Discussion
International marketing environment is identified as a complex constellation of demands and limitations which an organization typically encounters while contesting to compete and develop. Effectively distinguishing values in global business markets necessitates a highly sophisticated understanding of differentiated expressions of consumers’ demands, a vast proportion of which are determined by cultural aspects (Miller, Hutchinson and Goodman 2018). The following report evaluates the background and analyse the internal and external market environment of Aldi, a German-based retail store that had its business development in a totally new international marketplace in India.
Aldi, the German based retail store had been established in the year 1948 by tow indomitable brothers Theo and Karl. The organization has eventually developed itself as one of the renewed and well-established planetary nutrient retail commercial enterprises comprising over 7000 outlets across the world (Aldi.com 2018). In 2001, Aldi initiated its business operations in developed nations like Australia, Austria, China, Denmark; the Great Britain along with the USA and other counties has undergone rapid expansion over the ages. The company has efficiently adopted a world-wild policy of successfully providing its people with supreme quality merchandises at economical values. This successful implementation of low financial standards have led Aldi attain substantial level of success and growth and develop a highly competitive advantage position in these retail sector. However, Aldi in recent years has been encountering several challenges and barriers while executing their business operations in the food retail sector thus intending to make an expansion in a completely new retail market such as in India (Brown and Dant 2014).
On the basis of ‘Competitive Implications from Resources” model, there can be identified certain resources and expertise of Aldi which serves as significant strategic demands and impositions along with certain level of strategic strengths. Marketing analysis reveal that the strategic capabilities and strengths are recognized as highly superior expertise which Aldi constitutes. These advanced levels of competences however have proficiently created a highly sustainable competitive advantage position in the sector resulting to earn increasing rate of revenues and profits (Aldi.com 2018).
Furthermore, strategic necessities such as supply of good quality economical products along with efficient allocation capacity are regarded as the minimum competencies and resources required in order to execute business operations in retail sector of these counties and further would progress towards high rate of profitability (Brown and Dant 2014).
The incomes and competencies of Aldi have facilitated the company to earn significant “Below average returns” under the feature of performance implication which have been identified as their strategic limitations such as product delineation and prominence acquired through customer services (Grimmer, Miles and Grimmer 2015).
Aldi’s Background Analysis
Macro Environment- Macro environment typically involves the generalized influences which tend to impact an industrial sector (Chawla, Agrawal and Sharma 2016). Macro environmental analysis purposed for Aldi has been executed in order to implement the PESTEL analysis and further situating fundamental developments which have been affecting the prospective growth of the company in food retail market. The Indian retail sector typically constitutes of organized and unorganized retail and currently estimates over US $ 480 billion (Gupta and Dubey 2018).
Political Environment
- Well-established tint of competition with the entry of leading organizations like Aditya Birla & Reliance India groups into consumer retail sector. Extensive lobbying has been done to safeguard the investment of unorganized retail stores. The essential intention of various political parties has been to enhance their individual vote banks (Zakaria et al.2014).
- Increased levels of conflict as well as political liability across the worldwide have recently been posing threats to the growth and sustainability of global business enterprises who might encounter high level of challenges based on the home nation (Trevena et al. 2015).
- Alterations in authorities’ income development policy- With the vital transitions in the process of regulation of political parties, the revenue development policies and directives corresponding to their dockets could be immensely indecisive for the company (Ododo, Mulholland and Turner 2015).
- Significant shift in the level of consumption pattern of consumer goods has been observed. It has been regarded as a primary source of development in the exponential growth.
- Rapid growth of various formats in Indian retail sector has been in due course put to customers in perplexed state. Thus Indian retail sector is unable to distinguish between lucrative deals supplied by various organized as well as unorganized shops.
- Consumers across the world including India can comprehend the value of corporate social responsibility (CSR) activities. Indian buyers of retail sector can sense the gravity and have been ready to post query regarding their contribution to the nation and society related to environmental friendly imitative (Jing, Avery and Bergsteiner 2014).
- Greater degree of demand and inclination towards packaged food products for both young and middle aged population since recent past is a distinct indicator of the shifting lifestyle of Indians (Grimmer, Miles and Grimmer 2015).
- Indians because of their inclination towards energy-efficient or environment friendly products and services have considered these aspects as morals or values (Lavania and Dixit 2017). Thusbusiness organizations efficiently adopting such values and standards will attain high level of sustainability and growth while operating their businesses in the Indian food market.
- Leading players of Indian retail sector have already enhanced their budget on information technology spending an approximate of 35% in 2015 (Chandra 2015). Effective implementation of SCM (Supply Chain Management) solution to core businesses such as global sourcing, retail and logistics.
- Emphasis on Innovation, Advanced Ideas, New business- Operating trade especially food retail business is identified as an undemanding process in India as majority of business procedures being digitally processed with high level of convenience and expediency (Zakaria et al.2014).
- Highly increasing world-wide concerns in terms of environmental pollution should create greater degree of coercions and further intimidate relevant administrative bodies to risk factors such as natural disasters and weather patterns (Chandra 2015).
- Increasing level of concerns on packaged food market sector has fortified the legal demands thus obligating market authorities to sustain an integrated intervention through policies in order to provide supreme quality food products to Indian customer base (Cameron et al.2015).
- Other legal factors which Aldi must be aware of pertain to issues related to employment, health and safety, acts of discrimination as well as antitrust.
Recent market research has revealed the way leading grocery firms Spencers, Reliance Fresh, Lifestyle Stores, Central and D-Mart have been adopting diverse marketing strategies thus Aldi needs to strictly follow economical pricing value benefits by utilizing private labels which will enhance around 20% of Indian super retail markets brands (Aldi.com 2018). These private labels furthermore have been anticipated to rise up to 40% of all food as well as grocery sales in India within next 5 years (Brown and Dant 2014). Furthermore, there can be witnessed a significant transformation in the Indian consumers’ behaviour, preferences and demands towards privately owned labelled food products with a greater level of consumers exhibiting inclination towards renowned brands and their services (Aldi.com 2018). Aldi supermarket outlets in India will face criticality in creating marketing strategies and should target major proportion of customers of low and middle income base by employing various forms of marketing representations (Miller, Hutchinson and Goodman 2018).
There can be identified several factors within the regulation of the Aldi and its relevant activities which exhibit a tendency to impact the organization. There have been witnessed primary factors which can be segmented as micro environmental factors.
Marketing networking- This factor involves the distribution and allocation channel, stores, outlets, marketing representatives as well as market investigation business enterprises (Jing, Avery and Bergsteiner 2014).
Suppliers- Aldi suppliers play a vital role in offering quality products and services and establish enhanced working associations with the organization.
Public- This section constitutes the people who exhibit high level of inclination towards the organization which tend to pose potential interest or effect on Aldi’s competence to successfully attain success in retail sector (Lavania and Dixit 2017).
Marketing Intermediaries- This factor primarily focuses on external auditors, financial organizations along with credit agencies.
Business to Consumer (B2C) – Aldi – B2C or business to consumer refers to commerce between a business and individual consumer base. Aldi comprises of several stores and outlets across the world which typically offers products to wide ranging customer base (Venkatesh, Rathi and Patwa 2015).
Market Analysis of Aldi’s Macro and Micro Environment
Conclusion
To conclude, considering the macro environment analysis it a distinct balance of threats and opportunities can be witnessed for Aldi in order to operate within the Indian retail sector. The comprehensive analysis of the micro environment with Porter’s Five Forces model has signified that the high rate of power existing among market rivalries is immensely high along with a developing threat of substitutes as well as elevated bargaining competence among the consumers. These aspects have been considered to condense the market magnetism and productivity in its prospective days. The report has provided an explicit understanding of Aldi’s food retail business in India along with an analysis of its target market analysis.
- Evaluating the nature of competition retailing sector in India, it is highly crucial for Aldi outlets to initiate a consumer retention policy with their current emphasis on business development. However such a process will ensure Aldi’s expanding market revenues by introducing loyalty or privilege cards with periodic deliverance accumulated rewards.
- Customer retention policy will further significantly facilitate Aldi’s prominence as economical or low pricing marketing pricing strategy might raise threat to the Indian food retail market whereby other competitors may target Aldi’s market share by introducing creative and innovative marketing approaches with service improvements.
References
Aldi.com 2018. Welcome to ALDI. [online] Aldi.com. Available at: https://www.aldi.com/ [Accessed 5 Sep. 2018].
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Lavania, S.K. and Dixit, R., 2017. Indian Retail Industry–Its Challenges and Opportunities. Journal of Retail Marketing & Distribution Management, 1(1), pp.18-21.
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Ododo, C., Mulholland, G. and Turner, J., 2015, November. Can Discount Pricing Be A Comeptitive Brand Strategy? An Evaluation of Aldi. In International Conference on Marketing and Business Development (Vol. 1, No. 1, pp. 241-251). Bucharest University of Economic Studies Publishing House.
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Zakaria, I., Rahman, B.A., Othman, A.K., Yunus, N.A.M., Dzulkipli, M.R. and Osman, M.A.F., 2014. The relationship between loyalty program, customer satisfaction and customer loyalty in retail industry: A case study. Procedia-Social and Behavioral Sciences, 129, pp.23-30.
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