Executive Summary
This assignment is about a retail store named as Aldi that is primarily
based in Germany. This assignment is a comprehensive analysis of this retail
brand on the basis of four theories that would be used named as Value Flow
Analysis, The buying decision process, the 7Cs Framework and the Five Forces Model
of Porter. These theories would be used and backed by evidence from the
official website and other sources to determine the level to which Aldi has
remained consistent in meeting the needs of the consumers. Finally, the
recommendations would be made to the company, which would discuss how it should
sustain in the industry which is highly competitive and aggressive in nature.
Introduction
The assignment revolves around a question
which is the main element of the entire documents. The question is to know how
Aldi, a retail supermarket chain can increase its market share, given a
competitive threat from the other major players such as Walmart, Woolworth and
etc. However, the main question is also the objective of this assignment which
would be obtained by the end of this document. Given an aggressive nature of
the industry with in which Aldi operates, enhancing and maintaining market
share can be challenging. Hence, this document aims sheds light upon the use of
different models and theories that can be used to explain how Aldi attempts to
increase its market share by staying responsive to the needs of the consumer,
which will be presented through a number of shots for the evidence. However,
there is a need for Aldi to come up with a number of strategies for it to gain
a competitive advantage over its rival.
Analysis
Value Flow Analysis for Aldi
The buying decision process- The five staged model for
Aldi
Problem recognition
This
stage basically helps to trigger a consumer purchasing decision and helps with
pre-purchase information search. Aldi aims to identify what may lead a buyer to
purchase from the website and hence, it offers a number of options that helps
the consumer to take buying decisions. There are a number of goods that the
company provides under its groceries section (Figure 2). Also, figure 3
represents that the company comes up with a number of discounted deals for the
customers.
Figure 2- Range of
items offered
Figure
3- Discounted offers
Information search
At this stage, the
customer then starts looking for information which helps them to solve the
problem. The customer starts looking for information that will make him or her
select a product at Aldi. Aldi can easily be found on the search engine where
the customers can track the location, the products it offers and the discounted
deals (Figure 4). Aldi can also be found on different social media pages
(Figure 5) such as Instagram. On Instagram, Aldi has 174.2k followers which
means that there are a lot of people who are aware of this brand. However, if
there is any other information that the consumers would like to have, they can
contact the store directly as shown in figure 6.
Figure no 4- Presence
on different locations
Figure
5- Instagram page
Figure 6- Information
search
Evaluation of
alternatives
There are a number
of other services that Aldi provides to its customers. There may be some people
who may not be aware of the nearest locations or people who do not know how to
make online payment as they want to save time and buy the groceries online. Hence,
for customers who want ease and convenience by just sitting at home, Aldi,
provides a number of options under the option of customer services (Figure 7).
Nevertheless, any person who is on the website to not buy groceries but 
for employment can also visit. Also, in figure 9, it can be seen
that customers who are not here for shopping can view different recipes to try
at home.
for employment can also visit. Also, in figure 9, it can be seen
that customers who are not here for shopping can view different recipes to try
at home.
Figure-7-
Information search
Figure 8- Customer services
Figure
9- Recipes for customers
Purchase decision
The customers are
given a chance to browse through various options online and shop without having
to visit the store. The total payment and the number of items bought can be
viewed in figure 10 where the customers can then click the option to checkout
once they are done. In order to make purchasing decisions, it is vital for the
customers to first join as a member as shown in Figure 12. Online payment method is given on the website
to help the customers in figure 11.
Figure
10- Purchasing method
Figure 11- Online
payment
Figure
12- Become a member
Post purchase
decision
This is the last stage whether the customer
shares whether he or she was satisfied with the decision or not. As shown in
Figure no 13, customers can post their reviews on Facebook. The extent to which
they were satisfied or dissatisfied can also be seen from the customer ratings
that can be checked form its official page on Facebook
Figure
13- Post purchase decisions
Figure 14- Customer
surveys
Customers are also required to fill a
survey form where they can give their feedbacks. This can however be used to
improve the services and make it better as shown in Figure 14
7Cs Framework for Aldi
Content
The content of the homepage is very well organized. The content can also be translated into several other languages because the company is present in many other locations as shown in figure 15. Aldi is translated into different languages and for every country, the name may differ. Also, the homepage suggests that the content has been organized in a systematic way where the range of items are placed on the top and the section of additional information is placed at the bottom. Content is information dominated
Figure 15- Different
languages
Context
The figure 16 and 17 are the snapshots of the homepage which may appeal
the consumers to explore more. The web
design of Aldi is functionally oriented. This is because, the design of the
website is quite simple because provide you with fresh creativity. However,
every component works to achieve its functions.
Figure 16
Figure 17
Figure 18: Friendly design of the web
Community
Care for community
is evident in the figure 19 and 20 where Aldi has shared a number of stories
showing how socially responsible they are. The option is available at the home
page for the customers to view. Aldi also involved in a number of causes and
uses an environmentally sustainable approach that is also shown in figure no 20
and an ethical code of conduct as shown in figure 21. Hence, in this case, it
has a strong community.
Figure
19- Care for community
Figure 20- Corporate
Social Responsibility
Figure 21-Aldi’s code
of conduct
Customization
The
customers who are registered can get information about all the latest news and
products and services about Aldi. This is a personalized service which is only
available to the ones who subscribe to this service as shown in Figure 22.
Another example of personalization can be seen in figure 23 where the customers
can choose to limit their choice with in a price range and according to the
departments. It is highly customized.
Figure
22- Personalization
Figure
23- Customized offerings
Communication
Aldi communicates
with its customers through sending emails on latest offers and product through
its subscription offer (Figure 24). Also, figure 25 and 26 show a method of
communicating with customers. A two way communication is present on the
telephone.
Figure 24
Figure 25- Frequently
Asked Question
Figure 26- Customer
contact
Commerce
A
number of e commerce options can be found on Aldi.com. Aldi.com provides
payment detail options to its customers.
The customers have to register before they can proceed to shopping, and
can add things into the cart while continue to shop as shown in figure 28. It
shows a high e commerce.
Figure 27- Payment
options
Figure
28- Shopping cart
Figure
29- View your shopping status
Connection
Aldi.com is
connected to many other links which takes the customers to different links for
different countries. However, these are not the third party websites but belong
to the original company as shown in figure 30. It therefore presents a hub
connection
Figure 30- Connections
7Cs Map
Context
|
Aesthetical
|
Functional
|
Integrated
|
Content
|
Product dominated
|
Information dominated
|
Service dominant
|
Customization
|
Generic
|
Moderate
|
High
|
Community
|
Non existent
|
Limited
|
Strong
|
Connection
|
Destination
|
Hub
|
Portal
|
Commerce
|
Low
|
Medium
|
High
|
Communication
|
One to many, users non responding
|
One to one, responding users
|
One to many, responding user
|
Porter’s five forces model for
Aldi
Competition Rivalry
The competition in
the retail industry is very high because there are a number of retail giants in
the retail industry because the other players offer the products at the same
prices which are more or less the same. The major players include Walmart,
Woolsworth, Coles and all of them have a focus on their cost. The market
campaigns that are used by these competitors are highly aggressive where each
company attempts to take away the market share of each. Even though the costs
of marketing and advertising but the products’ prices are still kept very low.
Aldi operates on the basis of minimized fixed cost and hence, it can be said
that the competition rivalry for Aldi is extremely high
(Souza, 2017).
Threats of New Entrants
For the retail
industry, the cost of investment and establishment is extremely high which
makes it difficult for the new entrants to enter into the market. To open up a
new store and establishing a brand while also reaching the economies of scale
can be very time consuming and high. Also, the small entrants may become the
victims of mergers and acquisition. Nevertheless, the local super markets which
are low costs supermarkets or the farmer that sell home grown products for
instance vegetables and eggs can take up the majority of the market share of
Aldi. This can reduce the profit margin for Aldi and it can be said that the
threat of new entrant for Aldi is medium.
Bargaining power of suppliers
The retail
industry is full of supplies which are willing to sell the same product to the consumers
at either less or the same market share. These retailers than force the
suppliers to give convenient terms or discounts to the customers. Moreover,
there is no cost of switching. Also, suppliers are always looking for the
retailers who have the largest orders. This makes it evident to state that
suppliers cannot influence the retailers to sell at higher prices. The suppliers who supply the products of Aldi
do not have a high bargaining power
Bargaining power of buyers
For Aldi, the
bargaining power is very low. Aldi operates in the retail industry which
revolves around the products which are sold at lower prices to reduce the
prices further. Hence, this gives bargaining power to the company. Also, most
of the stores are located nearby to each other and the buyers do not have to exert
much effort in switching from one brand to another. In addition, there are many
other stores that offer loyalty schemes but Aldi does not have such offers.
This means that Aldi cannot raise prices nor it can influence the prices of the
products which means that the bargaining power for Aldi is very high.
Threat of substitutes
It
is evident to state that the products that are sold by Aldi are not so unique and
the products that it offers are offered by every other retail giant. Many of
the products are brands which are sold by many other outlets. Many other brands
use aggressive advertising and marketing which makes it easier for the consumer
to switch to the consumers
Discussion
The themes that were derived from the
analysis above are as follows
Consumer needs
The above
literature was an in-depth analysis of the retail store ALDI that aims to meet
the needs the consumers by providing a wide range of products and services. The
retail industry of UK is highly competitive and aggressive in nature. It is
noteworthy to state that customers want quick and easy shopping environment at
low prices. The checkout process is
highly known for being efficient where the operators of check out f do not have
to bag the groceries as the customers do that for themselves
(Meili, 2015).
Competitiveness
To satisfy the
needs of the customers, Aldi has made it part of their mission to sell vital
grocery products that are cheaper than that of the competitors. So far, there
strategy has been really effective. Its sales enhanced in Britain by 15.1 %
recently and in Australia, the company now holds 10 percent of the grocery
market share and in United States, it has Aldi has 1375 stores and is also planning
for an aggressive expansion. Aldi is also known for stocking only the essential
items where there less than 1500 SKUs. This makes choice limited, where there
is only one product for each category keeping the costs low and also removes
the over-head costs, minimizing the intra category competition and also
enhances the customer shopping experience (Meili, 2015)
Conclusion
·
It is noteworthy to state that
Aldi uses a very distinctive approach to retailing which gives it a competitive
advantage in market place that is highly crowded. It has a unique balance of
marketing mix which allows it to provide a superior quality and branded
products at a very reasonable price.
·
Its marketing campaigns such as
“Like Brands” and “Swap and Save” have also changed the consumer perception
these have greatly helped Aldi to achieve marketing objectives.
·
Its multi-channel promotional
strategy has been able to reengage with the customer generating positive
feedbacks
·
It works an EDLP retailer and
has evolved into a promotional merchant having a strong price reputation making
it a formidable grocery competitor
·
Aldi is very good at
communicating with the shoppers by speaking to the visitors. Aldi does it well
than any other competitor
·
Uses a powerful blend of highly
cost effective techniques with its merchandising techniques
Recommendations
These recommendations are in response to
the research questions “How could Aldi increase its market share?”
Aldi operates in a highly
competitive environment and the external environment show a very challenging
environment for the company. As the buying patterns are moving from 24 hours
shopping, online buying and self-service, Aldi needs of consider this and make
it part of the long term strategy
·
Continuous development and alignment with the target market to
survive and maintain market share
·
Market research and being extra agile to competitive forces
·
Innovation
·
Aldi should try a new market segment
·
Diversification
·
Try out different marketing channels
·
Selling more to the current target audience of Aldi.
References
Souza, K. 2017. Wal-Mart competitors Target
and Aldi make strategic countermoves - Talk Business & Politics. Retrieved
from https://talkbusiness.net/2017/08/wal-mart-competitors-target-and-aldi-make-strategic-countermoves/
Meili. 2015. Aldi: delivering what and only
what the customer values – Technology and Operations Management. Retrieved from
https://rctom.hbs.org/submission/aldi-delivering-what-and-only-what-the-customer-values/
Corporate.aldi.us. (2018). ALDI US - ALDI
History. Retrieved from https://corporate.aldi.us/en/aldi-history/
