Discuss about the Hospitality Marketing Management of ALDI.
A business can only expand its profitability and market share by appropriate marketing efforts. The success of a business organization is dependent upon successful marketing operations. The marketing strategy of a business encompasses advertising, public relations, marketing and sales. In the absence of marketing efforts, the company cannot obtain more customers as they are unaware of the company and the products it offered and their quality. Marketing can be defined as the process through which a business organization introduces and promotes its products to the potential customers (Reid and Bojanic, 2009). The present business scenario is characterized by high competition among the business organizations in the same industry. The efforts of the company to develop qualitative products and keeping low prices become worthless, if the customers do not know about it. Therefore, the companies use marketing strategy to promote its products and benefits of purchasing them. The retail business industry is characterized by enormous competition and low profit margins. The supermarket companies struggle to achieve their profitability margins. In this scenario, it is important for the companies like Aldi to create a robust marketing strategy to combat competitiveness and increase market share. In this regard, in this report, the present marketing strategy if Aldi is examined and strategic recommendations are made so that the business organization can move forward.
Aldi is one of the largest retail organizations across the globe with headquarters in Germany. The company was founded in 1913 and since then has established itself as one of the leading retail organizations. Since Aldi is a German organization, it has maximum market share in the country. However, recently, the organization has also expanded its business operations in other European countries, the US, Australia and planning to enter the Chinese market. Aldi has over 8000 retail stores across the globe. Although the market share of Aldi is low in the UK (approximately 10%), its importance is growing as more and more customers prefer low cost products offered by the company. Similarly, the company is also expanding its operations in other countries. In Europe, the major competitor of Aldi is lidl, which is also a discount retailer. In Australia, the company began as a discount retailer selling its own private label. The company achieves low prices by limiting the branded products in its retail outlets and selling its own private label. In Australia, Aldi covered the market niche of low budget people which was previously held by Franklins. After the defunct of the Franklins, Aldi was successful in holding the market share. The target customers make direct transition when Franklins went into trouble and closed down (Croxon, 2012).
Previously, the company was known for its cheap and low quality products; however, it has increased its market share by offering unique products like organic foods (Butler, 2016). In the UK, the company has obtained over 10% market share. In Australia also, the sales of the company has raised up to seven billion dollars (IGD Retail Analysis, 2016).
Aldi entered Australia in 2001 and has over 400 stores across the country. Throughout its internationalization, the company has stuck by its price advantage strategy where it offers private label products at a very low cost. Recently, the customers have also adopted a positive outlook towards private labels and preferring it in comparison to big brands. In Australia, it has also adopted the strategy of targeting middle-class customers who want quality products at affordable prices. It has created a niche by providing private label products to its customers and focusing on grocery shoppers. Moreover, the company has also started focusing on customer satisfaction and ranks highest among all the retail chains. It is also trying to distinguish itself from the largest retail chains of Australia, Coles and Woolworths who are a mirror image of themselves. It has also implemented self-service checkouts and plastic bags to increase the customer service (Evans, 2016). In order to target the middle-class customers of Australia, the company is sacrificing its low budget image. As per the current strategy of the company, Aldi is focusing on supplying fresh produce from the farms, enhancing the product display and modifying the architecture of the company to increase navigation. Aldi is also focusing on tapping the ethical customer base by adding features like reduced energy consumption, implementing LED lights and organic food products. By introducing the self-service option, the company is reducing check-in times and increasing the operational efficiency (Australian Food News, 2015). Aldi’s online marketing strategy is focused on email marketing wherein the company sends emails to all the customers in its database regarding special buys and new arrivals. The strategy is successful in creating excitement and building urgency in the product.
As Aldi sells low-cost products to its customers, it invest minimal amount on the marketing of the organization. The primary marketing methods of the company are word of mouth and email marketing. The customers benefits from the positive image of the organization built by its previous customers. The retail market chain is scientific in its research and adapted its business model according to the Australian market (Reynolds, 2014).
On the basis of the above discussion, the marketing mix of the company in Australia can be presented as:
Product: Aldi offers low rice and private label products. It maintains the quality of its label and sells them in attractive packaging to increase its market share. The company is also targeting the middle class customers by offering qualitative products at low prices. It offers several niche products at low price range. Moreover, in order to increase efficiency, it has initiated self-service system. It is implementing environment-friendly practices to tap the ethical customers towards the organization.
Price: The major competitive advantage of the company is its low price and cheap products. The company is able to reduce the cost of the products by keeping the operational costs low.
Promotion: The Company does not invest heavily in promotions. The primary methods used by the company are word of mouth and online marketing.
Place: Aldi is starting opening its stores in rural areas to tap rural markets and in remote locations to increase market share. It focuses on simplifying the design of retail outlets to enhance customer experience.
Aldi has been successful in distinguishing itself from its major competitors Coles and Woolworths by focusing on middle-class and lower-middle class customers. Since its entry to the Australian market, the company has grown substantially, despite the failure of other foreign retailers. In this regard, the company needs to implement strategies so that it can distinguish itself from its marker competitors and increase market share. Following recommendations can be used by Aldi to grow its market share.
Since the company sells its own private label, Aldi has to focus on maintaining the quality of the grocery products. The company can maintain the quality of the products by creating strategic alliance with farmers regarding quality audit and maintenance. Along with it, the company should also get its supplies from sustainable agriculture to show its inclination towards the sustainable practices and responsibility towards the environment.
The Company should launch online and mobile based shopping for the Australian customers. Today, most of the customers prefer online and mobile shopping due to the comfort and ease provided of checking all the services and products at home. The company should establish the facility wherein the customers can place order online or through mobile app and the company provides home delivery for the booked services.
In order to maintain the customer loyalty and increase the market share, the company can introduce loyalty cards like its competitors wherein the regular customers will be given loyalty cards on repeat purchase. The customers can begin the practice of offering discounts popular products to attract new customers in the organization.
The Company should implement business analytic methods to forecast the social trend and the consumer behavior in the major markets. Accordingly, the company should adapt its produce range and service offerings to maximize its market share. Aldi should exploit the social trends and use them to increase their competitive advantage. The company can use big data or determine the social trends through online channels and social media.
Aldi has a limited marketing strategy wherein the company uses word of mouth and online mediums to promote itself. The company can also use social media or broadcast media such as Newspapers or televisions to promote its products and services. As the company mainly deals with grocery products, the major target customers of the company are families and people in the middle-age group. These customers prefer watching television or reading newspapers; therefore, the company should include them in its marketing strategy.
Conclusions
Conclusively, it can be stated that Aldi is a major retailer across the globe. The company is renowned for its cheap products and private labels. Recently, by focusing on the quality of the products, the company has increased its market share in several countries such as the UK and Australia. Aldi has hanged its marketing policy in the country to break the duopoly of Coles and Woolworths and increase its market share. The company modified its product offering by providing quality products in its private labels. It has also included the strategy of tapping ethical customers by adopting environmental-friendly practices. Along with it, in order to increase the operational efficiency of the company, it has initiate self-service. The primary competitive advantage of Aldi is the low price it offers. Additionally, the company also opens stores in remote or rural places to increase its market share. The company can also assure its growth by creating strategic alliance with the farmers, establishing online stores and loyalty cards.
References
Australian Food News. (2015). Aldi tries new strategy to grow bigger market share in Australia. [Online]. Available at: https://www.ausfoodnews.com.au/2015/05/20/aldi-tries-new-strategy-to-grow-bigger-market-share-in-australia.html [Accessed on: 18 January 2017].
Butler, S. (2016). Aldi cranks up the pressure on the big four supermarkets. The Guardian. [Online]. Available at: https://www.theguardian.com/global/2016/apr/02/aldi-cranks-up-pressure-big-four-supermarkets [Accessed on: 18 January 2017].
Butler, S. 2015. Soaring sales at Aldi and Lidl push market share to 10%. The Guardian. [Online]. Available at: https://www.theguardian.com/business/2015/nov/17/soaring-sales-at-aldi-and-lidl-drive-market-share-to-10-percent [Accessed on: 18 January 2017].
Croxon, N. (2012). IGA tops grocery list: ALDI won’t fill Franklins void in Tamworth’s Centrepoint shopping centre. Northern Daily Leader. [Online]. Available at: https://www.northerndailyleader.com.au/story/98560/iga-tops-grocery-list-aldi-wont-fill-franklins-void-in-tamworths-centrepoint-shopping-centre/ [Accessed on: 18 January 2017].
Evans, S. (2016). Why Aldi thinks self-service checkouts are a stupid idea. The Sydney Morning Herald. [Online]. Available at: https://www.smh.com.au/business/retail/why-aldi-thinks-selfservice-checkouts-are-a-stupid-idea-20160308-gne2np.html [Accessed on: 18 January 2017].
IGD Retail Analysis. (2016). ALDI AUSTRALIA TO INVEST IN STORES AS SALES SET TO REACH $7BN. [Online]. Available at: from:https://retailanalysis.igd.com/Hub.aspx?id=13&tid=1&rid=73&nid=15942 [Accessed on: 18 January 2017].
Reid, R.D.. and Bojanic, D.C. (2009). Hospitality Marketing Management. London: John Wiley and Sons.
Reynolds, E. (2014). Why do Australians love Aldi? The secrets to the supermarket’s phenomenal success. News.com.au. [Online]. Available at: https://www.news.com.au/lifestyle/food/why-do-australians-love-aldi-the-secrets-to-the-supermarkets-phenomenal-success/news-story/fb4c5e30228f5f23b720f7b0caee3018 [Accessed on: 18 January 2017].
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