Marketing Strategy Of ALDI

Company Background

Discuss about the Marketing Strategy of ALDI.

According to Baker (2014), marketing strategy is the art of developing the demand of a particular product or a brand that is present in the current market. To develop a product market strategy, it includes the development of a new product and launching it in the existing market. Therefore, marketing can be defined as a customer group, consumers, clients and the difference between the wants and needs from the viewpoint of the product and the service that it will provide. It also includes the perception of performance, ownership and the competitive advantage of the product in the market.

Aldi began its operation in Australia from 2001 onwards in the month of January. It started on the Eastern side of the country where stores were present in Queensland, New South Wales and Victoria. The company as of 2013 had around 300 stores in operation and they intend to open about 20 to 30 stores with each passing year. The distribution centres of the company are at Minchinbury and Prestons, which are located in New South Wales, Staplyton in Queensland and Victoria, which has two centres that are Derrimut and Dandenong. (Refer to Appendix)

Two brothers Karl and Theo Albrecht first started the company as a private business organization in Germany in the year 1948. The brothers then split the company in two halves, which were called Aldi North headed by Theo, and Aldi South headed by Karl respectively. The name Aldi came from the original family name, which was Albrecht Discounts. The main aim of the company was to offer heavy discounts to the consumers on the various products that the store had. They even organized the ‘special buys’ that had different products in each week (Corporate.aldi.com.au, 2017).

At the time of entering the market, the strategy adopted by the company was to offer quality products at a very low price. The key elements that helped the strategy to be formulated were:

Exclusive brand products- The focus of the company was on exclusive products that were offered by the different brands. The company went in to partnerships with many leading manufacturers to come up with their own line of goods and products. A few brands like Vegemite, were offered to the customers because the company kept on looking for substitute that would cost less and yet was a good alternative to the main product (Ododo, Mulholland and Turner 2015).

Marketing Strategy of the Company in 2001

Limited range- The Company in all means wanted to provide the customers with low cost high quality products. This was only possible with a limited range of products as to stock the items related to the characteristics of the products in which Aldi took up the lead. It looked for suppliers who could provide the products with the taste according to the customers keeping in mind the factor of competitive price. Aldi offered those products at their most popular sizes and not all the sizes that were available for those products. Because of this, the other supermarkets had around 20,000 units in its production line where as Aldi had like around 600 to 700 lines at the most. The company significantly reduced its cost structure by stocking a particular size of the products that were liked by the consumers (Price 2016).  

Focus- The focus of Aldi regarding the products was to maintain its core business properly and not diversify unlike Woolworths and Coles who expanded their business from retail sector to petrol, pharmaceutical, liquor and the e-commerce sector. Aldi kept a policy of “surprise buys” wherein it sold products like televisions and computers, which were bought in bulk to supply their consumers for a limited period. These “surprise buys” were made by the company to play the game of low pricing yet selling a high quality product policy (Mitchell and Chaudhury 2014).

Policy of price change- According to Price (2016), the Company maintains a strict policy regarding the pricing change in the stores. The company believed that the customers should enjoy their products that are available to them at the lowest prices and were the last company to increase the price of their products. The change in the price was notified to the customers by placing an informative note regarding the changes on the cartons that were present in the stores.

As the organization is owned privately, it has the capacity to make decisions regarding business, which would have a negative impact on a short-term basis but would prove to be beneficial in the end. Aldi developed good relationships and long term partnerships with the suppliers so that if any new supplier in the market offers a cheaper price than the market rate to Aldi, then also the company would give a chance to the existing suppliers to compete with the new ones over the price range. This served as a positive point for the existing suppliers because they knew that the company would not stop taking products from them suddenly (Lehner and Halliday 2014).

Long-Term Approach

The main motive of the company is to grow within the Australian groceries market. The researchers identified that around 80 percent of the customers shopped at the supermarkets. The strategy that was adopted by Aldi was to focus on customer loyalty. The company also saw that the customers were aware of the Aldi brands that were of equal quality as the super brands like Fairy Liquid and Heinz. To succeed in this, the company made their own line of products and asked customers to taste it where they found that the customers were not able to tell the differences between the two brands. This gave a chance for Aldi to advertise their quality in an effective manner (Foster et al. 2014).

The company focused on giving high quality products to their customers at a very cheap price, which the customers saw as an alternative. The marketing mix that was taken up by Aldi was (Refer to Appendix):

Product- The company provided their ‘Like Brands’ which were of very good quality and could compete with the better brands that were available in the other supermarkets such as Coles and Woolworths (Armstrong et al. 2014).

Price- The main motto of the company was to give the customers the products at a lower rate than all the other markets would give. This gave an advantage to the company over the pricing factor of the products (Drzazga 2014).

Place- The success of the company was very well and the company expanded its chain to global scales so that it can broaden the base of the customers (Armstrong et al. 2014).

Promotions- the Company promoted their brand in a combination of above the line and below the line  type of promotional methods and focused on the ‘Like Brands’ and the ‘Swap and Save’ campaigns (Drzazga 2014).

This type of promotional activity taken up by the company illustrated the perfect balance in the marketing mix. To increase the loyalty amongst its customers the company made them aware of the products, which helped in recognizing the brand. The demand for the products increased due to the superior quality of the products and the services that were available to the customers (Schmutzier 2015). (Refer to Appendix)

The company took up this promotional activity so that the company can make use of the social media platform that is available to them. This allowed the company to communicate freely with the customers which included the use of the social media to make the customers aware of the products, the e-mails of the customers so that when a new product launches they get to know it and even if the company offers discount on the products (Mullin 2014). (Refer to Appendix)

Marketing Strategy of ALDI Recently

The AIDA model that was adopted by the company helped them to illustrate their promotional activities. This helped the company to create awareness of the products amongst the consumers, generating the interest of the customers by offering them products at a cheaper price than the other stores. The desire to purchase the product can then be generated amongst the consumers by the company, which will eventually lead them in taking an action of purchasing the product and trying it (Brandes and Brandes 2015).

Conclusion

The grocery industry is one of the most established and globally competitive industries, with the space of the changing markets that is happening in the recent times. It is very difficult for Aldi as the competitors are working their way up to increase their share in the market and exploiting the resources available at that place. In this competitive level, it is difficult for companies like Aldi to give huge discounts as the other supermarkets are also following that path. It all comes down to the quality of products that is available in the Aldi stores, where the company never compromises on their product quality. The marketing strategy adopted by the company since its inception has been very simple that is to give the customers quality products at the best price that is available in the market so that there is no alternatives offered by other companies on the factor relating to price. The promotional strategies taken up by the company also proves that the focus of the company is only related to price as they have a limited number of products that sells best in the market.

Reference List

Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.

Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.

Brandes, D. and Brandes, N., 2015. Bare Essentials: The Aldi Success Story. Linde Verlag GmbH.

Corporate.aldi.com.au. (2017). ALDI History – ALDI Australia. [online] Available at: https://corporate.aldi.com.au/en/about-aldi/aldi-history/ [Accessed 21 Jan. 2017].

Drzazga, M., 2014. New Media in Marketing Communication in Multichannel Retailing. Studia Ekonomiczne, (205), pp.23-33.

Foster, G.D., Karpyn, A., Wojtanowski, A.C., Davis, E., Weiss, S., Brensinger, C., Tierney, A., Guo, W., Brown, J., Spross, C. and Leuchten, D., 2014. Placement and promotion strategies to increase sales of healthier products in supermarkets in low-income, ethnically diverse neighborhoods: a randomized controlled trial. The American journal of clinical nutrition, 99(6), pp.1359-1368.

Lehner, M. and Halliday, S.V., 2014. Branding sustainability: Opportunity and risk behind a brand-based approach to sustainable markets. Ephemera, 14(1), p.13.

Mitchell, V. and Chaudhury, A., 2014. Predicting retail brand extension strategy success: A consumer based model. Journal of Customer Behaviour, 13(2), pp.93-111.

Mullin, R., 2014. Promotional Marketing: How to Create, Implement & Integrate Campaigns that Really Work. Kogan Page Publishers.

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.

Price, R., 2016. Controlling routine front line service workers: an Australian retail supermarket case. Work, employment and society, 30(6), pp.915-931.

Schmutzler, A.R., 2015. FMCG Marketing and Sales: Organizing Trade Marketing, Category Management, and Shopper Marketing (Doctoral dissertation, WHU–Otto Beisheim School of Management).