, instruction and guide (Srdjevic et al. 2012).

The low national rate of saving and the low rate of saving of the respective households is the economic factor. There is the decline in the gross domestic factor and also the high level of the household debt. These have a unconstructive impact on the spending pattern of the consumer (Srdjevic et al. 2012).

The population of Australia is growing and it is a multicultural society. After the second Great War, there has been heavy migration from various regions and countries to Australia. There is increase in the number of the people who live alone in the country (Srdjevic et al. 2012).

Most of the processes are online which are very convenient in nature (Srdjevic et al. 2012). The internet and the e-commerce have improved the international competition nature in the businesses of Australia.

Pollution is a serious problem along with the land being dry in nature. Australia is the most urbanized and coast dwelling populations in the world.

Threat of new entrants- the industry belongs to the grocery industry and the increase in the population increases demand in the future (E. Dobbs 2014).

Bargaining power of buyers - the grocery products have low and medium involvement hence, the bargaining power of the buyers will be high.

Bargaining power of the Supplier- to be competitive in this industry the supplier has to decrease the cost and increase the quality of the products.

Threat of substitutes- the large-scale supermarkets and the shopping malls are a threat for the retail stores as the range of the substitutes will be more in the malls. Then the fast food outlets also act as the substitutes for the groceries.

Competitors- there are many companies in the grocery industry and they contend well in the market to provide the finest quality at a low cost. The grocery products are easy to imitate and undifferentiated in nature (Aldi.com.au 2017).

Survival- The basic needs for survival for the employees of the organization are necessary. The personnel should be paid well in order to survive and keep their job.

Challenges

Safety- This refers to the economic and the psychological safety along with the physical safety of the employees.

Social- the organization’s simplified process helps them to work with ease and efficiency allowing their suppliers to invest back into their businesses.

Importance- They provide opportunities to the Australian farmers and reduce the stress of the competition.

Self actualization- the organization provides security to the Australian producers and consistent orders with time, which helps their flow of income. The planned expansion increases the volume providing opportunities to the new suppliers (Noltemeyer et al. 2012)

Stars- ready to cook Gammon joint with honey, Pesto Rosso, Vine Ripened Tomato and Lentil Seasonal Soup, Moser Roth Orange & Almond Chocolate and Fiesta Fajita Dinner Kit.

Question marks - flushable wipes as a ‘special buy’

Cash cows- Lacura, Mamia, Expressi and Choceur are the top selling things of Aldi.

Dogs- Aldi Ginger Beer, which was discontinued (Palia et al. 2014).

The company has a determined expansion agenda. Thus, there is a prospect for the future through the seeking of new property, logistics and opportunities for the employees. The Company is also making major investments in the new stores. They plan to influence the grocery prices and improve the perception and the quality of the private labeled goods with their exclusive brand philosophy (Aldi.com.au 2017). They also plan to introduce market leading inventiveness in Australia.

Aldi offers limited and unbranded product line to their customers. The customers can choose from two different products in a single product category (Slovic 2013). The offering of the click and collect option will be costly for the traders and this poses a challenge for the Organization. The company may not be able to compete on the price alone if they want to gain the profit online.

The competitors in the industry of grocery also follow the same strategies for providing high quality products at a reasonable price. Aldi has the arrangement of a cost leader and continues with its quest to sustain its position (Coles.com.au 2017). The competitors Coles and Woolworths have their nationwide distributing practices and have initiated the retailing on the internet as well. Aldi is a late arriver in the business of Supermarket in Australia. Hence, it poses a disadvantage as Coles and Woolworths has been already there in the market (Woolworths.com.au 2017).

Conclusion

 The entire piece of work reveals the marketing strategy of Aldi basd on their current business planning. However, Aldi is a popular retailer in global market and it offers high quality product with low price. Product differentiation is another marketing strategy of Aldi. Marketing mix is followed by Aldi to enhance their market share and to gain competitive advantages in the international market. However, at previous Aldi has carried out an extensive market research to understand the needs of the customers. Providing customer value was the main motto of Aldi at the beginning off their business. In the recent years Aldi has started online marketing to increase their sales revenue generation. Excellent customer service is another vital area of their marketing strategy.

The following report is a discussion on the marketing strategies and principles of the Organization Aldi. The report elaborates on the challenges that the organization is facing and where the business is based in. The report highlights the political, economic, social, legal, technological and the environmental factors that affect the productivity of the Company. The strengths, weaknesses, opportunities and threats faced by the company have been discussed along with the BCG matrix and the Maslow theory. The future trends and the technological innovations have been elaborated in the report. The report concludes with the position of Aldi in comparison with its competitors that is Coles based in Australia.  

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