How can Aldi increase its Market share?

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.

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/