assignment on aldi’s market · pdf filecustomer for customer relationship management ......

Assignment on ALDI’s Market Orientation

1. Executive Summary

Market place has now become extremely competitive these days and it is quite important for the

companies to put enough emphasis on building a sustainable business environment and model

where they can retain the customers and keep creating the value for both the company and its

customers. The idea of evolving the customers as important stakeholders is gaining momentum, and

the concept of market orientation emphasises on evolving the organizational culture as well as

developing a step by step process where the market and business intelligence in gathered across all

the departments and used in consolidation in order to create value for both the business and the

customers (Lafferty, Barbara A. and Tomas, G. H.2001).

ALDI has targeted to gauge the overall market orientation of the company with the help of

responses gathered from different customers. Different customers were asked for their responses

on different parameters of market orientation of the company.

The survey provided important insight into the various measures taken by ALDI which is leaving a

lasting impression on the customers as how the company is creating the value for the customers and

what areas does it need to improve upon in order to be more market oriented. An important insight

came from the survey that more than just putting in the efforts to be more oriented, it is also very

important to promote its measures and create a successful differentiating factor for the company.

Contents

1. Executive Summary ......................................................................................................................... 2

2. Introduction .................................................................................................................................... 4

3. Market Orientation Definition ........................................................................................................ 5

4. Importance of Market Orientation ................................................................................................. 7

5. Analysis of ALDI’s Market Orientation ............................................................................................ 8

5.1 Survey questionnaire and customers’ response ........................................................................... 8

5.2 Analysis of customer responses ............................................................................................ 10

5.2.1 Determining/ Measuring ALDI’s Overall Market Orientation .............................................. 11

5.2.2 Aldi’s Customer Orientation ................................................................................................ 11

5.2.3 Aldi’s Competitor Orientation .............................................................................................. 12

5.2.4 Interfunctional Coordination of Aldi .................................................................................... 12

5.2.5 Long Term Profit Focus ........................................................................................................ 12

6. Recommendations ........................................................................................................................ 13

7. References .................................................................................................................................... 14

2. Introduction

These days, with competition going sky high and the market structure becoming essentially ideally

competitive in nature, most of the companies are finding it pretty difficult to make themselves

economically sustainable in a long term. In such a scenario, the companies are using different

business models and approaches to target maximum customer satisfaction and achieve economic

efficiency and sustainability.

It is very important to develop customers as not only the ones to purchase your goods and services

but to also develop them as partners and advisors. The idea is to involve the customers more in the

business decision making process so that they feel like being a part of the process. Developing

relationships with the customer is not a one off event and it demands an ongoing model in process

so that the actual relationship building process has been started much earlier than approaching the

customer for Customer Relationship Management process (Kennedy, K. N., Goolsby, J. R. and

Arnould, E. J. 2003).

The evolved marketing concept sates that the single point focus for the companies is to satisfy their

customers more effectively than their competitors in order to achieve sustained economic and

operational success. Market orientation is an evolved concept which describes how well can the

customer needs be satisfied and what measures can be taken for the same. Market orientation has

been conceptualized on two aspects, the one being the behavioural and the other being the

organizational cultural perspective.

3. Market Orientation Definition

Market orientation is defined as an exclusive approach which focuses on identifying and meeting the

stated or hidden needs of the customers in order to satisfy the customers. Many marketing experts

have defined market orientation as per different school of thoughts. While Narver and Slater

describe market orientation as an organizational culture, on the other hand Kohli and Jawaroski

define market orientation as an implementation of the marketing concept. Kohli and Jawaroski

define it as a step by step holistic approach where the change is on an organizational level and the

marketing intelligence is accumulated across the different levels of business and across the various

departments. Further, it means an organization wide response to the accumulated market

intelligence across the various departments and use of important market information in responding

to various market factors affecting the business directly and indirectly.

The other important yet quite different channel of thought provided by Narver and Slater state that

the market orientation is a systematic approach where the market orientation itself is made up of

three behavioural components namely customer orientation, competitor orientation and

interfunctional coordination. Overall, as per Narver and Slater, market orientation is an approach to

redefine the organizational culture of the entire organization itself (Henard, D. H. and Szymanski, D.

M. 2001).

Customer orientation: it is the concept of meeting the needs of one’s internal and external

customers. This concept advocates the idea of setting up specific customer satisfaction standards

and actively monitoring the customer satisfaction level and taking steps to have clarification and

meeting on both the expressed and unexpressed needs of the customers. The idea is to provide

courteous and timely response to the customers and developing the relationship with the customers

as partners and trusted advisors.

Competitor orientation: A business or firm is said to be competitively oriented when it constantly

assesses its strengths, weaknesses, threats and opportunities with respect to its competitors in the

market. Production efficiency, delivery time, customer satisfaction, employee retention, market

share, pricing, product quality, promotions etc are measured with respect to its competitors in the

market. In a competitive market each firm is trying to expand its customer and sales base on the

expense of its competitors. Being competitor oriented means aligning one’s business activities in

response to the business activities of one’s competitor.

Interfunctional coordination: As per Narver and Slater, for market oriented companies the barrier

between the different business functions of a firm has to be removed and has to be internally

coordinated to work as a single cohesive unit. Market oriented companies are successful in getting

together all its business functions in order to provide maximum customer value (Appiah-Adu, K.

1997).

In a nut shell, across the various lines of thoughts by different marketing scholars, market

orientation is defined as a holistic approach where the different business functions work together in

a cohesive manner and the intelligence generated at different levels across the business units are

used to provide useful business information in order manner to provide the maximum customer and

business value.

4. Importance of Market Orientation

Market orientation is not only some theoretical concept with little or no direct implication on the

business; rather market orientation has much practical and economical significance in today’s

business environment.

The marketing scholars have cited many benefits of market orientation few of which can be

explained as below (Tay, Linda and Morgan, Neil A. 2002):

Places the highest priority in profit creation. Market orientation places a high emphasis on

economic sustainability in the long term and puts a very high priority on the profit creation

for the business.

Creation and maintenance of superior customer value. Market orientation has been defined

as an approach which places high importance on creation and maintenance of superior

customer value while at the same time taking care of the interests of other stakeholders of

the business.

Information gathering and collection of important and useful market information. The

evolved marketing concept places an emphasis on useful information gathering in order to

provide useful business information.

Provides norms for behaviour regarding organizational development and culture. Market

orientation provides norms for behaviour of employees across the organization in order to

promote standard business ethics and values and promote a homogenous culture across the

organization.

5. Analysis of ALDI’s Market Orientation

ALDI’s market orientation was tried to be measured with the help of a survey questionnaire by

gathering responses from the customers. The following questionnaire was used to gather responses

from different customers.

5.1 Survey questionnaire and customers’ response

1. Our business objectives are driven by

customer satisfaction.

1 2 3 4 5 6 7

2. We monitor our level of commitment and

orientation to serving customers’ needs.

1 2 3 4 5 6 7

3. Our strategy for competitive advantage is

based on our understanding of customer

needs.

1 2 3 4 5 6 7

4. Our business strategies are driven by our

beliefs about how we can create greater

value for customers.

1 2 3 4 5 6 7

5. We measure customer satisfaction

systematically and frequently.

1 2 3 4 5 6 7

6. We give close attention to after-sales

service.

1 2 3 4 5 6 7

7. Our salespeople share information within

our business concerning competitors’

strategies.

1 2 3 4 5 6 7

8. We respond to competitive actions that

threaten us.

1 2 3 4 5 6 7

9. We target customers and customer groups

where we have, or can develop, a

competitive advantage.

1 2 3 4 5 6 7

10. The top management team regularly

discusses competitors’ strengths and

strategies.

1 2 3 4 5 6 7

11. Our top managers from every function

visit our current and prospective

customers.

1 2 3 4 5 6 7

12. We communicate information about our

successful and unsuccessful customer

experiences across all business functions.

1 2 3 4 5 6 7

13. All of our business functions (eg.

marketing/sales, manufacturing, R&D,

finance/accounting, etc.) are integrated in serving

the needs of our target markets.

1 2 3 4 5 6 7

14. We target customers and customer groups

where we have, or can develop, a

competitive advantage.

1 2 3 4 5 6 7

Where, the following notations where used:

1: Not at all

2: To a very slight extent

3: To a small extent

4: To a moderate extent

5: To a considerable extent

6: To a great extent

7: To an extreme extent

5.2 Analysis of customer responses

Different questions, a total of fourteen, were put there in the questionnaire and the response was

noted from different customers based upon their feedbacks. Different questions were added from

different topics in order to give an insight into customers’ perception into ALDI’s customer

satisfaction, competitive advantage, strategic alignment, after sales service, competitor evaluation,

competitive advantage, customer satisfaction evaluation, communication and competitive

advantage. The responses of customers were measured on a scale of one to seven and measured

against all the questions.

Six customers were interviewed with the survey questionnaire and the following findings were noted.

0

1

2

3

4

5

6

7

8

1 2 3 4 5 6

Objective driven Customer Satisfaction

Objective driven Customer Satisfaction

5.2.1 Determining/ Measuring ALDI’s Overall Market Orientation

Aldi’s overall average score against all the parameters and across all the customer responses were

3.35. Out of a scale of 1 to 7, a score of 3.35 is just in the mid range of the scale and reflects that the

overall market orientation of ALDI is quite average and there is a scope of significant improvement.

The most worrying aspect is that many customers have rated ALDI on some parameter as 4, 5 and 6.

Though the score looks quite healthy on a scale of 1 to 7 with 7 being the highest, this remaining gap

of 3, 2 and 1 respectively against the scores of 4, 5 and 6 reflects some impending issues in customers’

perception which needs to be taken care of. The more worrisome aspect is that the high scores give an

inflated score and the company might be fooled into believing that they are doing well, although there

are pressing issues which needs to be taken care of, else the customer might drift to other competitors

(Sandvik, Izabela L. and Kare, S. 2003).

Another important observation is that the standard deviation of all the average scores in 1.59 which is

quite high given the data ranges. It means the customers have rated on different parameters across the

range. For few parameters some customers have given a rating of 1 while for others the same or

different customers might have rated ALDI as 7 out of 7.

5.2.2 Aldi’s Customer Orientation

The customers were asked upon their opinion on how objective driven was ALDI’s customer

satisfaction level was, and the average score for this was 4, which is on a fair level. On the other

hand, when asked on whether ALDI was committed to satisfying customers needs, the average score

was only 1.50. this reflected that the company needed to project its commitment towards customer

Competitive Advantage

1

2

3

4

5

6

7

satisfaction level more. The customer response was also not very positive on whether ALDI was

measuring the customer satisfaction level effectively. This reflects a customer perception where

ALDI is not putting important efforts in making the customers felt like their satisfaction is important

to the company. The main problem is of projecting the customers’ value to the company, as it is later

shown in the survey that the customers are happy with various measures taken by the company,

however these efforts need to be more flaunted.

5.2.3 Aldi’s Competitor Orientation

The customers were asked if ALDI was giving proper attention to the after sales service and also if

ALDI was putting an effort in understanding the customer needs and was building its competitive

advantage in the same. Customers rated ALDI fairly decent on this and the average scores were in

range if greater than 4 (4.67 and 4.17 respectively). This reflects that ALDI is putting proper efforts

with respect to their competitors towards building a competitive advantage based upon the

customer needs.

5.2.4 Interfunctional Coordination of Aldi

When the customers were asked, if there was proper communication across all the departments

regarding the successful and unsuccessful customer experiences, ALDI was very poorly rated as 1 on

average. However, when asked if the business departments were integrated well, it got a quite high

score of 5.83. However, this high score can’t be taken much seriously, as the customers may not

have proper insight into the same, and lack of proper knowledge might have resulted in the inflated

scores.

5.2.5 Long Term Profit Focus

When the interviewees were asked if they felt that the top management team of ALDI discusses

competitors’ advantage and strengths, and how did they rate ALDI in comparison to its competitors,

the respondents responded with quite an average score. This reflects that ALDI’s services were fairly

consistent with the market, and customers though generally satisfied, didn’t find much differentiating

factor in ALDI’s services.

6. Recommendations

Though, ALDI’s business has got a fairly decent overall market orientation score as per the data

collected from different respondents, the scores and the pattern of responses suggest that there lies

a significant room of improvement where ALDI can put efforts to be more market oriented. They can

be summarized as below:

Putting more emphasis on promotions and reaching out to the customers. Many customers

responded that they were quite satisfied with the general level of services provided by the

company and also they viewed that the company was performing well on the different

parameters of market orientations. However, when asked if they were happy with the

overall market oriented approach of ALDI, they were not so positive. It means that ALDI

needs to reach out to customers as how much effort they are putting in for the same

(Matsuno, Ken, Mentzer, J. T. and Ozsomer, A. 2002).

Trying to establish a differentiating factor. Most of the customers responded that they didn’t

find any special differentiating factor in ALDI’s services, as they didn’t rate ALDI high on

ALDI’s competitor orientation. The average scores indicated that the customers were not

able to differentiate well between ALDI and its competitors.

More information needs to flow across different departments of the company regarding

both the positive and negative feedbacks from the customers. A common repository or

mechanism through which crucial customer information can be shared should be promoted

and adopted by ALDI.

Overall, as per the customers’ responses, ALDI is performing well on the customers’ satisfaction

index and taking appropriate measures towards integrating its business departments. However,

more information needs to flow across the departments and more emphasis should be given on

promoting an organizational culture where creating the highest possible value for customers was

given the top priority.

7. References

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Large Firms Hold in the Small Business Sector?” Journal of Euro-Marketing, 6 (3), p1–27

2. Atuahene-Gima, K. (1996), “Market Orientation and Innovation,” Journal of Business

Research, 35 (February), p93–103.

3. Baumgartner, Hans and Rik, Pieters (2003), “The Structural Influence of Marketing Journals:

A Citation Analysis of the Discipline and Its Subareas Over Time,” Journal of Marketing, 67

(April), p123–39.

4. Capon, Noel, John U. Farley, and Scott, Hoenig (1990), “Determinants of Financial

Performance: A Meta-Analysis,” Management Science, 36 (October), p1143–59.

5. Clark, Lee Ann and Watson, David (1995), “Constructing Validity: Basic Issues in Objective

Scale Development,” Psychological Assessment, 7 (3), p309–319.

6. Diamantopoulos, A. & Susan, H. (1993), “Linking Market Orientation and Company

Performance: Preliminary Evidence on Kohli and Jaworski’s Framework,” Journal of Strategic

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7. Franke, George R. (2001), “Applications of Meta-Analysis for Marketing and Public Policy: A

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8. Gray, Brendan, Gordon Greenley, Sheelagh Matear, and Philip K. Matheson (1999), “Thriving

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9. Henard, D. H. and Szymanski, D. M. (2001), “Why Some New Products Are More Successful

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12. Kennedy, K. N., Goolsby, J. R. and Arnould, E. J. (2003), “Implementing a Customer

Orientation: Extension of Theory and Application,” Journal of Marketing, 67 (October), p67–

81.

13. Matsuno, Ken, Mentzer, J. T. and Ozsomer, A. (2002), “The Effects of Entrepreneurial

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Profitability,” Journal of Marketing, 54 (October), p20–35.

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17. Sandvik, Izabela L. and Kare, S. (2003), “The Impact of Market Orientation on Product

Innovativeness and Business Performance,” International Journal of Research in Marketing,

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18. Subramanian, Ram and Gopalakrishnan, Pradeep (2001), “The Market Orientation–

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19. Tay, Linda and Morgan, Neil A. (2002), “Antecedents and Consequences of Market

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20. Webster, Frederick E., Jr. (1988), “Rediscovering the Marketing Concept,” Business Horizons,

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