Marketing Strategies Of ALDI - Solution is Just a Click Away

Question: Discuss about the Marketing Strategies of ALDI. Answer: Introduction: In simple terms, marketing can be defined as to offer right products at the right place at the right time and at the right price. This assignment consists of critically analyzing the marketing strategies of Aldi Australia and illustrating their marketing mix effectively. There are Four Ps of marketing that are frequently called the marketing mix variable. This Four Ps is Product, Price, Place and Promotion (Kotler et al. 2015). Marketing mix strategies are very essential when it comes to new product offerings in the market. The marketing mix strategy helps in achieving the Sales target, increase in profit and provide complete consumer satisfaction. This report examines the marketing strategies of Aldi Australia a German base supermarket chain. This report is further divided into four sections. The first one provides a brief history of Aldi and its evolution in Australia. The second section provides information about the positioning of Aldi in Australian supermarket chain, the third s ection critically analyze the marketing mix strategies of Aldi and the last section provides recommendations for the growth and development of Aldi in Australia (Aldi.com.au, 2017) A brief history of Aldi: Aldi is one of the leading retailers in the world with approximately 8,000 stores globally. Aldi started their business in Germany where they opened their first store in 1913. Aldi is generally referred as one of the extremely regarded retailers in the international market of business. In 1960, the business of Aldi was separated into groups. That are Aldi Nord (North) which had headquarters in Essen and Aldi Sud (South) with headquarters in Mulheim an der Ruhr. On the International Level of business, Aldi Nord operates in countries like Portugal, France, Denmark, Netherlands, Spain, Poland, Luxemburg and Belgium. Whereas, Aldi Sud corporate business in United Kingdom, Switzerland, United States of America, Australia, Austria and Ireland. Aldi has a strong brand reputation in the market of retailers as they provide great value and quality of products. The products of Aldi are procured from handpicked suppliers those who possess superior quality (Aldi.com.au, 2017). Marketing Mix Strategies: The marketing mix strategies are a set of complex variables. The marketing mix strategy consists of providing high quality of products in a low amount of prices to the customers. The marketing mix strategy deals with Product, Price, Place and Promotion. The marketing strategy of Aldi Australia is as follows: Product: The business viewpoint of Aldi Australia is to focus on indispensible investments and avoid creating high price product to their customers. The focus of Aldi Australia is to make high quality brands of their products. The company primary objective is to create a product that delivers quality and not only quantity to their customers (Chernev. 2015). The products are obtained from chosen retailers of Aldi those who promise in superior quality, healthy and viability of the products. Aldi Australia also maintain sound relationship with their retailers those who only produce products for Aldi only and thus provides Aldi Australia to gain a competitive advantage within its competitors (Brown and Dant 2014). Price: The determination of Price is one of the crucial factors of marketing mix strategies. There are three types of market pricing strategies that include market penetration pricing strategies, market skimming pricing strategies and competitive pricing strategies. The market penetration pricing strategies includes charging of low prices for new products, which enables the product to enter the market and gain market share very quickly (Chernev. 2015). Market Skimming pricing strategy is a type of strategy where the price of the initial product is charged at a very high price due to the strong brand value and quality of the product. Moreover, as the product tends to generate revenue the price of the product is reduced. Competitive pricing is one of the key strategies of Aldi Australia. Competitive pricing method is a type of pricing which are entirely bases upon the prices of the competitors (Brown and Dant 2014). The two strategies of competitive pricing are to charge lower price ra ther than its competitors or to charge the same and equal price as per the competitors to gain a competitive advantage. Aldi always buys bulk of products at a large volume that provides them to charge best possible prices to their products irrespective of the market conditions (Lions et al. 2013). Place: Aldi Australia keeps and maintains their store layout simple to reduce the generation of wastes and always push to keep their overall cost lower (Ebner, Schon and Alimucaj 2016). Thus, they offer a low prices product to their consumers. While selecting a retailing store Aldi takes into account number of factors such as number of people visiting that area, the demographic classification of that place, the population count must be higher than 25,000 people in that area. Moreover, the location of the store must be centrally located in the town with clear accessibility from the main road. There must be sufficient spaces for parking (Brown and Dant 2014).The store size of Aldi is comparatively small than its competitors with an average floor space of 660 square meters to 1000 square meters. Moreover, Aldi offers low cost product to their customers but they also provide free parking facilities to them that attracts a large audience of customers towards their retail stores (Van den S teen and Lane 2014). Promotion: Promotional strategies are important as they leads to increase awareness among consumers about the products and services they are offering. A good promotional strategy also provides an organization to increase its market share respectively. There are two methods of promotion such as above the line promotion and below the line promotion (Steenkamp. 2017). Above the line promotion are the paid from of promotions that are aimed to attract mass audience by providing efficient advertising tools. Aldi advertises their products in Television for example showing a 25 seconds television promo of the brand and provides information about how well Aldi provides low cost products without compromising the quality of the product. Printed leaflets are also distributed among a consumer that provides complete information about new products offerings and special discounts of the months that attracts potential customers. Aldi advertise on the newspaper mentioning their Swap and Save message. This strategy is to create awareness among the consumers about the services that they are providing. Aldi often compares their products to highly demonstrated brands and portrays in front of their customer Aldis value for money message effectively (Ebner, Schon and Alimucaj 2016). Strategic Marketing Options of Aldi: The strategic marketing options opted by Aldi are as follows: Exclusive Products: The main strategies of Aldi Australia are to provide high quality of products at a low price to their potential customers. They should focus on exclusive brand of products. According to the researcher Aldi should formed partnership with leading manufacturing companies to produce own brand goods. Thus creating a competitive advantage over its competitors and providing efficiency in their business operations. There are very few products like Vegemite are sourced from outside but they are replaced as soon as low cost alternatives are available in the market (Gassmann, Frankenberger and Csik 2016). Limited Range of Products: According to the researcher, Aldi must implements reducing cost effective strategies thus, they tend to provide a limited number of products to their customers. For the betterment of their product quality Aldi must select from customer product characteristics and preferences. For example, Aldi stocks products that are heavily in demand by the consumers (Ebner, Schon and Alimucaj 2016). Aldi should not only keep inventory of the product but also successfully determines its size, variation and quality. Aldi must seek suppliers that can provide them with the adequate and right product without compromising its quality and taste at the most reasonable prices (Van den Steen and Lane 2014). Unlike other supermarkets chains Aldi does not make products of all sizes rather they produce products of popular sizes that helps them to lower their stock size and maintain efficiency in the distribution within the supermarkets. By stocking only one magnitude of each product, Aldi Australia considerably reduces its costs (Steenkamp. 2017). Strong Focus: Aldi strong focus should be based on their core business that is supermarket retailing chain and they does not provide much attention in other retail chain base like petrol, pharmaceuticals and liquor unlike its competitors (Dagevos. 2014). The only area where Aldi has deviated their business is introducing Surprise Buys in their supermarkets where the consumers are able to buy televisions and computers at a low price with high quality offerings (Drzazga. 2014). Change in Price Policy: Aldi is the first in the market industry to introduce low price strategies to the customers and Aldi should only increase their prices when there is an increase of cost of production (Steenkamp. 2017). Aldi must create a value proposition strategy through which it can be determine that the product will not only be low cost but also with greater value and quality. Aldi focus should be on the long-term profit policy rather than short term returns (Dagevos. 2014). Moreover, Aldi must provide their entire attention in creating long-term revenue rather than focusing on accumulation of short-term profits. Future Trends of Aldi Australia: According to the researcher, the growth of Aldi depends on creating a competitive advantage over its competitors in the future prospect. Aldi should focus more on creating eco friendly products to attract their customers. Aldi can prosper in their supermarket chain in the future through this ways: Fresh Food: To prosper in the future in the Australian supermarket chain Aldi needs to provide more fresh food products to their customers. They should invest more in centralizing their product purchasing method. Aldi must create strategic relationship with their suppliers and make flexible contracts that address the growth of the product with climate conditions New Store Format: According to the researcher, Aldi must maintain innovation in their store format to create and engage more customers towards their supermarket. They should extend their expertise in providing expanded wooden racks, better LED lightning and extended chiller in their stores to keep the products fresh for more time. Aldi should also expand their operations in Australia through setting up new stores in their retail chain. Environment Friendly Approach: To gain a competitive advantage over other firms Aldi needs to identify themselves as one of the socially responsible supermarket chains in Australia. Aldi must provide focus on creating environment friendly packaging of their products. Moreover, Aldi must provide positive contributions towards local communities and provide efficiency in Health Nutrition of their customers. Aldi must use sustainable strategies while producing their products that will create more customers towards their business. Yes, according to the researcher Aldi Australia will continue to be successful in the future, if they follow the above mentioned points and create more customer engagement in their business. Aldi must create a user friendly online websites through which consumers can easily procure products and make proper reviews of the product. Pestel Analysis ALDI: The PESTEL Analysis is required for Aldi Australia to investigate and observe the macro-environmental factors that have an impact on it. Through observing the external factors that affects the organization, Aldi can come up with strategic planning and marketing schemes of its own in gaining the market share. POLITICAL ECONOMICAL SOCIAL TECHNOLOGICAL ENVIRONMENTAL LEGAL Regulation of Foreign Policies Increase of Unemployment rate Change in Consumer Taste Preference and Low spending culture Increase in Technological Expertise Increase of Eco-friendly packaging Acceptance of Australian Common Law Pressure of International sponsorship groups Changes in Market Trend and Trade Cycles. Brand and Company Image with preference in home made brands Competing with technological advancement Decreasing the use of Polythene Bags in their stores Better relationship with Australian Retailers Association Implementation of new government policies and rules. Increase in fuel prices Sound product Demographics Online accessibility of the consumers and buying habits Reducing the amount of pollution in the environment Abiding with the laws and Legislations in Australia Politically, in future, the government will focus closely through its policies and regulations in offering the best quality products, as the level of concern is high for packaged grocery products. Governments intervention with measures related to protectionism like tax in protecting Australian products could affect heavily Aldis growth in Australia. Economically, Aldi is in safe position, as the Australian dollar has remained strong in the past few months without many fluctuations. Moreover, increase in fuel prices would directly affect the strategy of low price and competitive wise affect Aldi negatively. In case of socio-cultural environment, Australians love being eco-friendly, and they like organizations who follow ethical practices which is favorable for Aldi. Aldi would do well to upgrade the online shopping system and it should use advertising through internet for viral marketing in technological aspects. Aldi is into eco-friendly mode, which is attracting more Australians as they love being that. The organization has also said no to polythene bags, reducing its usage in current past for improving environmental factors. Legally, Aldi Australia has good relations with the legal associations that make its work process a smooth affair. ANSOFF Matrix of ALDI: By using the ANSOFF Matrix tool from the above diagram, Aldi may adopt the following strategies to perform even better in the future. Market Penetration: Aldi should open more retail stores and put their focus on developing different types of customers. Not only from lower middle class backgrounds of customers but also make loyal customers by introducing Loyalty Cards to them. Aldi must make proper initiatives towards sponsorship of local sports team and provide adequate advertisements in the future. Product Development: Aldi needs to keep their cost margin relatively low to ascertain enlargement in its assortment quickly. Aldi must introduce new products and services in their product line in order to gain valuable revenue to sustain its business in the future. Aldi can also introduce a new delivery system that will satisfy the customers and put their entire focus on quality. Market Development: In the future Aldi can expand their business operations overseas and build an international position. Moreover, in not only the supermarket retail chain but also Aldi can focus on expanding their business in different sectors of markets to grow their business. Diversification: Aldi needs to diversify their product range. The success of Aldi is hugely depended on introducing new lines and services of products in their business operations. Moreover, to gain potential market share in the future Aldi needs to focus on offering wider range of products to attract customers in Australia. Conclusion: The Australian supermarket chain is one of the most highly concentrated and competitive markets with competitors like Woolworths and Coles are prevailing in the market. Despite of this situation Aldi has been able to establish them in the market and created a valuable presence in the market. Aldi overall strategy is to provide their customers with high level of quality in their products, reducing cost of the products, focuses on exclusive brands of products, eliminating all the unnecessary business functions and creating a healthier relationship with their customers and suppliers. Aldi also provides efficiency in their management practices, that includes paying proper wages to its employees, granting them rewards and recognition, creating and maintain an effective workforce that helps Aldi to create a competitive strategic position in the eyes of its competitors. Moreover, Aldi creates successful marketing campaigns rather than its competitors that creates loyalty and make more consu mers aware of their retail stores. References: Aldi.com.au. (2017). About ALDI - ALDI Australia. [online] Available at: https://www.aldi.com.au/en/about-aldi/ [Accessed 13 Jan. 2017]. Brandl, S., 2014. Development of a CSR strategy for Toys R Us Germany. Brown, J.R. and Dant, R.P., 2014. The role of e-Commerce in multi-channel marketing strategy. InHandbook of Strategic E-Business Management(pp. 467-487). Springer Berlin Heidelberg. Chernev, A., 2015.The marketing plan handbook. Cerebellum Press. Dagevos, H., 2016. 15 Beyond the Marketing Mix: Modern Food Marketing and the Future of Organic Food Consumption.The crisis of food brands: Sustaining safe, innovative and competitive food supply, p.255. Drzazga, M., 2014. New Media in Marketing Communication in Multichannel Retailing.Studia Ekonomiczne, (205), pp.23-33. Ebner, M., Schn, S. and Alimucaj, A., 2016. Print Your Personal Book: A New Service and Revenue Model for Open Access Journals. InMedia Convergence Handbook-Vol. 1(pp. 171-185). Springer Berlin Heidelberg. Gassmann, O., Frankenberger, K. and Csik, M., 2016. Innovation Strategy: From new Products to Business Model Innovation. InBusiness Innovation: Das St. Galler Modell(pp. 81-104). Springer Fachmedien Wiesbaden. Kotler, P., Burton, S., Deans, K., Brown, L. and Armstrong, G., 2015.Marketing. Pearson Higher Education AU. Lions, A., Seiki, A., Albrecht, K., Albrecht, T., Tigers, A., Pharmacare, A., Axelrod, R., de Investimentos, B.A., Barry, M., Barsini, A. and Buy, B., 2013. Acquisition, growth by, 50 Adaptability as competitive advantage about, 1920 big business challenge, 2526 experimentation, role of, 2223.signal,20, p.22. McGee, J., 2014. Value Chain.Wiley Encyclopedia of Management. Steenkamp, J.B., 2017. Global Marketing Mix Decisions: Global Integration, Not Standardization. InGlobal Brand Strategy(pp. 75-109). Palgrave Macmillan UK. Van den Steen, E. and Lane, D., 2014. Aldi: The Dark Horse Discounter.