Sample Masters Marketing Assignment
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Marketing Plan for Aldi
Aldi is a grocery store chain that originated in Germany. This business entity was established in the year 1913 as a food store; however, by the end of the year 1960, the business of Aldi was expanded to 300 stores in Germany. Aldi has been operating with more than 10,000 stores in different regions of the world. At the international level, the business operations of Aldi are expanded in Denmark, France, Netherland, Spain, and Poland. The gross revenue of Aldi was approximately 30.5 billion euros in the year 2017 (figure 1).
Figure 1: Gross revenue of Aldi in 2017 (Source: Statista, 2017)
Core Competency and Sustainable Competitive Advantage
Selling high-quality products at lower prices is the core competency of Aldi (Aldi, 2017). The organisation has focused on facilitating the customers from the lower and upper-middle-class, by increasing the accessibility of this population to high-quality products. Developing effective relationships with price-conscious customers is also recognised as a sustainable competitive advantage for Aldi (Financial Times, 2018). Aldi has been operating by using the strategy of increasing its sales volume and products by selling products at subsidising prices. Unlike other competitors, Aldi does not spend much on the design of stores, advertisement, and customer care services, such that the organisation sells their products in warehouse-like stores. The SWOT analysis of Aldi is presented in the appendix.
Porters Five force
Porter’s five force Model for Aldi is described below.
The competitive rivalry for Aldi is relatively high. Within the retail industry, all players are offering products at almost similar prices. The price competition is strong in the retail industry, such that the difference of a few pence is also highlighted by the competitors. The retailer industry players focus on increasing the cost of advertising and marketing; however, the prices of products are relatively low. In this regard, there is a highly competitive rivalry for Aldi (Chung, 2015).
Threats of New Entrants
Initiating the retail business from the scratch requires time and capital investments. Opening the new stores, establishing the brand, and reaching the economy of scales of stock, is a systematic procedure. In the case of Aldi, the local farmers associated with the business of fresh vegetables and fruits can take the share of Aldi within the small town, decreasing the sales and profit of Aldi. In this regard, the threat of new entrants for Aldi is medium (Chung, 2015).
Bargaining Power of Suppliers
The retail industry can contact several suppliers for supplying the same products at the same or even less cost to giant retailers such as Aldi. These retailers pressurise the suppliers to supply products at favourable and discounted prices. The suppliers of the retail sector strive for acquiring the largest orders and provide products at discounted prices. In this regard, in the case of Aldi, the bargaining power of suppliers is relatively low (Cox, 2018).
Bargaining power of Buyers
Similar to Aldi, other competitors within the retail sector focus on selling the products at the least possible prices, such that each of the players further attempts to reduce the prices of products. Such intense competition between the competitors contributes to the provision of high bargaining power to the buyers. Aldi cannot attempt to influence the market prices of the products; therefore, the buyers possess high bargaining power over Aldi (Cox, 2018).
Threats of Substitutes
Aldi has not been selling unique products, as all the competitors of Aldi have been selling similar products that are almost similar or even at low prices (Cox, 2018). In addition, the other competitors of Aldi have been spending more on advertising and marketing; therefore, the threat of substitutes for Aldi is high.
The business operations of Aldi are similar to many competitors including Wal-Mart, Lidl, Coles, Amazon, Tesco, Woolworth, Sams Club, and Costo Wholesale. According to the report presented by Weinswig (2016), Aldi was included in the top retailers in Germany.
Figure 2: Aldi competitors (Source: Weinswig, 2016),
The comparison of the revenue of Aldi with competitors is presented in the following table (Statista, 2018). The analysis of revenue generated by the retail stores revealed that Aldi generated more revenue as compared to the competitors in the year 2017 due to its effective business strategies.
|Aldi||30.5 billion euros|
|Lidl||24.33 billion euros.|
Market segmentation and Positioning
Offering high-quality products at competitive prices, Aldi has targeted the middle-income group, such that the individuals of this group are referred to as price-sensitive customers. Aldi has positioned itself as the most economical retail store offering the products at approximately 30% fewer prices as compared to other competitors (Chung, 2015). The no-frills strategy and unmatched discounts offered by Aldi target males and females in the low and middle-income groups.
The target market of Aldi is middle and low-income consumers, willing to purchase high-quality products at low prices (Cox, 2018). Aldi has been positioning itself within the grocery market by utilising strategies different from the competitors, such that the positioning strategy of Aldi is a combination of cost leadership, differentiation, and focus strategy. These strategies have been effectively contributing to acquiring a competitive market share.
|Product||Aldi is more focused on serving quality products to the customer. Aldi pays special concentration to the quality of its products (Aldi, 2017).
Aldi introduces food products through its in-house brands including fresh meat, fish, vegetables, fruits, organic food, drinks, and beverages.
Baby products, cosmetics and beauty products, and apparel products.
Furniture, Bike accessories, dental products, kitchen accessories, and other household products.
|Place||Aldi has been doing business in several parts across the globe, having approximately 10,366 outlets in European countries, the United States, and the United Kingdom (Aldi, 2017).|
|Price||Aldi possesses the competitive advantage of selling high-quality products at low prices. The suitable pricing strategies of Aldi are selected based on the demands of the consumers.|
|Promotion||Aldi utilises the above-the-line and below the line marketing strategies for surviving in the market. The promotional strategies used by Aldi are focused on improving communication between the business organisation and the customers (Chung, 2015).
Aldi promotes its products through its official website, social media platforms, as well as direct emails.
|People||The targeted customers of Aldi are lower middle class and middle-class sections; therefore, the pricing strategies used by this business entity have been focused on the provision of facilitation to these individuals.|
|Process||Aldi engages several suppliers and distributors in its selling operations; however, the processes used by Aldi have been specifically designed to provide products to targeted customers at a low price (Chung, 2015).|
|Physical Evidence||Aldi has also been using the platform of print and social media for promotion. In addition, the blogs and articles establishing a comparison of Aldi with other competitors further contribute to attracting more customers.|
Chung, F., 2015. The Supermarket switch is on as Aldi takes top award in customer satisfaction. Business retail July, 21, p.2015.
Cox, J., 2018. Tesco and Morrisons fastest growing big supermarkets but cut price Aldi and Lidl continue to challenge, data shows. Independent (Online) Available at:< https://www. independent. co. uk/news/business/news/tesco-morrisons-supermarket-aldi-lidl-shopping-inflation-kantar-worldpanel-asda-sainsburys-a8241701. html>(Accessed on: 25 th April 2018).
Financial Times. 2018. Divide opens between German discounters as Aldi juggernaut slows. Retrieved from https://www.ft.com/content/596b0750-bb82-11e5-bf7e-8a339b6f2164
Statista. 2017. Gross revenue of Aldi . Retrieved from https://www.statista.com/statistics/505695/aldi-group-revenue-germany/
Weinswig, D., .2016. German Retail Overview: Characteristics, Developments and Prospects. Retrieved from http://www.deborahweinswig.com/wp-content/uploads/2016/05/German-Retail-Overview-by-Fung-Global-Retail-Tech-May-24-2016.pdf
Frequently Asked Questions
Porter’s Five Forces is a framework used to analyze the competitive dynamics of an industry. It considers five key factors: industry rivalry, the bargaining power of buyers and suppliers, the threat of new entrants, and the threat of substitute products. It helps assess industry attractiveness and formulate strategies.