Strategic Marketing for Aldi

1. PURPOSE OF THE REPORT

This report will be analyzing and developing appropriate marketing strategies for ALDI’s growth in market of the United States.

1. SCOPE OF THE REPORT

ALDI has been growing rapidly regardless the huge competition in the market of the United States. Successful marketing strategies are what brought them to where they are today. Hence, the report will be analyzing ALDI based on several theories such as environmental analysis, competitive analysis, consumer analysis, and SWOT matrix analysis, strategic objectives for Aldi as well as proposed broad strategies and marketing mix tactics. From all the analysis, it will able to provide a well-structured concept of how is ALDI doing and what they will become in the near future.

1. LIMITATIONS OF THE REPORT

Sources of analysis are limited to only accessible to secondary data which are from journals and internet, primary data is not involved. Secondary data is collected by someone else in the widest sense. It can include data to examine for answering questions of a research (Boslaugh, 2007). Its differences between primary data is secondary data is designed, collected and analyzed by an individual or a team of researchers (Vartanian, 2010).

1. OVERVIEW OF ALDI

ALDI has been expanding rapidly in 40 years, since their inception into the United States market in 1976. They have owned more than 1400 stores in the United States (ALDI, 2015). ALDI US’ slogan is ‘Smarter Shopping Experience’ emphasizes on customers’ satisfactions giving them the better shopping experience they could have in ALDI. Based on a Grocery Inquiry report and found out there are significant numbers of factors which are limiting the effectiveness of pricing competition among the industry, for example, entry barriers and limited price competition between the independent sectors (ACCC, 2008). The report also shown that ALDI had become a vigorous pricing competitor within the market since its entry into the US market. The company also had incentive and ability for sustained price competition engagement which formed an impact on the grocery sector.

ALDI selected their suppliers carefully to purchase huge quantity of products while providing their customers the lowest prices. The company has been keeping their costs at lowest but also ensuring their operations are effective and efficient for their customers as possible. In order to survive in high intensity U.S. market, ALDI bases its business on a basic consumer proposition which are low overhead cost, low prices, concentrated buying power, minimal advertising and predominantly private label products (Shao, 2014). Minimizing advertisement will allow ALDI to cut unnecessary prices to points that mass merchandisers such as Walmart. ALDI does not spend much on their celebrity endorsement and advertisement compares to other retailers. For instance, Phil Vickery the Chef was hired by ALDI US in 2010 during a Christmas campaign whilst other retailers such as Sainsbury’s M&S and Morrison’s spent much more and hired high profile celebrity in the area just to gain the market share. This could be a challenge and possibly forms a threat for ALDI as other retailers might be able to get the society attention by doing mass advertisement (Emsell, 2011).

In addition, ALDI choose to saves their customers’ money by keeping their store at peak shopping time which is 9 a.m. to 8 p.m. and 9 a.m. to 7 p.m. on the weekend. Although this could possibly benefit the customers, but it is also meanwhile posing a threat to the company as there are several 24 hours retailers and customers would choose the competitors over ALDI because of the opening hours (ALDI, 2013).

1. ENVIRONMENTAL ANALYSIS OF ALDI

This analysis consists of two types of environmental analysis which are macro-environmental analysis and micro-environmental analysis. Both of the analysis can strategically analyze on current situation of ALDI.

5.1 Macro-environmental analysis

A macro-environmental analysis has been used on ALDI using the PESTEL model. PESTEL analysis is the most common way in considering one company’s business environment. PESTEL consists of 6 key factors which are Political, Economic, Socio-cultural, Technological, Environmental and Legal (Gupta, 2013). It is not only a simple mnemonic but describes the framework of how a company’s macro-environmental is used in determine the component of its management strategy. PESTEL analysis allows a company to react to changes of its external environment and reflects a strategic ideas which fit to the changes.

5.1.1 Political Factor

United States has its corporate tax rate as high as 39.1%, which is the highest in among the developed world. More than 36.4% of retail industry pays higher corporate income tax than other industry (Heritage Organization, 2015). In fact, approximate 10 percent of tax rate is paid by food retail industry (Rila Organization, 2015). ALDI is required to pay huge amount of corporate taxes annually to the government as a retailer. If the amount of tax required to pay is increased, it will be another concern for the company to worry about as they are determined to provide lowest prices for their customers. Hence, unstable corporate tax which is usually high in the United States could pose threats to ALDI.

5.1.2 Economic Factor

United States’ inflation rate of the year of 2015 has maintained at 0.1% which is close to zero inflation rate (Statista, 2015). This has given the industry to maintain their customers’ purchasing power and also manage to provide lowest price as they could for their customers at the moment. As the market maintains stable throughout the year, ALDI manages to still maintaining their products price low and as a discount store, a stable market with low inflation rate is giving them opportunity to grow bigger. ALDI would spend more than 3 billion USD on opening their first stores in the Southern California in 2016. Low inflation rate can bring opportunity to ALDI as it allows the stores to maintain its prices at lowest (Chaudhuri, 2015).

5.1.3 Socio-Cultural Factor

Social factors can be influenced by businesses in terms of improving living standards and employment rate in the United States. Businesses are responsible for fundamental of urban regeneration in many parts of the country and therefore, it invests and innovates (Department of Trade & Industry, 2004). The food retailing industry in the United States such as Walmart and Costco has been participating in building relationship with the society by promoting their membership program to earn loyalty from both existing and potential customers. ALDI has been doing their part to raise health trends within the society and becomes a role model for the society to follow (Bergenheim, 2013). Organic products are main products that ALDI advertises and with prices that ALDI offer, their customers will be able to obtain healthy products with cheaper price. With this, it has given opportunity to ALDI to reach out and attract customers to them.