Aldi: Company Background
Discuss about the Analysis of Aldi Marketing Strategy.
The report would discuss and analyze how Aldi has established its market position in Australia by breaking the dominance of Coles and Woolworths supermarket chains. The report would study the marketing strategies adopted by Aldi and its current market position in Australia by applying various marketing theories such marketing mix, pricing strategy and value proposition, and balancing mix.
Further, the report would also recommend marketing strategies using marketing theories such as value driven services and retaining loyal customers for Aldi to grow its market share and maintain its sustainability in the Australian market.
Aldi is a German based supermarket chain with its presence in over eighteen countries across the globe. The supermarket chain was founded by the brothers Karl and Theo Albrecht in the year 1946. Aldi entered Australian market in the year 2001 and has contributed towards the development of the community through creating jobs for the local people. It provides high quality products to the Australian society at a very nominal price. The supermarket chain has strategically built its long term relationship with the local suppliers, producers and manufacturers to maintain its sustainability” (The Times 100). The company has simplified its processes to increase its efficiency and reduce the cost price to maximize its profitability. Further, the company supports the local farmers of Australia through its simplified process of partnership and alliances. Aldi supermarket chain has created indirect employment in the country through its consistent and high volume orders for the suppliers and manufacturers (Aldi, 2016).
Aldi supermarket maintains its diversified product portfolio to meet the daily requirement of the Australian household. Its specialized product range includes beverages, food, sanitary articles, toilet paper and other household needs (Aldi, 2016).
Being and international player, Aldi has established its brand image in Australia through its unique marketing strategy. Aldi’s goal is “To provide our customers with the products they buy regularly and ensure that those products are of the highest possible quality at guaranteed low prices” (The Times 100). The supermarket chain has been exploring the opportunities in the international market and has established a market share in Australia. The focus is on creating long term relationship with the customers through the quality products and services to achieve customer delight.
Marketing Mix
Aldi has employed the marketing mix principle to create a unique combination of right product at right price in the right place through right promotional activities. The supermarket chain focuses on providing high quality products to the customers at the lowest prices as compared to its competitors through its retail outlets which are growing in number. Aldi uses suitable promotional methods such as ‘Like Brands’ to attract the customers. Further, Aldi focuses on its core business, unlike Coles and Woolworths, it does not have a diversified portfolio.
Marketing Analysis
AIDA Model
Aldi uses the AIDA model for promotional activities to create awareness among customers and pull them to buy the Aldi products by generating interest and fueling the desire for purchase (The Times 100).
Balancing Mix
Further, Aldi has appropriately used the balancing mix to meet the consumer demands of Australia. The supermarket chain has selected its suppliers very strategically to provide the products to the customers at the lowest prices and achieving the economies of scale simultaneously. Aldi maintains the quality of its products through its rigorous process of supplier selection. The suppliers provide the finest quality of products which is sold by Aldi under its own brand name.
Aldi has employed competitive pricing strategy to differentiate itself from the competitors by selling the products at slightly lower prices than its competitors Coles and Woolworths (Kakulas and Messurier, 2015). Aldi purchases the products in large volume which gives it a leverage to negotiate its prices with the suppliers.
Another reason for low priced product is Aldi’s store layouts which are very simple in order to cut down the extra expenses (Australian Food News, 2015). Aldi considers the following factors for a new store location:
- The demography of the area and the number of people who frequently visits that area.
- The store is positioned at a location which is easily accessible and has well connectivity to the main road.
- Availability of parking space
- Well connectivity and public transport links
Aldi provides limited products to the customers to reduce its cost of inventory management. The supermarket chain selects product range which is popular based on taste, sizes, variation. Fewer products are stored in great volumes to increase operational efficiency.
Aldi uses above the line promotions for advertising through TV commercials, printed leaflets, newspaper ads and ‘Swap and Save’ in store posters. Aldi uses these channels to promote itself as ‘Like Brands. Only Cheaper’ to reinforce the message that a product of equal quality would be available at Aldi at a low price. The message clearly distinguishes Aldi from its competitors in terms of prices. Its ‘Swap and Save’ strategy fosters the message that customers could save their money if they shopped at Aldi (The Times 100).
Aldi uses promotional emails, social media network, PR activities and third party endorsement to reach its target audience (The Times 100). Social media such as facebook and twitter allow the Aldi to directly connect to the target audience through promotions and campaigns. Sending emails to the target audience is an effective method used by Aldi to reach its target audience and convey the brand message. Aldi maintains its website by featuring all the promotional offers and discounts to the customers.
Strategic Marketing Options for Aldi moving forward
Aldi has been expanding its stores in Australia by taking away the market share of Coles and Woolworths. Aldi has successfully established its market through its low pricing strategy and unique value proposition to the customers. Its limited range of products gives it a competitive edge over its competitors.
Aldi has captured a market share of 12.1 in Australia where Woolworths is the market leader with market share 37.3 percent followed by Coles with a market share of 32.5 percent (Roy Morgan Research, 2016). Woolworths have been enjoying a duopoly in the Australian market for many years. Aldi with its strong marketing strategy has established very strong hold over the market through its low pricing strategy and limited product range in a short duration (Clemons, 2015). Aldi has created a fierce competition in the supermarket chain through its strategic marketing plan and severely influenced the market share of the key players by capturing a market share of 12.1 percent (Roy Morgan Research, 2016). Woolworths and Coles have started revising their market strategy to maintain their market share by retaining their customers (Burke, 2016).
Aldi has penetrated the Australian market by breaking the duopoly enjoyed by the Coles and Woolworths through its low cost and efficient supply chain management. Since the market segment of these supermarket chains are price sensitive consumers who are inclined towards low prices where they find greater value for their money.
Aldi has successfully established its market share of 12.1 percent in Australia by breaking the dominance of Coles and Woolworths. Aldi’s low pricing strategy might have helped to penetrate the Australian market but Aldi still need to grow its market share in order to compete with the key market players. Coles and Woolworths have also reduced their prices in order to maintain their market position (Burke, 2016). Coles and Woolworths are the major players of Australian supermarket and have strategically built their market position (Pierce, 2015). Aldi’s pricing strategy has started a war within the supermarket players and both the players are trying to maintain their position by reducing their prices (Burke, 2016). Therefore, Aldi would need a strong marketing plan in order to establish its market position and maintain its sustainability.
In spite of Aldi’s low price strategy, Coles and Woolworths are the market leaders of supermarket chain because of their strong hold over the Australian market. Customers perceive value in Coles and Woolworths and have become loyal customers over a period of years. Now changing their routine habit of buying from these two supermarkets is a challenging task. Aldi need to make more efforts than just providing low priced products.
Aldi needs to study the marketing strategies of Coles and Woolworths in order to grow its market in Australia. Following are the strategies that could be adopted by Aldi to move forward in the industry:
- Online shopping and mobile based application: Aldi needs to open its different channels to increase its customer base and online shopping and mobile based applications are the most preferred ways of shopping by the customers. Coles has established its customer base through its mobile based applications where customers can place their orders (Coles, 2016).
- Home delivery services: After price, the next thing that consumers perceive is value. Consumers look for a great shopping experience where they can sit and relax without even going to the supermarket for shopping. Coles provide free home delivery services to its customers (Flybuys, 2016). Aldi also needs to provide home delivery to the consumers to increase their ease of shopping and create more value driven services (Mudie and Pirrie, 2012).
- Loyalty card: Aldi could also provide a membership card to its customer because a membership card would incline the customer towards the supermarket chain.
Conclusion
The report has successfully analyzed the marketing strategies of Aldi supermarket chain in Australian market. In spite of being an international player, Aldi has established a strong market position within a very short duration. It has captured a market share of 12.1 percent by breaking the dominance of Coles and Woolworths supermarket chains. Its unique value proposition is providing the products at guaranteed low prices to the customers. Aldi’s limited range of products and efficient supply chain system supports its low pricing strategy. Its ‘Swap and Save’ and ‘Like Brands. Only Cheaper’ marketing strategy has helped to spurt its market growth.
Aldi’s market entrance has led to a fierce market competition and Coles and Woolworths have started changing their marketing practices in order to retain their market position. Therefore, Aldi needs a strong marketing plan in order to grow its market share and move forward. Aldi needs to provide online shopping and mobile based application to increase its customer base. It also needs to provide home delivery to ensure value driven services to the customers. Further, it can also start a membership card system to retain its loyal customers.
References
Aldi. (2016). Ensuring your safety is our top priority. Aldi. Retrieved from: https://www.aldi.com.au/en/about-aldi/product-recalls/
Australian Food News. (2015). Aldi tries new strategy to grow bigger market share in Australia. Australian Food News: Thought for Food. Retrieved from: https://www.ausfoodnews.com.au/2015/05/20/aldi-tries-new-strategy-to-grow-bigger-market-share-in-australia.html
Burke, L. (2016). The war no supermarket wants to have. News.com. Retrieved from: https://www.news.com.au/finance/business/retail/the-war-no-supermarket-wants-to-have/news-story/d82bf59300beb17ab27a6d3315da71d8
Clemons, R. (2015). Want to spend less at the checkout?. Choice. Retrieved from: https://www.choice.com.au/shopping/everyday-shopping/supermarkets/articles/cheapest-groceries-australia
Coles. (2016). Strategic Overview. Coles. Retrieved from: https://www.colescareers.com.au/~/media/files/colescareers/…/coles-strategy.pdf.
Flybuys. (2016). Coles. Flybuys. Retrieved from: https://www.flybuys.com.au/collect#/partners/coles
Kakulas, V., and Messurier, D. (2015). Aldi winning supermarket price war against Coles, Woolworths. Perth Now. Retrieved from: https://www.perthnow.com.au/business/aldi-winning-supermarket-price-war-against-coles-woolworths/news-story/535aed3f476dbb411833599950b4b75c
Keating, E. (2015). Supermarket Monsters: Seven insights into how Coles and Woolworths came to dominate Australian groceries. Smart Company. Retrieved from: https://www.smartcompany.com.au/growth/48367-supermarket-monsters-seven-insights-into-how-coles-and-woolworths-came-to-dominate-australian-groceries/
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Mudie, P., and Pirrie, A. (2012). Services Marketing Management, 3rd Edition. London: Routledge.
Pierce, F. (2015). 5 reasons Coles and Woolworths took over the Aussie supermarket sector. Australia Business Review. Retrieved from: https://www.businessreviewaustralia.com/leadership/1880/5-reasons-Coles-and-Woolworths-took-over-the-Aussie-supermarket-sector
Roy Morgan Research. (2016). Supermarket sweep: ALDI’s share of the Aussie market still rising. Roy Morgan Research. Retrieved from: https://www.roymorgan.com/findings/6762-supermarket-sweep-aldis-share-of-aussie-market-still-rising-201604142258
Shankar, V., & Carpenter, G.S. (2012). Handbook of Marketing Strategy. UK: Edward Elgar Publishing.
The Times 100. Creating value through the Marketing Mix. The Times 100: Business Case Studies. Retrieved from: businesscasestudies.co.uk › Aldi › Creating value through the marketing mix
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