Retail Marketing
Table of
Contents
Introduction:
Today’s
business world is so much competitive. To survive in this competitive era, most
of the companies do retail marketing in innovative way to get competitive
advantages from the competitors. Retail marketing is the customer focused
business system where the companies serve their customer directly without any
intermediary. As a result of retail marketing both the customers’ surplus as
well as producers’ surplus in increased. There are lots of multinational
retailers all around the world. The
numbers of the retailers as well as branches of the existing retailers are
increasing day by day. According to the guideline I select ALDI which is a
non-domestic retailer in the United Kingdom (UK). ALDI is a Germany based
leading global discount supermarket serving in 18 countries with 10,000
branches across the world. ALDI is serving its customers with the necessary
household products, dairy food, vegetable, Alcoholic product and dresses as
well. In this report the retail mix of the ALDI is analyzed then the sources of
its competitive advantages and the sustainability of the competitive advantages
is discussed and finally ALDI’s international growth prospect is discussed.
Retail Mix of ALDI
The
main focus of the retail marketing is to serve its customer directly without
intermediary via lower pricing strategy. As a retailer, ALDI also serves its
customers directly without intermediary in UK. For the retailer it is the most
important fact to design its marketing mix properly. In designing marketing mix,
the market trend and customers’ behavior must be taken into consideration (Armstrong
and Kotler, 2012). According to the requirement of the
report the retail mix of the ALDI is going to be discussed.
Merchandise range and assortment:
The first element of the
marketing mix is the collection of products. Customers’ buying behavior must be
taken into consideration at the time of designing product line(Blythe,
2013). The cost and
quality are the two factors which can create competitive advantage for the
company over its rivals. The company must be trade-off in between cost and
quality of the offered products. Around 1300 products are offers by ALDI. The
merchandises offers by ALDI are different types of recipes, fresh and bakery,
drinks, baby and toddler, health and beauty, pets, frozen and flower and
gardening. Specially, ALDI focuses on the lowering cost by maintaining the
standard quality of the products. ALDI is not only single customer segment focused.
It targets all type of customers to serve. In this respect ALDI introduced its
owned branded products as well as from large quantity production ALDI is able
to reduce its product cost.
Retail Communication:
Communication
plays the most important role to capture the market. Without proper
communication channel it is not possible to survive in any industry in the
current competitive era. Regular and incessant communication with the both
customers as well as suppliers must be maintained. Regular and well behaved
communication to the old customers help the company to keep the customers
satisfied and build a bonding in between the customers and the company which
helps the company to earn from the repetition(Aldisuppliers, 2015).
The old satisfied customers bring new customers to the company naturally. Comparing
with the rivals ALDI is able to build proper relationship with both the
customers and suppliers through efficient and effective communication channel. ALDI
uses mainly social media like Facebook and Twitter to keep its customers
updated and informed regarding the company offerings (Facebook, 2015).
Store layout, design and visual merchandising:
Store layout, design and visual
merchandising also create competitive advantage for the company. The uniqueness
in store layout and design makes the company more familiar to the customers and
comfortable also. And this uniqueness in product categorizing and placement
reduce customers’ shopping time at time of shopping from any store from any
places. ALDI follows the same store layout and design across the country which
is helpful for the customers to pick up the store easily which increase the
loyalty of the customers to the company as well as company can keep its
customers for the longer time.
The visual merchandising refers
to the features of the product must be clear enough to the customers so that
customers can choose the most favorable one for him/her. In this fact, ALDI is efficient
and experience enough.
Customer service and facilitating services:
In this competitive world the
most important thing is the customer satisfaction where all competitors selling
most probably same type and quality of the product. The company which is able
to maintain a good relationship with the customers through the best customer
service can have longer-term satisfied customers. And the satisfied customer will help the
company to survive in the competition as well as to earn more and more profits.
In ALDI the company’s management is so good. The sales people are well trained.
And the well trained employees are able to serve the customers satisfactorily.
The company also launches Mobile App through which customer can know the latest
offerings, any occasional discount declaration and any other important facts of
the company(Aldi, 2015).
Formats and Locations
Formats and locations of the
outlets should be in such a place from where the largest number of the targeted
customers can shop. To ensure easy and comfortable access for the customers the
ALDI run more than 500 outlets in UK. The consequences of running more outlets
are highest employment in the social context and capturing large market share
in industry in business context. In terms of employment, ALDI already provide
job around 5000 people in this year. On the other hand in terms of market
capitalization ALDI is able to increase its market share from 4.7% to 5.5% in
the retailing industry in UK.
Pricing Strategies and tactics:
In the developed technological
era every company must have to compete with the quality product. Since every
company serves the customer with the quality product the comparative advantages
come from pricing strategy. The company which can able charge lower price than
that of its competitors as a result of large scale production, large scale
selling can survive in the market as well as can able to lead the market one
day. In UK, ALDI is one of the leading companies in retailing industry which
follow the lower pricing strategy and make profit from economies of scale and
large scale selling.
Assessing the extent to which the retail mix provides a basis for sustainable competitive advantage
Sustainable
competitive advantage refers to the competitive advantage which is not short
term that means the competitive advantage which will last longer in the future.
The company having the competitive advantage over its rival but which is not longer-lasting
may not survive in near future. So the competitive advantage which is
sustainable is a must for the company’s survival. The extent of the sustainable
competitive advantage of ALDI is derived from the retail mix are going to be
discussed now.
Competitive advantage from merchandise range:
The merchandise
range of the ALDI is so much wide. They are offering around 1300 products to
the customers. The company which is able to provide more segmented product to
its each and every specific group of customers can satisfies its customers more
than that of its rivals. Since ALDI is running ‘one stop” outlets from which a
customer can buy most probably all of his or her necessities, it will be
attract new customers and able to build a strong bondage with the existing customers
(Doole and Lowe, 2008). This collection of verities of product as well as one
stop outlets is the sources of the sustainable competitive advantages for ALDI.
ALDI also owned branded products to the customers and own branded products make
the customer more confident regarding the quality of the product. Since those
stated facts create the sustainable competitive advantages for the company but
it cannot be said that this competitive advantage will continue forever. Thus
why always to be in a better position comparing with the competitors, ALDI
should add more and more products based on the demand of the customers.
Competitive advantage from customer service
Nowadays
customer service is the most important fact for any company. The company which
is able to provide its customers within shortest possible time as well as in a
befitting manner will get the sustainable competitive advantage over its
rivals. ALDI has a dedicated customer service department. From this department
ALDI always try to serve its customers within shortest possible time with the
quality products. The customer service department always works on how the
customers will be made more satisfied day by day. ALDI’s mobile app is playing
an important role in this fact. Via this mobile app, ALDI can spread its new
offering to its customers. Customers can make themselves updated about ALDI’s
any occasional discount offerings also and they can easily grab the
opportunities. Again it cannot be said that the present condition will remain
forever. To make the comparative advantage sustainable for the longer period
ALDI has to introduce new ways to serve its customer which are better than that
of its rivals.
Competitive advantage from location selection, business formats
Retail
industry is so much competitive. To sustain in that competition company must be
able to having a large group of customers. To catch a large group of customers,
the outlets’ location selection and suitable business formats play an important
role. Location must be in such a place so that many customers can easily access
the outlets and shop within a shortest possible time from his/her house. To
ensure best location service to its customers ALDI has already more than 500
outlets across the country and it has decided to start more 70 outlets in the
county to serve its customer(Telegraph, 2015). As a result
ALDI is in a better position than that of its rivals in serving its customer
easily and quickly.
Competitive advantage from pricing strategies
ALDI
is discount supermarket. So it can be said that ALDI is focused on lower
pricing strategy. Actually this is so. ALDI always works on how to provide
customers the quality product with a low cost. In this era of globalization,
quality of the product is a must. Without ensuring quality no company can
survive in this pierce competition (Smith and Zook) 2011).
After then ensuring quality the company will get the comparative advantage if
it can lower its products price. ADLI’s customer groups are so broad. It serves
most probably all types of the customers. Since ALDI’s targeted customers are
large, it can produce in a large scale as well as and sell in a large scale.
For this reason ALDI is able to reduce its production cost for economies of
scale and can make more and more profit from large volume sales to its wide
customer groups.
Evaluation of the challenges to the continuous international growth
The
retail industry is so much competitive in this era of busyness. When a company
is in a better position than that of its rivals, it does not mean that this
position will remain for longer period. Any of the competitors can take the
place by providing better services than that of the present leading one.Thus
why, the one which is in the position, must has to innovate new ways to serve
customers comparing with others to remain in that position. The ALDI form
Germany it is now serving 18 countries around the world including UK. For the international
growth any firm has to face country specific hindrance along with the
international competition. The challenges for the ALDI’s growth in the
international market are going to be evaluated in section.
PEST analysis:
Before entering
in a new market any company must has to evaluate the strength and weakness in
the company itself, and opportunity and threat in the environment. PEST analysis is used for analyzing the
environmental opportunities and threats. PEST stands for Political, Economic,
Socio cultural and Technological factors analysis. For ALDI, the PEST analysis
is so much important to enter in a new market which is going to be discussed
now.
Political Factors:
the political ideology and power of the origin country of the company plays an
important role in the companies’ international growth (Kotler and
Keller, 2011).The agreement among the countries
regarding the business paves the way for the companies’ international growth. For
example the EU treaty paves the way for ALDI to expand its business around the
Eurozone.
Economic Factors:
economic factors like interest rate, inflation, employment of the country in
where the company is going to expand its business is so much important. If the
economic factors are not supportive for the business, the company should not go
for the expansion in that country.
Socio cultural Factors:
it is the customers features based on which the company has to decide about its
product line, offering system etc. The inhabitants’ culture, nature, buying
behavior, taste etc. need to be taken into the consideration.
Technological Factors:
the change in technology can make the business flopped
overnight. The company must have to go along with the technological changes.
Company must have to come up with new advanced technology to make the customers
satisfied (Miller, 2012).The mobile app for
the ALDI’s customer to remain updated plays an important role in maintaining
its customers.
If
all of the four factors are supportive or going to be supportive in the near
future only then the company should extend its business in that respective
country.
Porter’s five forces analysis:
According to
Porter (2004), to analyze the future prospect of business of any country the
five forces must be taken into consideration. The five forces are
Threat to new entrants: if there are
entry barriers like start-up cost, legal cost, fixed cost is so high the
entrance of the new firm is hindered(Kanter, 2015). But in retail marketing
industry this threat is low. But very recently the online shopping stores
become a threat to the retailing industry.
Substitutes of the products: retailing
industry is such type of industry where many substitutes are available and new
substitutes are emerging day by day which makes the competition more and more
piercing. Through innovating new types of offerings ALDI is managing this
threat.
Bargaining power of the customers: since
the customers have many substitute products he or she has the bargaining power.
ALDI is able to manage this threat by providing best services and keeping the
customers satisfied to the company.
Bargaining power of the suppliers: since
there are many industries competing in the retailing market the bargaining
power is not high. On the other hand to keep the power of the supplier in a
limit the company is able to build a good and smooth relationship with the
suppliers. As well as ALDI’s own produced products also helps the company to
lessen the bargaining power of the suppliers.
Rivalry among the existing competitors:
This fact varies from country to country. In UK it can be said that the
competition among the supermarkets are started to highly competitive. The
country where retailing industry is not flourished enough and the result from
PEST analysis is supportive the ALDI should go for business in those countries.
For example ALDI can expand its business to the South-Asian countries.
Growth objectives and growth strategy:
To determine the
growth objectives and growth strategy ALDI can follow the Ansoff’s growth
matrix.
Figure: Ansoff’s Growth Matrix
Source: Bradley, 2008
Based on the
market situation the region ALDI can go for any one of the four strategies. In
where market is competitive company need to go for market penetration strategy
by lowering prices. Company can also need to develop new products for the
customers which help the company to keep its customers loyal also. Apart from
this company can go for the non-served nation to serve.
Market selection and market entry method:
At the time of
entering into a new market ALDI has many options like franchising, licensing,
joint-venture etc. company should analyze the market and country specific
factor and company self-controlling power of the management. If the overall
economic factors of the entering market is prospective and the government
regulation is supportive, ALDI can go for any one the available to options
based on the flexible and less risky financing opportunities.
Emerging trends in international retail market
The most
important competitor of the retail marketing is now online shops out of the
same line of business approach. To compete with the rivals ALDI must have to
focus on online business. ADLI can facilitate its customer with the home
delivery services which will help the company to keep a smooth relationship
with the customers by making the customers loyal to the customers as well. And
thus way company will be able to longer its competitive advantages over the
competitors.
Conclusion
In fine it can
be said that the business in where ALDI is competing is one the highest
competitive industries. In this era of the technology and busyness company
should focus on the online delivery more and more. And offerings should be modified
based on the customer demand through regular basis of market analysis which
will help the ALDI to gain the competitive advantage over its rivals for the
long run.
References
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Tags
Retail Marketing