MKT00720 – Marketing Session 2, 2019Assignment 2: Report (on Aldi Australia)
The purpose of this assignment is to again provide you with an opportunity to apply knowledge, theory, frameworks and tools from the early part of the unit to an analysis of the strategy and strategic practices of a real organisation. In this assignment, you will work to analyse the strategies pursued by the Aldi Australia discount supermarket chain since its local launch in 2001. You will evaluate marketing-related strategies and their effectiveness and relate to be real-life experiences and relevant research to look at core marketing theory. The aim is to provide experience of marketing analysis and practice and to determine your ability to relate real marketing strategy to theory and research.
The Overall Task
In increasingly competitive markets, consumers have a greater choice over where they buy their goods and services. For an organisation to meet its business objectives, it has to find out what consumers require and then identify the best way in which it can satisfy these needs and wants. Creating a competitive advantage can be difficult. A unique marketing strategy with clear objectives is vital to ensure effective promotional activity.
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 (this may include some history on Aldi’s international operations). You should use the principles and concepts that you have learned throughout the unit to answer the following two questions:
These are wide-ranging questions and you should undertake extensive independent research into Aldi Australia 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.
Ensure that you have related the real conditions of the company to theory and research and that you have read, cited and referenced appropriate academic material as well as more popular sources (which also need to be properly referenced).
Marketing strategy of ALDI
a. Executive Summary
In this detailed study, market analysis of ALDI has been defined with critical arguments. In this study, the discussion has been made on the comparison between marketing strategies made by ALDI at early stage and market strategy adopted in the current market. The comparison has been made to identify the future market strategic option for ALDI based on the current market analysis. Ansoff Matrix has been used to identify the opportunities for improving the performance of the organisation ALDI in the targeted market Australia. The discussion has helped to understand the meaning as well as importance of the market analysis for the betterment of the organisation to identify the future growth in the national as well as international market.
Marketing refers to some activities acquired to be the company to improve the selling or buying of the product or service. Marketing function includes selling, advertising as well as delivering the products to other business or consumers. Marketing involves the entire actions that a company undertake to satisfy the customer and manage the relationships with them. With the competitive prices, the organisation Aldi has targeted the middle-income group as the retail economic sectors, which serve the products at 30% affordable prices. The study will discuss the background of the company. The study will also analyse the marketing strategy of Aldi’s as well as strategic marketing options of Aldi.
c. Background to the Company
For the last 40 years, ALDI US has strictly followed some crucial principles such as high quality should not come at a huge price, rather than great quality would come with low prices daily. The first ALDI store was founded by Albrecht family and was launched in the year 1961 at Germany, making the company the first company to give discounts in the world (Corporate Aldi Us, 2019). ALDI is headquartered in Batavia, Illinois, and now has up to 1800 stores in approx 36 states, hires up to 24,000 people and have been growing since opening the US stores based in Lowa in the year 1976. Over the last decade, the company has doubled in size and by the year 2022, the company will further bring the total number of US stores to about 2,500. Since it began its operations in Australia, it has been able to grow. Now the company has 11.4% market share in the Australian market (See appendix for market share graph) (Roy Morgan, 2019)
More than 30 million consumers have said that they can secure the time and money without comprising the quality at Aldi (Corporate Aldi Us, 2019). At this company, the small differences are making a huge effect on the store. The company also focuses on purchased grocery items. The company enables for the sizable discounts which have implemented directly to the customers. The store model mostly avoids non-essential services such as pharmacies, banking to bring savings to the customers.
d. Marketing Analysis
ALDI is considered as the supermarket chain and the company control as well as measure the initial concept of the business. In the words of Ramanathan et al. (2017), the approach of the supermarket retail marketing strategy of ALDI has stuck in the similar position since the time of the development in Germany. Nowadays, the model is also focusing on accommodating the middle-class market.
i. The Nature of Aldi’s Marketing Strategy or Strategies since it began.
ALDI is well defined as to start the cheapest market all across the world. ALDI is further succeeded by determining as well as achieving the need of positive standard of the consumers. It is not arranged for everyone. The main target market of the company was to put the focus on the performance class. Therefore, the strategy of marketing of the company was to serve lower price with extensive quality.
Furthermore, the company has been also reduced the costs in much emerging ways and distinguish mainly from the rivals. The company buys huge extents of the products from different suppliers that enable them to consult with the best quality prices. The size of the store is approximately 600-800 sq.m along with an average 6-8 square meter in every store measured to the Coles as well as Woolworths who have 140 sq.m as well as also 14 employees (ALDI, 2019). ALDI denies for providing any free plastic bags; individual bag costs 14 cents, as well as shoppers, should purchase their groceries. Apart from increasing the opening hours such as any other competitors, the company has limited the performing hours from 8:35 to 8 am, only highlighting the peak shopping periods.
The company also have an average of about 850 products in every store, with a probable number of individual products. The company has the potentiality to meet the higher sales volumes on every item. Therefore, the company could further gain more price after doing the discount from the suppliers. For instance, the company has one single variety of tomato sauce, but on the other hand its rivals are selling many different brands and taste of tomato sauce (Brandhook, 2019). A possible negative impact can be if the customer does not like the taste of the tomato Sauce sold by ALDI they will surely move to any other place. Up to 80% of the products of ALDI are of exclusive brands out of which most of them are the Australia suppliers.
This marketing approach has deduced that the organisation ALDI has string market vase in the international market. The market of Australia plating positive role for ALDI thus, the organisation could get a better start in the market. ALDI has determined marketing strategies by the help of which it has captured as much market share in the international market. As mentioned by Steenkamp, (2017) also it can be deduced that the ALDI has made changes in their marketing strategy as per the changes takes place in the marketplace in the sense of taste and preferences of the customers.
According to a research report, it has been analysed that the groceries stores have been accounted for approximately 20% of grocery sales. Furthermore, the house brand of ALDI was about 22% and 25% that is cheaper than Woolworths and Cole’s products. To analyse this, the company had done blind tests experiments where the company had an efficient rate of approval of the customer. In the words of Josephson et al. (2016), the company have analysed that the main purpose was to allow the Australian customers to have an effective standard of the lifestyle by paying less amount for the groceries. ALDI has an efficient range of the products defined as special buys, for instance, television, bicycle and garden related equipment. The products are seen to be very different from the product range of the grocery.
An emerging strategy by the company ALDI is that it analyses the effective expansions. ALDI is currently directing on serving stores in the emerging class. It also opened the first store in Bridgepoint, an expensive shopping place that further resulted in improving the huge profile name.
ii. Strategic Marketing Options for Aldi moving forward
The Australian industry is defined as one of the most competitive and recognised organisation globally. Apart from the great achievement of Aldi is ingoing the grocery industry and gaining the substantial share of the market, the company should realise that the dynamic of the emerging world market (Schmid et al. 2018). For instance, if a new entry is planning to enter the Australian supermarket, it can be “Lidl”, a well-defined German retailer that is similar to the company.
The defined strategy of the individual assortment has been developed for the Aldi. It has been observed that for an organisation the most important factor is the marketing strategy that helps the organisation to develop their targeted market opportunity in the national as well as international market (Fazli and Shulman, 2018). ALDI as a marketing strategy can serve Muslimfood, Jewish, Indian or Chinese cuisine to some ethnic groups, during the religious and cultural festivals.
As involved in the strategy of the marketing, ALDI’s universal business can enable the customers in Australia to offer some products with foreign stores in Europe as well as the USA that are not present in the Australia. It can be profitable and antique marketing strategy of ALDI (Um et al. 2018). Another efficient strategy suggested by ALDI could acquire is related to provide a loyalty reward card such as competitors Woolworths as well as Coles. When the consumers purchase in ALDI, they can achieve the loyalty points. When the consumers contribute some thousand-loyalty points, they can get an instantaneous discount of cash.
ALDI can also co-operate with some other German companies including Grundig, Siemens as well as Adidas who provide the European along with the foreign markets with the other products. To launch the operations of Australia that would further need huge arrangements costs, these companies can achieve experience to local market of Australia with ALDI’s chain stores along with the reduced costs. The company has effective promotions; these organisations now have an effective promotion. These companies now have a proper accessibility for the Australian market such as household equipment and clothing (Lamey et al. 2018). The entire organisation is needed to keep focus on the organisational development that is needed for the betterment of the business.
The organisation ALDI might go with the sponsorship technique as a promotional tool for promoting the brand via different events. An Australian Golf tournament and Melbourne Cup are the common sports events held in Australia. The organisation ALDI might be participating these events as a sponsor. In the words of Alon and Lattemann (2016), the sponsorship technique is beneficial for an organisation in the sense of fast branding. The sponsorship technique helps an organisation to promote its brand in the international market at minimum cost. Thus, it might be beneficial for ALDI to tackle down challenges in the new market of Australia.
According to the Ansoff’s Matrix, Aldi has been suggested to focus on the market development factor that is needed for the betterment of the organisation in the targeted market. The suggestion has been made based on the analysis made on the current market condition of the organisation in the operating market. The organisational development is dependable on the market analysis as well as market research techniquesapplied by the R&D department of the organisation.
From the detailed study, it has been concluded that for an organisation the market analyses one of the most important techniques that help the organisation to analyse their current market performances. From the above study it has been deduced that organisation ALDI has diversified market strategy in the national as well as international market that has helped the organisation to gain as much market share in the market ALDI (Um et al. 2018). The study has even highlighted that from the earlier stage to the current stage, the organisation ALDI has changed its marketing strategy with the changes take place in the society or community.