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The Expanded Marketing Mix: Aldi Organization Add in library

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Question:

Evaluate how well the marketing mix of the organization is performed for Aldi organization?
 
 

Answer:

Introduction

The expanded marketing mix of Aldi will be studied in the present report. Aldi is an International discount supermarket chain based in Germany. The supermarket is known for offering high quality products to the customers with exceptional value. The supermarket offers range of grocery products with best quality. The grocery products are available at exceptionally low prices. In order to offer products at low prices, Aldi manufactures its own products. In order to reduce their cost of production further, Aldi encourages customers to carry their own shopping bags. It also offers shopping bags for sale.  In order to reduce the cost, the shopping carts are given at rent on quarter basis (deposit is returned with the cart). It eliminates the need for making payments to the employees for recovering the carts. Aldi sells its own brand label food, beverage items and household items that are inexpensive in nature.

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Product

The product offering of Aldi ranges from selling own brands which are cheaper than the labels that are highly priced. The cost and production process of the organization is controlled by Aldi. Non food items are also stocked by Aldi such as toiletries and sells musical instruments.

Advantages of quality, feature and style improvement of a product

The target market of Aldi is the middle class and the lower middle class. It offers products at low prices. The quality of the products offered by Aldi is average. It does not offer high quality product to the customers. The quality, feature and style of product are essential attributes of the product that sets it apart from the rest of the products. The essential attributes of the products add value to it. Continuous improvement of quality of a product is an essential part of the business management process. The style and improvement of quality of a product will reduce the defects and improve the quality of the product. The philosophy of continuous improvement of quality of quality of a product will make the business better equipped to adapt to the changes that occur in the industry. This will enable them to take advantages of the opportunities and avoid the threats (Ruddick, 2014). Improvement of quality focuses on improving the business process as a means to improve the efficiency of the organization. Aldi has been continuously improving its efficiency in terms of quality improvement of the products manufactured by it, style and feature improvement of the product. Aldi has been professional and it always inspects the products supplied to it to ensure that it meets the demand of the customers. The own branded labels of Aldi are sold at cheaper rates than the other supermarkets. This has helped Aldi to maintain its market share. Apart from selling the products at cheap rates, it is essential for Aldi to enhance the quality and features of the products offered by Aldi. This will enhance the competitive advantage of the organization (Hamel, 2015).

 

Addition of New Products

Aldi offers range of food products to the customers. The own branded labels offered by Aldi comprises of Choco rice , Rich tea biscuits , Lager – Stella Artois and other wide range of food products. Aldi has been imitating the top brands and manufacturing the same products with variety and different features. The choco rice sold by Aldi is imitation of the Kellog’s coco pops. There are certain modifications in the product quality. Similarly there is various range of product offering of Aldi which is an imitation of a popular brand (Adnews.com.au, 2015). It is a clever evolution by Aldi to target the affluent areas of the market. Aldi sells fewer products than most of the products sold by the supermarkets. Tesco has 40,000 products in line but Aldi stocks only 1350 products (TheGrocer.co.uk, 2013). It has been said by retail analyst of Kantar, Edward Garner that one might find 20 pasta sauces in Tesco but Aldi will only have two or three pasta sauces (SHOOTER, 2013). The food products sold by Aldi have been very successful. In can diversify its product range and add new sections. It can venture into the clothes section. It can start the clothes section. Wools worth is a large supermarket that is making its clothing business more appealing and fashionable to the customers. At present Aldi sells clothes, electronic products and furniture’s on special days like twice in a week. The special products are sold every Wednesday and Saturday (Grocery.com, 2015). But instead of selling the products on special days, Aldi should diversify its product offering and include the clothes section as a regular section in the supermarket (Aldi.com.au, 2015).

Price

Pricing the product in an accurate manner is the most difficult considerations for the marketing organizations. There are different strategies of pricing the product. The various strategies of pricing includes market penetration, competitive pricing and strategic pricing.

The strategy applied by Aldi to price its products is competitive pricing. By the pricing policy Aldi is able to offer the products at low prices (Harvard Business Review, 2006). The low prices are offered by Aldi as it manufactures most of the food products and buys products in huge volume (Icmrindia.org, 2015). It offers great leverage for negotiating the best possible prices for the products (mrmlogiq.com, 2013).

Pricing Objectives

The major pricing objective used by Aldi is competitive pricing. The strategy by Aldi has been successful as it has forced the suppliers to deliver products at lowest prices. Since the company makes bulk purchases, it is easier for the organization to purchase at cheaper rates without lowering its profit margin. Since it purchases the products at lower rates, selling the products at reduced rate is not a tough job for the organization. The pricing policy of Aldi is made to capture the larger share of the market. The competitive pricing policy by Aldi has made it one of the largest supermarkets in Australia. One in every three household in Australia visit Aldi to purchase the food products (Harrison, 2014).

Policies of pricing

The pricing policy of Aldi is simple and transparent.  The low prices are offered by Alsi by undertaking some unique policies. Unit pricing policy has been used by Aldi to price its products. Comparison of the prices of the products with other supermarkets can be done accurately using unit pricing policy (Aldi.com.au, 2015). It provides extra information to the customers. The unique pricing policy by Aldi has maintained the transparency of pricing the products. The customers will get the real value of shopping from Aldi. The refund policy used by Aldi is done understanding the need of the customers. The refund is done on an everyday basis if the customers are not satisfied with the products (Aldi.com.au, 2015).

Strategies of Pricing

The pricing strategy of Aldi is targeted to capture the larger share of the market. It uses the competitive policy of pricing to address a larger mass of customers. The various strategies of pricing are –

1. Market Penetration – The pricing strategy is used by organization by charging lower prices for the new products so that the new organization can enter into the market and have a greater share of the market. This helps the organization capture the market fast. The company can gain over the market share quickly.

2. Competitive pricing - The competitive pricing policy is used to drive the existing customers of a particular company towards it. The competitive pricing is done by offering lower prices for a range of products to the customers.

3. Strategic pricing - The strategic pricing policy emphasizes on enhancing the quality of brand positioning of the product in order to allow a higher price for the product. The organization focuses on enhancing the quality of the product rather than reducing the price of the product.

Amongst the three strategies, the strategy applied by Aldi to sell the products to the customers is competitive pricing (Collinson, 2014). It will offer products of high quality or similar quality as sold by the other supermarkets at cheaper rates. Aldi can offer the products at cheaper rates since it purchases the products in huge volumes. Since Aldi buys products in large volumes, it allows great leverage for negotiating with the suppliers for the products. It sells the products to the customers at the best possible prices (This is Money, 2014). Since it purchases the product in bulk volume it can negotiate with the suppliers regarding the price of the product. This is known as economies of scale which means that huge volumes of a product is purchased at low price. The savings made by Aldi is passed on to the customers of Aldi (Butler, 2014).

 

Procedures of pricing

Aldi offers products to the customers at low prices. Since it offers less expensive items to the customers, it has to reduce its cost of production. Instead of purchasing the products from outside, Aldi manufactures most of the food products.  The food products are manufactured by Aldi keeping in mind the demand for the product. It has imitated the top brand food products like Kellogs while manufacturing its own food products (Cambridge News, 2014). Among the top supermarkets in the world, the products sold by Aldi are 16% cheaper than the products sold by Asda. It is 20% cheaper than the products offered by Tesco and 40% cheaper than the products offered by Waitrose (Osborne, 2012). The customers have to carry their own shopping bags in Aldi.  It reduces the extra cost of the company. It offers milk at the lowest prices. It offers lowest prices to the dairy farmer for their milk. Thus if the customers want to support the dairy farmers then they should not buy the milk from Aldi (Food Strategy Associates, 2014).  The customers complain about the loyalty cards offered by the othersuper markets. They claim a reduction in the price of the product instead of the loyalty cards.  Aldi has gone down in the same path. They do not offer loyalty cards to the customers.Instead they have reduced the price of their product (Osborne, 2012).

Distribution

Distributing the products to reach out to a wide range of audience is essential for the growth of the business organization.  The strategy used by Aldi to capture a larger share of the market is by distributing the product to a wide range of customers. The target audiences of the company are the low and middle income earners. They opened their supermarket chains all over the world which includes Australia, UK , US etc.

Objectives of Distribution

Aldi has a well networked team of supplier who supply their products to all the supermarkets. The main distribution strategy used by Aldi is to maximize the reach out of their product to the customers. This will help them gain a larger share of the market.

Strategies of Distribution

Aldi has separate distribution centres in their operating countries. They have made huge investment in each of the distribution centre in order to manage their business in an efficient way (Cordón, Hald & Seifert, 2012). The distribution centers hire employees on a regular basis in order in order to distribute their products to the end users in an efficient manner. The logistic and supply chain operates at world class efficiency (Supplychainanalysis.igd.com, 2015). The suppliers keep the delivery roots short and they employ the best war housing techniques for supplying the products to the various stores (Kleemann, 2011). In order to distribute the product efficiently to the end users they employ candidates with market leading skills. They provide a clear delegation of responsibility to the employees (Theuvsen, 2007). The region in which Aldi operates is decentralized. Thus the operations can be controlled from a localized point. This ensures efficient management of the supply chain (Johnsen, Howard & Miemczyk, 2014). The supplier arrangements are made in the organization to minimize the consumption of energy and reduce the carbon emissions (ALDI Australia, 2012).

Promotional Strategies

In order to increase its profitability, Aldi has to increase the market share. The promotional activity will demonstrate the balance of the marketing mix. In order to enhance the awareness of the customers and to gain customer loyalty, it is important to increase the awareness of the product to enhance the recognition of the brand , increase the demand for the products , enhancement of the image of the brand and supplying superior products to the customers.

Objectives of Promotional strategies

The major objective of Aldi is to increase its market share. The promotional activity should ensure a balance of the marketing mix (Aldi.us, 2015). The promotional activity is planned to increase the loyalty of the customers and communicate the quality and value messages. The major objective of the promotional activities of Aldi is increasing the awareness and improvement of the brand recognition. Innovation and improvement has to take place in a parallel way in order to capture a larger share of the market. The other objectives of Aldi include increasing the demand for the products, improvement of the brand image and highlight the products that are of superior quality. The promotional activities of Aldi are above the line promotion and below the line promotion (Marketing Week, 2014).

Strategies of Promotional Strategies

The promotional strategies used by Aldi includes above the line promotional strategies and below the line promotional strategies.

Above the line promotion

Above the line promotional strategies are applied by Aldi via advertising targeting at mass audience. Advertising is done by Aldi using media such as television, radio, newspaper and magazines. This has helped them to reach to a larger audience. Television is used as an effective medium to communicate the view point of the company to the customers (Aldi.co.uk, 2015). The “Like Brands” are promoted by Aldi using television media showing that the products are available at cheaper rates. Leaflets are distributed in the stores to reinforce the brands sold by Aldi. Aldi also uses news paper as an effective source of medium to campaign the products (Ferrell, Pride, Schembri, Lukas & Niininen, 2015).

 

Below the line promotion

Below the line promotional activity is done by Aldi to increase their engagement with the customers. The methods are used to target to a specific audience. These methods are found to be more effective than above the line methods. The organization will have a greater control of their communication. The below the line promotional strategies is applied by Aldi using social media, targeted emails to the customers , endorsements and awards for third party and emphasizing on their public relations and media relationships. Two way communications is encouraged by Aldi by using Facebook and Twitter pages. The social media pages have been an effective source of communication with the customers. The direct emails have been very effective form of communication. Aldi can communicate variety of messages to the target customers (Ritson, 2015).

Public relations

 Another below the line method used by Aldi to highlight the quality of the products to the customers is via positive third party endorsements. It has entered over 1000 of its products into awards. In 2012, Watchdog had awarded it as the best supermarket. It beat the competition from Marks and Spencers. It has also made positive endorsements for the products on Television to reaffirm the message that the products of Aldi are of highest quality. They offer good quality product at cheaper rates (corporate.aldi.us, 2014).

Improvement of Promotional Budget

Optimizing the infrastructure of the organization can save the marketing budget of the organization to a considerable extent. This will ensure increase in the sales. The company can increase the operational efficiency and reduce their expenditure by increasing the expenses for promoting the product. The expenditure made in the various marketing resource like marketing materials, software of marketing can be reduced to increase the expenses in promoting the product. The budget for the various promotional activities can increase by 10% by reducing the other expenses. After increasing the promotional budget, the company has to evaluate the effectiveness of the increase in the budget. If the sales of the organization increases via the enhanced promotional activities then it can be assured that the promotional activities of the organization has been effective (Johnston, 2015).

Use of expanded marketing mix for improving the organizational performance

Apart from the 4P’s of marketing, the expanded marketing mix is essential for increasing the value of the product to the customers. Since the marketing strategies are far more customer oriented, it is essential to incorporate the additional 3 P’s of marketing to enhance the service of the product to the customers (Groucutt, 2005).

1. Physical layout – In case of large supermarket like Aldi , the physical layout and infrastructure of the organization to receive good feedback from the customers. The customers today purchase products from the retail units and they expect high level of presentation in the modern shops. This enhances the shopping experience of the shopper and at the same time it increases the standard of presentation of the organization (Richter, 2002).

2. People – An essential attribute of retail marketing is enhancing the customer service. It is an essential feature to attract more customers to the organization. The employees providing service to the customers has to understand the need of the customers and serve them in a better way. This will generate positive word of mouth for the investors and more customers will visit the supermarket (Cateora, 1983).

3. Process - Process is an important attribute of extended marketing mix. The various process in the organization will help the organization to handle the queries of the customers effectively. The return policy, customer complaints and the process for handling the orders can be done effectively. This will increase the efficiency of the organization. The top priority of the organization will be to provide good quality of service (Ronkainen & Czinkota, 2002).

 

Conclusion

Aldi is a large supermarket based in Germany. Aldi has been successful in its strategy of targeting a larger mass of audience. The unique and innovative strategy used by Aldi is to provide products at cheaper prices to the customers. Aldi has not compromised with the quality of the product. They have manufactured their own product to reduce the cost of production. Since they buy in bulk volumes, it has been possible for Aldi to reduce the purchase price of the product. They sell the products at discount rates which is an essential strategy used by Aldi to reach out to a wide range of customers. Apart from using the 4P’s of marketing, it should focus on applying the other 3P’s such as physical layout, process and people to increase their mass appeal.

 

References

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SHOOTER, A. (2013). The high street copycats: Yes it's cheap - but the real secret of Aldi's success is the ruthless way it apes the look of top brands... and often the quality is even better. Mail Online. Retrieved 6 February 2015, from https://www.dailymail.co.uk/news/article-2508069/Aldi-successful-copies-brands-improves-quality.html

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