Predicting Retail Brand Extension Strategy

Background to the Company

Discuss about the Predicting Retail Brand Extension Strategy.

The customers have a greater choice over where they purchase their desired services as well as goods. An organization has to figure out what the customers need and then recognize the best approach with the help of which that company can satisfy these wants and needs in terms of meeting business objectives of the organization. The major focus of this report is for analyzing the marketing strategies those are pursued by ALDI discount supermarket chain since the time of its establishment. Therefore, this study also aims to evaluate the strategies related to marketing and the effectiveness of those strategies. Moreover, this report also relates to be the real-life experiences as well as the proper research for looking at the core marketing theory. On the other hand, the marketing options for ALDI are also aimed to be demonstrated in this study if this grocery retail organizations wishes for remaining a successful company throughout the next decade.

Aldi is common brand of the two major as well as leading international discount supermarket chains in 18 countries with over 10000 stores around the globe. This retail organization has a combined and an estimated turnover of more than € 50 billion (Aldi.co.uk 2017). This retail chain is based in Germany. It was established by brothers Theo and Karl Albrecht in the year 1946 while they took over the store of their mother in Essen which was started to operate since 1913. The headquarters of ALDI are located in Mulheim and Essen in Germany. Few ALDI business practices are common in the supermarkets in Germany but significantly authentic to ALDI in other nations. These practices incorporate the system of turnstiles and metal gates charging the customers for shopping bags and forcing customers to exist over the checkout (Aldi.co.uk 2017). This organization specializes in staple goods like food, beverages, sanitary articles, toilet papers and other household goods.

Since the beginning of this retail chain as well as the reformation of this huge retail organization, Aldi has established itself as a renowned and one of the most reputed retailers in the international business market in terms of providing quality as well as great value (Baker 2014). Aldi aims to provide the customers with the good quality that the customers purchase on a regular basis and ensure that the products are of the possible highest quality at guaranteed low prices. On the other hand, other major focus of the marketing strategy of this retail chain is on demonstrating that the Aldi brands are of equal quality to the well-known brands  (Referred to Appendix 1). Aldi ran the blind taste tests among to do this among the shopper’s cross section. These have confirmed that most of the customers who liked the popular brands also liked the brands of Aldi (Lund & Marinova 2014, p.100). Therefore, these findings have created the basis towards the “like brands” marketing campaign conducted by Aldi.

The Nature of ALDI’s Marketing Strategy or Strategies since it began

The grocery market in Australia is the most heavily concentrated market all over the globe. In the year 2001, the global grocery retailer ALDI has come into this competitive and concentrated environment. It was an interesting move given that entry into the grocery retail market of Australia is difficult and complex as well (Gummesson, Kuusela & Närvänen 2014, p.228). While entering the Australian grocery retail market, ALDI focused more on providing the high quality product in low prices. Moreover, this particular strategy has also helped this retail grocery organization to acquire the other neighbor countries such as New Zealand, Singapore and other countries. Furthermore, the marketing strategy of ALDI involves a strict aim on what it sees as the core business. Therefore, ALDI is not following the Coles as well as Woolworths practices of expanding their retail base for incorporating online shopping, liquor, pharmaceuticals and petrol.  On the other hand, the major elements of the low price element of this particular strategy are the price change policy, limited range, focus and the exclusive brand products (Brown & Dant 2014, p.467).  The central strategy of ALDI is to focus on the exclusive brand products and thus this organization forms the partnerships with the leading manufacturers for producing the own-brand goods. Moreover, central to the capacity of ALDI for reducing costs is the provision of only a limiting range of products. ALDI significantly reduces costs by stocking only one size of each product.

As per the focus in the market strategy adopted by ALDI in Australia, one area where ALDI would move away from a very strict policy to sell only the major products is that it has the practice of “surprise buys” within that several products like computers or televisions would be sold in the stores with the constant prices (Steenkamp 2017). In addition, the policies made by ALDI on the changes in price is to be the first in the grocery retail industry for passing on lower costs to the customers and last for increasing costs while costs increase. ALDI has pointed out the change to the customers by placing a note on cartons inside the stores. On the other hand, the long term-approach and value proposition are two significant marketing strategies with the help of which ALDI has been successful to capture a huge marketplace in Australia along with New Zealand, Singapore and PNG.

Organizations should always focus on improving their business as well as marketing strategies in terms of achieving more success by gaining huge competitive advantage (Yu, Ramanathan & Nath 2014, p.26). Therefore, in case of ALDI, this large grocery retail organization should also concern on searching more marketing options to promote their product more to the people in Australia, along with Singapore, New Zealand as well as PNG (Referred to Appendix 2). Thus, ALDI is trying their new strategies in order to grow the market share of this organization in the Australian market. In this regard, ALDI should utilize the AIDA model in terms of demonstrating the aim of any kind of promotional activity. As per this model, ALDI should think for initiating the awareness amongst the customers of the grocery retail enterprise (Metzger 2014). On the other hand, ALDI should also generate interest for and desire to have the products. Moreover, ALDI should aim to convince effectively the consumers to take action for purchase their products. All of the AIDA activities are the significant marketing options for ALDI for remaining the most successful enterprise in future days.

Strategic Marketing Options for ALDI moving forward

In this regard, ALDI has focused on trialing a new style of Australian retail store. Therefore, ALDI has opened new four shops that move away from the low-budget aspect over the past few months (Stone 2015, p.21). The new store concept of ALDI is aimed on the improvised displays of product, expansion of fresh produce as well as new layouts that attempt for improving the navigation. As per the marketing options in Australia, this grocery retail organization has also aimed for cutting the average check-out waiting times at shops as well as is attempting for winning over the ethical shoppers with the environmental concerns those must be resolved in numerous new locations for them (Hibbert 2015, p.268). Thus, the new ALDI stores also incorporate the features like LED lights with the organization being committed for reducing the consumption of energy. Furthermore, these changes usually follow the review got from the customers but this retail organization is adamant that these would not influence the capability of offering the low prices. The trial centers of ALDI are located in Highton (VIC), McGraths Hill (NSW), Chuisholm (ACT) as well as Kallangur (QLD) (Aldi.com.au. 2017).

Now the question comes whether this marketing decision is a good marketing option for ALDI or not. Therefore, in this regard, it can be stated that ALDI has become successful in its business expansion in Australia as more local councils have permitted this enterprise for operating stand-alone sites that the organization prefer among the places in the shopping hubs. As a result of which, ALDI can successfully bring in house-branded products with better quality and colored packaging (Mitchell & Chaudhury 2014, p.94). Therefore, the marketing option of setting the trend of house-branding has helped this organization to gain huge competitive advantage and would also help ALDA to remain in a good position within the Australian market by beating Woolworths, Coles and other such popular retail organizations.    

Conclusion

After conducting the entire discussion, it can be stated that being a Germany grocery based retail organization; ALDI has successfully captured a good position in Australia along with New Zealand, Singapore and PNG with the help of its innovative marketing strategies. Most important fact is that ALDI has adopted all marketing strategies by concerning the customer benefit, which seeks more customer attention to buy their products. On the other hand, in order to remain a successful organization throughout the next decade in Australia along with its neighbor countries, ALDI has aimed in bringing in house-branded products with better quality and colored packaging.

References

Aldi.co.uk. (2017). ALDI UK | Homepage. [online] Available at: https://www.aldi.co.uk/ [Accessed 23 Jan. 2017].

Aldi.com.au. (2017). ALDI Australia – ALDI Australia. [online] Available at: https://www.aldi.com.au/ [Accessed 23 Jan. 2017].

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Gummesson, E., Kuusela, H. & Närvänen, E., 2014. Reinventing marketing strategy by recasting supplier/customer roles. Journal of Service Management, vol. 25, no. 2, pp.228-240.

Hibbert, E.P., 2015. The Impact of Culture on Strategy and Organisation in International Retailing. In Proceedings of the 1996 Multicultural Marketing Conference. Springer International Publishing, pp. 268-273

Lund, D.J. & Marinova, D., 2014. Managing revenue across retail channels: The interplay of service performance and direct marketing. Journal of Marketing, vol. 78, no. 5, pp.99-118.

Metzger, K., 2014. International Management Analysis of ALDI.

Mitchell, V. & Chaudhury, A., 2014. Predicting retail brand extension strategy success: A consumer based model. Journal of Customer Behaviour, vol. 13, no. 2, pp.93-111.

Steenkamp, J.B., 2017. Global Brand Strategy: World-wise Marketing in the Age of Branding. Springer.

Stone, M., 2015. Competitive marketing intelligence in a digital, data-based world. Journal of Direct, Data and Digital Marketing Practice, vol. 17, no. 1, pp.20-29.

Yu, W., Ramanathan, R. & Nath, P., 2014. The impacts of marketing and operations capabilities on financial performance in the UK retail sector: A resource-based perspective. Industrial Marketing Management, vol. 43, no. 1, pp.25-31.