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2018 strategic marketing group report

MKT3SMK STRATEGIC MARKETING | 2018 SEMESTER 1 | MR. PETER MATHEIS

Tierra Leustig, 19590412Madison Kristoff,19569895Luke Benfield, 18967435Winston Luong, 18479374

21 MAY 2018

CONTENTSEXECUTIVE SUMMARY.................................................................................................2

INTRODUCTION...............................................................................................................4

CASE STUDY ANALYSIS...............................................................................................4

COMPANY BACKGROUND...........................................................................................5HISTORY......................................................................................................................................5MISSION AND VISION............................................................................................................5OPERATION AND PERFORMANCE....................................................................................5

SITUATIONAL ANALYSIS.............................................................................................5MARKET ANALYSIS.................................................................................................................5KEY COMPETITORS................................................................................................................5SWOT ANALYSIS.....................................................................................................................7

CRITICAL SUCCESS FACTORS...................................................................................8

PROBLEMS AND OPPORTUNITIES STATEMENT................................................9STRATEGY DEVELOPMENT.........................................................................................9STRATEGIC THINKING – DECISION MAKING.......................................................9

STRATEGIC ANALYSIS...........................................................................................................9MARKETING OBJECTIVES...................................................................................................10STRATEGIC DEVELOPMENT..............................................................................................11HIGH LEVEL MARKETING STRATEGIES........................................................................13

SEGMENTATION, TARGETING AND POSITIONING STRATEGIES...............14SEGMENTATION.....................................................................................................................14TARGETING..............................................................................................................................14POSITIONING..........................................................................................................................14

STRATEGY DEVELOPMENT SUMMARY................................................................15

CUSTOMER VALUE CREATION MIX.......................................................................15CVC APPLICATION.................................................................................................................15

STRATEGY IMPLEMENTATION.................................................................................17RESOURCE ALLOCATION....................................................................................................17IMPLEMENTATION................................................................................................................17

STRATEGY EVALUATION AND CONTROL............................................................17ETHICAL CONSIDERATIONS.....................................................................................19

CONCLUSION..................................................................................................................19

REFERENCES...................................................................................................................20APPENDIX........................................................................................................................21

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EXECUTIVE SUMMARYThe supermarket and grocery store industry is one of the most competitive industries in Australia. The rapidly changing environment has put pressure on the industry’s key competitors within the past five years.

The research objective of this report is to perform an overview of ALDI’s position in the supermarket and grocery store industry. Methods of analysis include a situational analysis, identifying industry critical success factors, problems and opportunities statement, and customer value creation mix. Through extensive research, five strategic ideas were developed based off opportunities and threats ALDI faces in the industry today. The five creative ideas include:

1. Loyalty Program2. Self-Checkout Implementation3. Shop Diversity4. Increase In-Store Experience5. Online Grocery Shopping

Additionally, the strategic ideas developed will plan to improve the overall success of ALDI’s brand in the supermarket and grocery store industry.

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INTRODUCTIONThe supermarket and supermarket industry is one of Australia’s most competitive and fast-paced industry. In the past five years, ALDI Stores Supermarkets has disrupted the way top competitors in the supermarket and grocery store industry operate with its success of the company’s low-pricing strategy. ALDI Stores Supermarkets is the third-largest grocery retailer in Australia’s supermarket and supermarket industry with 9.2% market share (Cloutman, 2018). ALDI continues to achieve great success through its mission of striving to offer consumers a smarter way to shop. An aggressive strategy is in place to expand ALDI’s presence throughout Australia. ‘ALDI’s revenue is expected to increase at an annualized 13.5% over the next five years through December 2018, to $9.4 billion’ (Cloutman, 2018).The aim of this report is to conduct a strategic analysis using a business format about ALDI Stores Supermarkets performance in the supermarket and supermarket industry. Based off the key insights found regarding ALDI’s performance, five strategic recommendations will be made. These strategic recommendations will be based on ALDI’s ‘problems and opportunities’ occurring within the company today.

The following criteria will be highlighted throughout the report: ALDI Stores Supermarket Background Critical Success Factors Problems & Opportunities Strategy Development Segmentation, Targeting and Positioning Strategies Customer Value Creation Mix Strategy Implementation

CASE STUDY ANALYSISThe case of the 2015 ALDI Christmas Campaign focuses on how ALDI sought to gain a competitive advantage over its competitors (Coles and Woolworths) for the Christmas shopping period in order to gain long-term success in the area of perceived quality of their products. In this case, ALDI identified several key problems. These problems being that although ALDI succeeded in their pricing advantages, they lacked in perceived quality when compared to competition, and due to Christmas shoppers’ preference of quality over affordability during the holidays, ALDI has struggled to compete in the holiday food market (Munro, 2017). In order to combat this, ALDI sought to convince customers that their products were “good enough for Christmas lunch” and would therefore be worth buying year-round (Munro, 2017). So the company launched a campaign centered around the pride in Aussie Christmas, aligning this pride with ALDI quality. Their strategies combined implicit messaging through emotions and imagery along with visual representations of quality, luxury and relaxation to reposition the brand in consumers’ minds (Munro, 2017). The campaign was so successful that ALDI had to keep up with the demand for their products during the holiday season, and results included improved value and quality perceptions as well as positive short-term ROI (Munro, 2017).

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As outlined in the case study, this was a short-term strategy to solve the problem of quality perception of ALDI which sought to have long term effects after the Christmas season. This report seeks to continue to meet the objectives of improved quality by implementing strategies to increase ALDI’s position in the competitive landscape as well as increase long-term perceptions of quality across all aspects of the brand.

COMPANY BACKGROUNDHISTORY ALDI Stores Supermarkets was established in 1913 in Germany by the Albrecht Family (ALDI, 2018). The family-run supermarket came from humble beginnings when Anna Albrecht opened a supermarket in a low-income suburb in Essen, Germany. Anna’s sons, Karl and Theo Albrecht, took over the small supermarket and turned it into the first budget supermarkets which is now one of Australia’s largest grocery retailers today. Today, ALDI is the third-largest grocery retailer in the supermarket and supermarket industry in Australia with 9.2% market share and over 450 stores nationally (Cloutman, 2018). Today, ALDI has over 10,000 stores internationally located in Europe, The United States and Australia (Cloutman, 2018). ALDI prides itself as a company that enables shoppers to ‘live richer lives for less’ (ALDI, 2018). The company’s strategy is to provide high-quality products at an affordable price. ALDI’s low-price cost strategy has recently seen great success within the past five years altering how the key players operate in the supermarket and supermarket industry. ‘ALDI’s revenue is expected to increase at an annualized 13.5% over the next five years through December 2018, to $9.4 billion (Cloutman, 2018).’

MISSION AND VISIONMission Statement: “At ALDI our mission is to provide you incredibly high quality at impossibly low prices (ALDI, 2018).”

OPERATION AND PERFORMANCEALDI has experienced significant financial growth in the past five years stealing a large portion of the market share in the supermarket and supermarket industry. ‘Over the next five years, ALDI’s industry-specific revenue is expected to increase at an annualized 13.5% to $9.4 billion’ (Cloutman, 2018).

SITUATIONAL ANALYSISMARKET ANALYSISAs of 2018 the supermarket industry is considered as one of the most ‘fiercest industries within Australia.’ Currently the industry is valued at $102.3 billion dollars with an estimated 3.0% growth over the last five years. In the coming years the industry is expected to grow at an annual rate of 1.6% annually over the next five years with the key players in the industry most likely to increase product ranges

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reduce prices to attract customers and increase focus on online grocery shopping therefore the market is expected to reach $110.9 billion.

KEY COMPETITORSWOOLWORTHS

Competitor Type DefenderGeographic Operates nationwideCurrent Marketing Performance

Owns 37.2% of the market share.

Competitive Position

Expected to increase at an annualized 3.0% over the five years through 2017-18, to $38.1 billion (IBISWorld, 2018).

Current Corporate and Marketing Objectives and Strategies

Build stronger, more profitable customer relationships as well as to be the most sustainable retailer in the southern hemisphere.

Likely Future Goals and Strategies

Woolworths is getting rid of all single use plastic bags at checkouts in order to become more sustainable and will look to utilize technology to improve technology.

The Capabilities: Strengths and Weaknesses

Weakness: The industry has peaked and is now at a maturity level.Strength: High barrier to enter the industry, therefore less competitors entering the market. High market share.

Vulnerabilities of Each Significant Competitor

Lack of product diversity

Moves to Make That May Provoke the Most Effective Retaliation by Competitors

Lower prices Increase advertisements Introduce loyalty program for returning shoppers

COLESCompetitor Type DefenderGeographic Operates within Australia.Current Marketing Performance

30.3% market share.


Expected to increase at an annualized 3.8% over the five years through 2017-18, to $31.0 billion (IBISWorld, 2018).


Increase customer loyalty, focus on lowering customer costs.


Continue working to lower prices so consumers get the best deal as evident in their “prices are down” advertising campaign.


Weakness: Intense competition.Strength: High barrier to enter the industry.

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Lack of product diversity


Lower prices Increase advertisements Introduce loyalty program for returning shoppers

COSTCOCompetitor Type ProspectorGeographic 741 warehouses worldwide.Current Marketing Performance

Currently own 1.6% of the market share.


In the year 2018, Costco stores across the nation made over $1.32 billion in revenue.


Provide the lowest prices for the customers whilst maintaining good service.


Open up more stores and gain market share.


Weakness: Not open to the public and low profit margins.Strengths: Members have to pay a yearly fee to access their stores; cheap products; and rapidly expanded in growth the past five years, and diverse range of products.


Competitors often sell items at higher prices as they are not wholesale.


Loyalty bonus Lower prices

SWOT ANALYSISSTRENGTHS WEAKNESSES

Growth and recognition of the company within Australia has seen ALDI get a 9.2% market share

Offer groceries at very affordable prices Internationally recognized brand with

stores in 15 different countries Diverse product range, from their own

private label to the premium brands Low operating costs in comparison to

their rivals Good relationship with their suppliers

Often seen as having low quality products

Whilst experiencing a high growth they are still relatively behind their major competitors (Coles and Woolworths) in market share

Limited use of the available technologies in comparison to their rivals

High staff turnover rate (employee review)

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Have only been in the Australian market for 17 years

Limited number of stores within Australia

Lack of membership program gives less incentives for customers to come back.

Only stock 1350 product lines in comparison to the 30,000 lines that Woolworths and Coles stock

OPPORTUNITIES THREATS Advances in technology can improve the

industry High barrier to entry meaning less

competitors will enter the market Consumer Lifestyle changes allow for

the industry to grow

Competition between the large companies may cause a price war that affects the suppliers

Government policies/taxes: ability to import products may be affected

Wage in Australia is constantly increasing

Amazon may enter the Australian supermarket industry

CRITICAL SUCCESS FACTORSIn a highly competitive industry, companies must identify critical success to in order to succeed in the market environment. Critical success factors are skills and resources a company must achieve in order to sustain a competitive advantage in the industry. Three critical success factors have been identified in order to remain successful in the supermarket and grocery industry:

1. Online Grocery Shopping FocusThe convenience of online grocery shopping appeals to consumers as it eliminates the hassle associated with the in-store grocery shopping experience. Consumers’ top desires with online food delivery include food arriving in excellent condition directly to the customers’ doorstep and free/low-cost delivery service (Statista, n.d.) Incorporating an online supermarket experience will avoid transportation issues, save time, and eliminate the overwhelming in-store supermarket experience. Online grocery sales revenue ‘is expected to rise by an annualized 14.2% over the five years through 2017-18, to reach $3.1 billion. This includes an increase of 11.8% in the current year’ (Cloutman, 2017).

2. Investing in TechnologyNew technology is being implemented in supermarkets and supermarkets to reduce costs, improve productivity, and increase the consumer’s in-store shopping experience. “Data is expected to be essential to the future planning and development of industry operators (Cloutman, 2018).” Investing in technology will provide a return in investment in regard to money as well as improved customer loyalty. Mobile applications, self-service check-out lanes and ‘smart’ data are some of the steps companies are shifting towards a more technologically advanced supermarket. Companies who are able to

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effectively implement new technology will gain a competitive edge over industry players who are not willing to invest in technology.

3. Pricing StrategyHaving an effective pricing strategy is crucial in the supermarket and supermarket industry as price is one of the top factors that influence consumers to pick one supermarket compared to another. Top competitors in the industry compete with each other to have high quality products at the lowest rate to consumers. Private-label brands allow supermarkets to achieve low prices while maintaining a healthy profit margin. In the past five years, there has been a significant increase of private-label products offered in stores in order to achieve this industry initiative of a low-cost strategy.

PROBLEMS AND OPPORTUNITIES STATEMENTThe supermarket industry is constantly evolving and changing and in order to overcome these challenges and problems that ALDI may face they have to identify them early and adapt to the changes, therefore giving them the best chance to benefit from a potential problem that may arise in future. An opportunity that was found during the SWOT analysis was the advancement in technology, this can benefit the business because if they where to invest in the technology it can improve efficiency and therefore the store is more likely to satisfy the paying customer. However, ALDI have yet to really implement the following technologies such as self checkout machines, mobile apps and online shopping and this is a future opportunity for the company to close the gap on Woolworths and Coles.

Another opportunity that was discovered during the SWOT analysis was the fact that the supermarket industry has a high barrier to entry meaning competitors are less likely to invest and enter the market. Thus allowing for ALDI to expand into more locations nationwide without the threat of another rival entering the Australian market. Additionally, this allows ALDI to have more control over their pricing strategy as they do not have to compete with a newer company entering the market.

STRATEGY DEVELOPMENTThe strategic development of objectives and corresponding creative strategies involves the proposal and discussion of four short-term and two long-term marketing objectives as well as five creative strategies. These strategies seek to improve ALDI’s recognition of a low-cost provider of quality, while obtaining a loyal customer base and staying at the forefront of the competitive grocery market.

STRATEGIC THINKING – DECISION MAKINGSTRATEGIC ANALYSIS

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ALDI’s current low cost focus strategy has seen them gain a 9.2% market share after operating in the Australian market for 17 years. In order for the company to close the gap on their competitors it is vital that the company keeps using their current differentiation strategy where they a limited range as opposed to the normal supermarkets which stock over 20,000 products per store. (Grunig, et al 2015), the seating of employees when scanning items which helps increase the scan rate. In the SWOT analysis conducted a significant weakness found was the lack of a membership program which is ‘proven to boost growth’ (marketing land, 2018), furthermore ALDI’s three main rivals in the Australian market all have an established membership program which incentives shoppers to come back and spend more money. In order to combat this lack of a program ALDI should look to add and develop a loyalty program therefore resulting in a more loyal customer base.

MARKETING OBJECTIVESOBJECTIVE 1 (SHORT-TERM): INCREASE SALES BY 10% WITH IMPROVED EFFICIENCY OF IN-STORE PURCHASES.Specific: Increase efficiency of in-store purchases with self-checkout technology

and improved store layout to increase sales by 10%.Measureable:

Measure how many people use self-checkout machines and how that correlates with sales.

Achievable: YesRelevant: Increase overall sales and productivityTime-Bound:

1 year

OBJECTIVE 2 (SHORT-TERM): ENTER NEW MARKET BY EXPANDING STORE VOLUME BY 15% AND DEVELOPING SMALLER STORES.Specific: Expand number of stores throughout markets as well as opening smaller

ALDI stores.Measureable:

Measure the amount of new stores opened in new markets.

Achievable: YesRelevant: Increase overall salesTime-Bound:

1 year

OBJECTIVE 3 (SHORT-TERM): INCREASE SOCIAL MEDIA PRESENCE BY 10% THROUGH PROMOTING SALES AND PROMOTIONS ONLINE.Specific: Increase social media presence by 10%Measureable:

Measure the number of consumers who bring in promotions and coupon codes from social media promotions.

Achievable: YesRelevant: Help boost overall sales

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Time-Bound:

End of 2018

OBJECTIVE 4 (SHORT-TERM): INCREASE IN-STORE TRAFFIC BY 15% WITH THE IMPLEMENTATION OF LOYALTY PROGRAM.Specific: Increase in-store traffic by 15%Measureable:

Compare the number of consumers per day prior to the loyalty program and after implementing the loyalty program

Achievable: YesRelevant: Helps increase the number of returning customersTime-Bound:

6-12 months

OBJECTIVE 5 (LONG-TERM): INCREASE CUSTOMER QUALITY PERCEPTION OF ALDI.Specific: Increase the perception of quality that people have in relation to the ALDI

brand and their products through improvements to store locations and product presentation.

Measureable:

Measured through customer surveys, reviews and sales.

Achievable: YesRelevant: Improves ALDI’s brand position as well as increased salesTime-Bound:

2 years

OBJECTIVE 6 (LONG-TERM): INCREASE CUSTOMER RETENTION BY 30%.Specific: Increase returning loyal customers through customer loyalty program,

quality improvement and efficiency.Measureable:

Measureable through loyalty program and tracking of customers who return to the store and how frequently they return.

Achievable: YesRelevant: Improves customer retention and salesTime-Bound:

2 years

STRATEGIC DEVELOPMENT1. CREATE A CUSTOMER LOYALTY PROGRAM.Customer Group Targeted: All customersJustification: This strategy aims to increase the relationship between ALDI and all customers. In return, ALDI should have a more loyal, returning customer base.Identification of Key Issues:

Competing in an industry with little to no switching costs, it is important to

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establish a loyal customer base.Advantages:

Customer loyalty and retention Increase sales in exchange of loyalty

rewards Uncover customer data and trends

Disadvantages: Financial investment No instant gratification Neglects consumers who do not buy

into the loyalty program2. IMPLEMENTATION OF SELF-CHECKOUT TECHNOLOGY IN ALL STORES.Customer Group Targeted: Younger generation customersJustification: Appeals to younger consumers who are familiar with newer technologies and how to use self-checkout machines. Closes the advantage gap that Woolworths and Coles currently have over ALDI, whilst additionally making the store more modern.Identification of Key Issues:

Since Coles and Woolworths have self-checkout machines to help reduce wait times at registers, it would be in ALDI’s best interest to add these machines to their stores in order to compete with their rivals.

Wages in Australia are rapidly rising and the implementation of self-checkout machines will reduce the number of staff members required.

Advantages: Reduce cost of employees Decrease wait times at checkout Modernize store layout

Disadvantages: Costly to install self-checkout

machines in all stores Neglects to consider older customers Machines take up a lot of floor space

3. INCREASE DIVERSITY OF STORES.Customer Group Targeted: Customers who buy more frequently and in smaller amounts, as well as people who value efficiency and less time spent shopping.Justification: Having a range of different store types eliminates an advantage ALDI’s competitors have, and also enables diversity and an ease of access to their stores.Identification of Key Issues:

Not just brand as winning on price but also convenience Difficult to get into as competitors are already doing this

Advantages: Get an advantage by also opening

special buy stores Convenience Attract more customers and increase

market share

Disadvantages: Variety of in-store items is limited Costs a lot of money to get started

and operate Increased cost to constantly supply

stores4. IMPROVE QUALITY OF IN-STORE EXPERIENCE.Customer Group Targeted: All customersJustification: This strategy aims to improve the in-store experience for all customers, not necessarily focusing on one segment in particular.Identification of Key Issues:

Store aesthetic tends to have the look and feel of a warehouse Creates an undesirable experience for consumers Creates the impression that products are of lower quality

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Advantages: Improves customer experience and

perception Increases quality without having to

invest in higher quality products Improves customer navigation

through stores

Disadvantages: Costly to redesign all store locations Halt in sales while stores are

undergoing improvements Customers will need to re-familiarize

themselves with store layouts

5. CREATE ONLINE GROCERY SHOPPING CAPABILITIES.Customer Group Targeted: All customers – specifically tech-savvy MillennialsJustification: This strategy aims to increase overall sales by providing all customers with an easier and more convenient way of grocery shopping. Online grocery shopping has experienced great success in the Millennial generation.Identification of Key Issues:

Loss of potential customers to supermarkets who offer online grocery shopping.Advantages:

24/7 convenience for consumers Front Door delivery Avoids large crowds and long

queues Ability to find everything grocery-

store related

Disadvantages: Expensive delivery costs Limited product selection Consumers are unable to handpick

each item they are purchasing

HIGH LEVEL MARKETING STRATEGIES1. CREATE A CUSTOMER LOYALTY PROGRAM.Creating an effective loyalty program allows companies to attract potential customers by enticing them with special discounts. ALDI implementing a loyalty program into its company would increase consumer’s relationship with the store resulting in a more loyal, returning consumer base. Deep discounts and specials often create short-term volume increases at the expense of long-term business (Hoover). Another perk of loyalty programs is allowing firms to collect data on consumer’s spending habits based of previous purchases. Consumers would be more likely to shop at an ALDI store consistently to build up rewards. The perceived benefit created by loyalty program rewards is the relationship between the consumer’s perceived benefits in relation to the perceived costs of receiving these benefits, and represents a positive emotional response such as a subjective experience of satisfaction and happiness (Bridson, et al., 2008). In an industry with low switching costs, it is important ALDI establishes a loyalty program to avoid consumers switching grocery retailers.

2. IMPLEMETATION OF SELF-CHECKOUT TECHNOLOGY.In comparison to their main competitors ALDI have yet to adapt to the technologies that are currently available such as implementing self checkout machines in there stores which would reduce the staff costs and improve efficiency. Whilst Coles and Woolworths have added Self Checkout machines whilst still having cashiers on which gives customers options when checking out their groceries ALDI have yet to adapt and in order to close the gap on the following companies they should look to add SCO machines into there stores. Additionally, by adding these checkout machines it would improve the layout of the store and design making it more

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modern and therefore improving the customers shopping experience which is crucial for the company if they want returning customers.

3. INCREASE STORE DIVERSITY.Unlike their competitors, ALDI has refused to open up different types of stores and only operate the one type, this being the traditional supermarket that are all similar size. This means that ALDI are neglecting customer groups that value efficiency, ease of access and frequent buyers. For ALDI to improve their shop diversity they open up a series of small convenience supermarkets in large cities which their competitors have done and seen success with. ALDI also has the unique advantage over its competitors by offering special buy items that are well received by customers, this means that ALDI has the opportunity to open up stores that just sell these special buy items. This means that customers have easier access to these and ALDI can sell more. ALDI increasing their shop diversity is an easy way for them to gain market share however, there can be costly and increases the strain on their operating systems such as supply.

4. IMPROVE QUALITY OF IN-STORE EXPERIENCE.Since ALDI’s direct interaction with their customers takes place in the physical space of their stores, the quality of customer experience is indicative of customers’ perceptions and loyalty to the brand. One of the areas that ALDI is lacking is in their minimalistic approach to their store design. The competition stands far above with their carefully designed aisles, self-checkout stations, and in-store product advertisements. As customer experience directly impacts customer loyalty, it is crucial that ALDI focus on improving a consumer’s experience when shopping in their stores. This will increase customers’ perceptions of the quality of the brand and products sold, as well as have customers leave feeling happier and willing to return for their next shopping trip. In order to accomplish this strategy, it will be crucial to invest in R&D such as focus groups to understand what customers prefer to experience when they visit a supermarket. Following R&D, ALDI should invest in more organized shelving systems, in which the products can be removed from their shipping cases – as these cases make the store seem more like a warehouse than a supermarket. The addition of products signs on each aisle and product advertisements would also make it easier for customers to find products, increasing sales and decreasing the amount of time spent searching for products. Since a store’s aesthetic says a lot about the products being sold, the appearance of ALDI as a food warehouse rather than a supermarket gives the impression that their products may not be of the highest quality. The implementation of these in-store additions will serve to position ALDI as a provider of not only affordable, but quality products, thereby aligning with competition, increasing sales and market share.

5. CREATE ONLINE GROCERY SHOPPING CAPABILITIES.Demand for online supermarkets are growing significantly. The convenience of online grocery shopping attracts consumers who are looking to save time by eliminating the hassle of going to the supermarket. Creating an online shopping platform would allow ALDI to boost consumer demand. Online grocery shopping attracts consumers who are looking for a convenient way of grocery shopping. ‘BOPIS’ is another component of online grocery shopping that eliminates the expensive delivery cost. BOPIS stands for buy online, pick up in store. This strategy

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is similar to online grocery shopping besides having to pick up the groceries at the store.

SEGMENTATION, TARGETING AND POSITIONING STRATEGIESSEGMENTATION

1. Young adults, adults and elderly people who buy groceries in-store and prefer to find low-cost options.

2. Families who buy products in bulk for a low price.3. Young adults and students who seek budget friendly groceries.

TARGETINGThe segments that ALDI should focus on targeting include families that want to buy products at a low cost, families account for a major part of supermarket customers and there are a lot that value low prices, this segment can be increased with a growth potential as people become more cost aware. Like families ALDI should also focus on targeting young adults, adults and elderly people who prefer to shop in store and find low cost items as this is ALDI’s competitive advantage and since consumers are now far more price conscious.

POSITIONINGALDI aims to positions itself as a unique retailer by doing things differently than the key players in the industry. ALDI excels in their private-label brand products offering low prices while maintaining a healthy profit margin. This strategy is a combination of cost leadership, focus, and differentiation.

STRATEGY DEVELOPMENT SUMMARYRefer to Appendix 1.0 for Figure 1, a table summarizing the marketing strategies presented.

CUSTOMER VALUE CREATION MIXCVC APPLICATIONPRODUCTALDI’s focus is to deliver high quality products at the lowest price possible. ALDI emphasizes private-brand products enables ALDI to price its products lower than its competitors in the supermarket and grocery store industry. Food products and beverages are ALDI’s main in-store selection, but also stocks a limited variety of health and beauty products, stationary, household items, electronics, clothes, and wine (in selected stores). ALDI’s breadth of products is limited compared to its competitors. The amount of products offered in-stores is a fraction of what is offered compared to Coles and Woolworths. Consumers are attracted to ALDIs despite having a limited amount of products because they know what they will receive in

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stores. ALDI stores have created brand-label products that sets their stores products apart from its competitors.

3. Increase Diversity of Stores:Shop diversity will offer smaller stores with a narrow range of products. The variety of products offered in store will be limited as these stores are catered towards in-and-out customers looking for large savings. Due to these stores offering an additional promotion on top of ALDI’s already low prices, only a limited range of products will be offered.

5. Create Online Grocery Shopping Capabilities:Online grocery shopping will have an affect on the product assortment offered to consumers online. Due to the complexity of delivering fresh produce to consumers’ homes, the amount of products offered online will be limited compared to ALDI’s traditional brick-and-mortar stores. The consumer is willing to give up specific products in return of the convenience of online grocery shopping.

PRICEAldi puts great emphasis on good quality products being sold at cheaper prices, this is how Aldi remains successful. Price is very important at Aldi as it is how they gain an advantage over their competitors by offering lower prices. Aldi gives its customers value in terms of pricing that can not be beaten by competitors this also means that prices across the supermarket industry are dropping (Cormack, 2018). As mentioned, ALDI’s pricing strategy is below the market. ALDI follows a penetration pricing strategy by providing low and upfront priced products to attract consumers. This eliminates consumers having to search the store for the latest sales and promotions as they know each product is priced fairly.

1. Create a Customer Loyalty Program:Establishing a loyalty program will give consumers the perception they are receiving discounts in exchange for their loyalty to the brand. The more consumers spend at ALDI, the larger discounts and promotions they will receive.

5. Create Online Grocery Shopping Capabilities:Online grocery shopping will come with an additional expense when shopping at ALDI. The cost associated with delivering groceries while keeping the products fresh comes at an additional expense.

PROMOTIONALDI utilizes various strategies of promotion in order to emphasize their affordability as a brand. Currently, they utilize print, display and electronic media in the Australian market. In addition to these traditional strategies, ALDI does ample email advertising to customers for specific sales promotions happening. Among these email promotions, they use two particular angles: the swap and save and brand comparison. Both of these angles allow ALDI to position themselves above competition in terms of price, incentivizing customers to switch to ALDI’s brand. ALDI also uses social media platforms like Instagram, Facebook and Twitter to connect directly to their consumers, especially the younger demographics that they target.

1. Create a Customer Loyalty Program:

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Implementing a loyalty program will give ALDI a larger database of customer contact information which they can use to promote products through email promotions. It will also allow customers involved in the loyalty program to receive special promotions and sales.

3. Increase Diversity of Stores:Building smaller ALDI stores will require the promotion of these stores specifically in addition to promoting the product lines that these stores carry. This promotion can be achieved through online mediums, email promotions, billboards and print.

4. Improve Quality of In-Store Experience:Improving the overall aesthetic of ALDI stores will provide new opportunities to promote products in-store that have not been utilized. With promotional signs, holders and tags for products.

5. Create Online Grocery Shopping Capabilities:The implementation of online grocery shopping provides new promotional strategies like online ads, direct links to products in email promotions, as well as online promo codes that have not be utilized before.

PLACEAs of 2018 ALDI currently have 473 stores across the nation with plans in place to open up new stores in South Australia, WA, Queensland and NSW. Before ALDI opens up new locations they factor in the population of the suburb, accessibility of the store and the distance between there nearest competitor. In order to reduce the costs for customers the company keeps the store layout very simple. Additionally, in order to lower the costs for customers the company bulk buys products from suppliers across Australia and stores them across various warehouses before shipping the products to the retail stores.

3. Increase Diversity of Stores:Implementing the new, smaller store locations provides ALDI with a new place to sell their products. Since these stores will carry less products, it provides the task of creating an enjoyable shopping experience despite the minimalist style of these store locations.

5. Create Online Shopping Capabilities:The online shopping capabilities provide a completely new place for ALDI to sell its products, with the presence of online advertisements and promotional material. It also consolidates the shopping experience into an easy and stress-free process that takes place in the comfort of customers’ homes.

STRATEGY IMPLEMENTATIONRESOURCE ALLOCATION

The budget for the Loyalty Program is ten million dollars, with most of this budget going towards marketing and the remainder to setting up the program. This cost can be reduced by suppliers’ contribution.

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The budget for Self checkout implementation is forty million dollars for the setup of the machines and marketing.

The budget for Shop diversity is forty-five million dollars, most of this will be used for acquiring the stores with only around two million of this to be spent on marketing.

The budget for increasing the In-Store experience is twenty million dollars with extensive marketing valued at six million of the budget.

The budget for the Online grocery platform is thirty-five million dollars with five million of this being allocated for marketing.

IMPLEMENTATIONIn order to implement ALDI’s loyalty program we will need to study ALDI’s current customers finding out how much average customers are spending, what they are buying, how satisfied they are and how long they have been a customer. The next way to implement the loyalty program would be deciding what customers need to be targeted from the information gathered and then implement the actual loyalty program along with a marketing campaign which will all be completed within a year. Self checkout implementation will be done by setting up the machines and training staff. This will be completed with a small marketing campaign and will be fully implemented in six months.Shop diversity will be implemented by attaining the buildings, hiring and training staff, setting up supply and marketing the new shops. This will all be fully completed in 4 years. Implementing an increase in Store experience will be done through an overhaul on the ALDI shopping experience with an emphasis on how the stores look and feel. This will also be done by increasing the sense of community and immersive experiences. This will all be followed up with a marketing outlining these changes and will be completed in nine months. The implementation of the Online grocery platform will be done through setting up the website, setting up more suppliers, set up a delivery system and pick up system and also set up a large marketing campaign to attract customers to the platform.

STRATEGY EVALUATION AND CONTROLCreative Idea What is will

MeasuredHow it will be Measured

Data Source When it will be Measured

Create of Customer Loyalty Program

Repeat customers, retention of customers and participants in the loyalty program.

Compare to non-loyalty program customers. Measure customer satisfaction and customer loyalty through surveys and sales.

The customers in the loyalty program and customers not in the loyalty program.

First month, six months end of the year and continued follow-up every year.

Implement Self-Checkout Technology

If self-checkout has increase customer

Data on market share and asking

The customers that use self checkout and

Fist week, first month, three months and the

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volume and customer satisfaction.

customers if they like the machines and why/why not they use them. Data from machines about how many customers use machines.

the ones that do not use it.

end of six months and the year.

Increase Store Diversity

The profit of the new stores, customer satisfaction and how many people shop at the new stores.

How profitable the new stores are, in addition to asking customers if they like the new stores and measuring shop traffic.

The new and old customer that have been to the new stores and customers who have shopped at competing stores as well.

After first year, second year and fourth year.

Improve Quality of In-Store Experience

Customer satisfaction and increased profit.

How satisfied customers are with the improved stores and if customers are spending more or shopping more frequently.

Customers and staff.

Third month, sixth month and ninth month.

Create Online Grocery Shopping

The amount of people using the new online services.

Traffic flow, purchasers and profit.

The customers using the online service.

Progress on the supply and website after 1 month, 3 months and 5 months. Then a follow-up on how systems are working the month after the end of a year.

ETHICAL CONSIDERATIONSEthical consideration is only necessary for self-checkout implementation. This strategy raises the ethical concern of reducing the number of employees needed. While it aims to lower labor costs for stores, it also threatens employees’ jobs as they are being replaced by technology.

CONCLUSION

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Even though ALDI is rather new in the Australian market, their market share has been consistently growing, making the company one of the fastest growing supermarkets. Although ALDI is known for their low prices, they have not necessarily been recognized for the quality of their products. Through the analysis of internal and external factors as well as crucial capabilities to succeed in the industry, it was concluded that the aforementioned 5 marketing strategies will be crucial to ALDI’s success as a provider of quality, affordable groceries in the Australian market. ALDI’s perception of quality and ease will be improved through the implementation of self-checkout technology, online shopping and redesigning store interiors, as well as increasing customer retention through a new customer loyalty program and new, smaller stores that tailor to all customer segments. Through these strategies ALDI can continue to grow their market share in the Australian supermarket industry and become a leader in quality and affordable grocery sales.

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REFERENCES1. ALDI (2018). ALDI History. Retrieved from https://corporate.aldi.us/en/aldi-

history.

2. ALDI (2018). ALDI – The Australian History. Retrieved from https://www.aldicareers.com.au/About-ALDI.

3. Bridson, K., Evans, J. & Hickman, M., 2008. Assessing the relationship

betweenloyalty program attributes, store satisfaction and store loyalty. Journal of

Retailing& Consumer Services, 15(5), pp. 364-74.

4. Cloutman, Nathan (2018). IBISWorld Industry Report G4111 Supermarkets

and Grocery Stores in Australia. Retrieved from http://clients1.ibisworld.com.ez.library.latrobe.edu.au /reports/au/industry/default.aspx?entid=1834.

5. Cloutman, Nathan (2017). Online Grocery Sales in Australia. Retrieved from http://clients1.ibisworld.com.au/reports/au/industry/ataglance.aspx?entid=5527.

6. Hoovers (n.d.). Grocery Stores & Supermarkets. Retrieved from http://subscriber.hoovers.com.proxy.library.ohio.edu/H/industry360/overview.html?industryId=1535.

7. Jinger Productions (April, 2017). The History of ALDI. Retrieved from [video]

https://www.youtube.com/watch?v=Ds-2X3gn8bo.

8. Statista. (n.d.). Supermarkets in the United States. Retrieved from https://www.statista.com/statistics/197905/2010-sales-per-store-of-supermarkets-in-the-us/.

9. UKEssays. November 2013. Factors That Determine the Success of Supermarkets. [online]. Available from: https://www.ukessays.com/essays/marketing/general-factors-that- determines-success-of-supermarkets-marketing-essay.php?vref=1 [Accessed 15 May 2018].

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APPENDIXAPPENDIX 1.0Figure 1. Table summarizing and outlining the marketing strategies presented.Creative Strategy Details

Strategic Concepts Strategy Combination

Targeted Segment

Key Channels

Resource Intensity

Estimated Delivery

Capability Assessment and Risks

Corresponding Objectives

Create of Customer Loyalty Program

Incremental Innovation, Differentiation

All customers

R&D, Online, Brick and Mortar, Face-to-Face Education

Financial:High

People:Medium

September2019

There is a high capability to create this program. Risk that customers will not enroll.

Objective 4, 5, 6.

Implement Self-Checkout Technology

Differentiation, Cost Leadership, Focus

Younger generation

R&D, Brick and Mortar

Financial:High

People:Low

December 2020

There is a capability to implement, however financial investment might be a challenge. Risk that machines will take up too much space and not benefit all customers.

Objective 1, 5.

Increase Store Diversity

Radical Innovation, Differentiation, Cost Leadership

Customers who buy frequently and in smaller amounts

Brick and Mortar, Face-to-Face Education

Financial:High

People: High

June 2021

Relatively capable of implementing. Risk that small stores will not be successful.

Objective 1, 2, 4.

Improve Quality of In-Store Experience

Focus, Differentiation

All customers

R&D, Brick and Mortar

Financial:High

People:Medium

September 2019

High capability to improve quality, as it is the lowest cost option. Low risk as this will mostly benefit customers and the ALDI brand perception.

Objective 1, 2, 3, 5, 6.

Create Online

Radical Innovation,

All customer

R&D, Online,

Financial:

February 2020

Capability to make this

Objective 3, 4, 5.

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Grocery Shopping

Differentiation, Cost Focus, Market Development

s, specifically tech-savvy Millennials

Face-to-Face Education

High

People:Low

possible but will require a lot of R&D, pre-planning and advertising. Risk that customers will not utilize service and that costs will be too high.

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