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).
MKT00720 – Marketing
Assignment 2: Report (on Aldi Australia)
a. Executive Summary
The report has discussed four different marketing approaches, product, production, marketing and societal approach and its relationship with the marketing strategies used by Aldi in the Australian market since its opening of the branch in the year 2001. At the beginning of the report, it has introduced the concept of marketing and stated the background of the company Aldi, which is based in Australia and its relevant history. Further, it has also provided some strategic marketing options for future scope of expansion of business in the Australian as well as other relevant regions in the world. In the end, it has provided details information about various aspects that can be developed with the help of using such marketing options with an illustration of examples.
Marketing is a broader concept for the business organisation in the retail sector. In other words, the strategic marketing theories can be considered, as suitable marketing research and practice for a retail business like Aldi established in Australia. In this report, it will critically analyse in-depth marketing research by using marketing theories, for relating to marketing strategies applied in Aldi's business model. It will provide different aspects of using marketing theories that is focussed by Aldi for gaining competitive advantage in the Australian market. Further, it will throw an insight upon the strategic marketing options for its future prospects in business.
c. Background to the Company
Aldi in Australia began with a great start with its chain of the retail market since 2001. In other words, the brand name has been popular for offering its quality grocery food at reasonable prices to win the heart of the Australian customers. At the same time, the organisation opens at around 500 stores in the major locations of Australia like in New South Wales, Australian Capital Territory, Queensland, Victoria, SA and WA. Currently, Aldi in Australia is considered to be the topmost retailers among the other ten market retailers (Corporate 2019).
According to the online report based on PWC, ALDI Unpacked (2019) it could be identified that Aldi has been operating in the most promising locations for selling its range of grocery products and services to the customers generating near about $23 billion to Australia’s GDP from the beginning of its market entry. Apart from this, the report also finds that it has economically contributed to five major areas of concern such as direct business, retail suppliers, non-merchandise suppliers, and capital venture and tax payment. In addition, it has initiated a number of market-leading strategies since 2001 in Australia that has not been seen before in other supermarket retailers.
d. Marketing Analysis----
Analysing a definite market in supermarket retail business involves a number of discussions, views and consequences. Certain types of market intervention and marketing theories can be used further for justifying the strategies of marketing implemented by Aldi in Australia:-
i. The Nature of Aldi’s Marketing Strategy or Strategies since it began
Figure 1: Marketing Approaches
(Source: Ramanathan et al. 2017)
Production Approach of Marketing:
The nature of marketing strategies applied in an organisation is better recognised if there are multiple ways of examination and market research value. According to Shakoor et al. (2017), product and production approach is one such marketing strategy that can enhance value-added service and generate maximum customer satisfaction. It determines the fact that if the production process can be balanced with the help of lean thinking approach, it would be easily sold at low pricing strategy for increasing the demand at the initial stage of business. For example, based on the entire historical data and market research applied in Aldi, it could be known about a fact that the company had a consistent marketing strategy of producing a high-quality product at low pricing strategy to the customer of Australian since its opening (ALDI Unpacked 2019). In addition, compared to Coles and Wools worth, the brand of products in Aldi is nearby 23% and 27% cheaper (Conomos 2014). Hence, it can be recognised that Aldi in Australia had maintained low price and high quality of grocery products in its large number of the retail supermarket.
On the contrary, Ramanathan et al. (2017) argued that production approach could be also be maintained at high pricing strategy if it can depend on the premium class of people. It tries to indicate that if the pricing strategy is kept at high range, it can also increase the sales ratio in the Australian market with the target of high profile customers. In the case of Aldi, it might work in a rapid state as it has received by applying a low pricing strategy from the beginning.
Product Approach of Marketing:
The product marketing approach is something that needs special attention in gaining customer loyalty and creates a positive relationship with the customers for long-term aspects. Parvatiyar et al. (2018) stated that the value of outsourcing marketing facilitates a brand to flourish in the overseas market as well. It tries to depict that if a product marketing approach is implemented by focussing on a limited portfolio, it can increase the maximum number of popularity in a small market and limited target audience. Besides, Upadhyaya (2016) contradicted with this concept that if there is less amount of portfolio under a brand name sold at static pricing strategy, it might deteriorate its sales volume one day due to the differences in its competitors’ portfolio and pricing varieties. From this argument, it can be further acknowledged better than if the range of products is stagnant at fixed price rates at cheaper rates, then it might not gain someday attraction towards high profile customers as well other than its local Australian market. For example, based on an online review of the article, ABC News (2018) Aldi had a limited range of products and a limited number of stores for distributing its variety of products. In fact, a portion of the profit amount used to be transferred to the accounts of the customers for some household demands stretching their shopping numbers. This kind of personalised approach of product distribution at low pricing strategy has opened up the better scope of increasing the number of stores gradually in the Australian market so far. Due to such reason, its competitors like Coles and Woolworth were compelled to cut the price to survive in the market.
On the other hand, it has been noticed, as per UBS report that Aldi consists of the limited customer segment in Australia that is going to limit its sales volume at low price ranges in the market due to the onset of cannibalisation (ABC News 2018). This might affect the territories of Australia and its associated people and families.
Marketing approaches deals with a number of things that focuses on products that can fulfil the needs and taste of the customers directly. Lamey et al. (2018) opined that a marketing approach that is initiated for the overall marketing success of an organisation has the possibility of enhancing growth and development. On the other hand, Parvatiyar et al. (2018) argued back that if marketing approach is following terms and conditions ethically, it can have marketing success. It demonstrates the fact that by using an ethical approach in marketing that covers the all-round positive impact on marketing feedback, an organisation in the retail segment can grow well. For example, it can be further evaluated from an online review that Aldi’s some of the products used to be exclusive, as per customer choice filling their needs at correct price range like Mamia range of nappies, kinds of toothpaste and sky gears and other brands. However, it is once again evident from the discussion that most of the ranges of portfolios are limited in numbers and available at fixed low price intact that has satisfied already the customers’ mind (NewsComAu 2014). Therefore, it can be examined that only some specific brands used to be available from Aldi’s stores at a discount and low prices previously.
Societal Marketing Approaches:
This kind of marketing approach is genuinely applied for the sake of social and organisational well-being. Gopaldas (2015) mentioned that the societal approach of marketing deals with social well-being and gaining sustainable business development in the Australian market. Such a concept also brings into mind about sustainable products that can reduce emissions. For example, according to NewsComAu (2014), it is evident from the online review in detail that Aldi has been maintaining it’s extremely low pricing strategy for not only attracting customers of low profile, rather, but it has also tremendously emphasized on recycled and reusable products and avoiding packaging of plastics in its stores. In addition, it has committed to reducing carbon footprints by 30% by the end of 2020 (Corporate 2019b). Hence, it can help in sustaining its brand value and customer loyalty for long-term aspects in future.
ii. Strategic Marketing Options for Aldi moving forward
Based on the above analysis of the marketing approaches in relation to the marketing strategies of Aldi, it can be realised well that the organisation has equally gained success as well as it tends to fall under limitations of customer access due to its limited range of products and specific range of portfolio in the market. In order to enhance its business platform by judging its current market status:-
Focussing on Product Development:
If the focus is on product development and growth, then Aldi would be able to increase its customer base from the overseas market as well. In accordance with the study and research online, Mitchell (2016), there is an increasing rate of competitors in the retail supermarket business in Australia. These are the provider of market penetration and threats at a high rate. Therefore, certain pressure on marketing options needs to be controlled in advance in order to sustain its brand image in the market.
Improving marketing channels through digital technology:
The growth of a business depends on the proper way of marketing channels. In other words, the marketing channels with the help of digital media can bring a number of consumer forum for viewing of products online (Forbes 2019). It is possible if Aldi can find some suitable partners for promoting its brands through an e-commerce website. For example, offering loyalty cards, rewards and range of other benefits can also be included in the e-digital sites for promotion. Apart from this, Aldi can also be suggested to find better digital sites like AMAZON, eBay for advertising its new product portfolio in order of sequence for better recognition.
Increasing customer segment:
Aldi seems to have only some specific segmented group of customers for selling its products at low pricing strategy. Besides, it can also be recommended to increase its customer segment from geographic to psychographic and behavioural segment and develop accordingly for being recognised in terms of versatility along with the dynamic nature of brand size and shape. The strategic way of implementing brand recognition through research and development of a market can better examine the customer profile (Nenonen and Storbacka 2016). It can be attained through the help of recruiting efficient team members in the marketing department able to apply low cost and low budget market research to find access into appropriate customer segment and track a record for future production and supply chain management.
Engaging Customer and employee programs:
Engaging customer and employee together for involving in the loyalty program is an effective marketing option to build a sustainable relationship. In other words, customer-employee engagement is a strategic marketing program that brings the close association of people, community and an organisation together for social interaction (Brashear-Alejandro et al. 2016). It determines the fact that if there is a social event concerning a subject matter, it could be able to understand peoples’ mind, taste, preference and process of production and ethical terms and conditions well. Therefore, in the case of Aldi, it can be applicable, as it would make direct communication between people and employees face-to-face for understanding.
Based on the overall analysis of the marketing approaches and its relation with marketing strategies, it can be understood that Aldi in Australia has received a large number of recognition for selling its low range of products and services directly to the customers and expanding its number of stores in multiple volumes. However, it has still some limitations in terms of similarity of products, which is being repeated for some specific customer profile. Therefore, some strategic marketing options have been provided that can facilitate its business market in Australia is a far better position.