Branding Strategy Of Aldi's Non-Cricing Strategies

As Aldi has already established itself as a large discount supermarket chain with over 10,000 stores in 18 different countries including Australia (2001), and holds a large market share in the grocery world due to its business culture and market leading initiatives. This report aims to provide the ALDI board of directors with:

1.3 Physical Resources & Capabilities The ALDI brothers took over the family business of their parents in 1946. World wide expansion led to enormous growth. This comprises around 9800 stores (1000 to 1500 SQM each). The layout is simple with wide ails designed to refill shelves in the fastest, most convenient way {Brands, D. 2003}. They offer a small assortment of mainly fast-moving items (approximately 700 food – including a slim and organic line- and non food products). Small warehouses are located at the back of each store. Affiliates are equipped with limited technology such as intelligent cash systems high-end product concerning quality and price and bottle deposit machines. ALDI won the 2008 energy management award for great results in terms of cooling systems, illumination etc. Most stores have about 100 parking space and a shopping cart area near the entrance. ALDI has a long history which implies that they have gained great experience over the years. The location and layout of stores are designed to support fast and efficient supply and not especially aimed at customer needs. This is a weakness. Stores advantageously located as there are in convenient reach for consumers. Their product range is adapted to various consumer needs (organic, healthy living). The technological equipments are of high quality enabling fast operations at the checkout (ALDI’s staff are two times faster compared with other similar operations). This is

(Please note: Task 1, 3 & 4 have been combined together into one report. Task 2 is separate and can be found on page 9)

From the time it opened, Aldi has expanded the number of product assortments that allow consumers to find nearly anything they need to supply and feed their families. Aldi developed a strong marketing program and decentralized their pricing and assortments that also include some well-known products. Aldi’s begins its value propositions to shoppers with its amazingly low prices. Their “hard” discount pricing, averages about 30% below standard supermarkets like Winn-Dixie or Kroger’s (Brick, 2016). They attribute their success and growth to the “hard discount” model as it has demonstrated to be highly effective. Aldi is different than “large” discounters like Walmart where Walmart’s varieties are limited in size and led by private label products, and investments are made in stores atmosphere, unfortunately, resulting in lackluster customer service. This allows “hard” discounters like Aldi to win the grocery price war by greater margins than Walmart, making Aldi a major competitor of Walmart (Bartone,

Operating on very thin profit margins, players in the supermarket industry traditionally either focus on a premium segment or follow a discounter strategy at the low end. Premium players address educated and more price elastic consumers who value healthy, natural and organic food; the share of perishable items for these players is normally distinctly higher. Players that focus on a discounter strategy offer a higher share of simple necessity items and value price competitiveness over premium features like healthiness or organic origin. Independently of the focused customer group it is imperative for players in the supermarket industry to be cost efficient and optimize operations

This report is going to present the current culture of Aldi, critically examining its current culture and possible proposal for a change in culture. It identifies the current organisational culture, its strengths and weaknesses and make recommendations necessary for an organisational culture change.

Cole expects to establish more and bigger stores and supermarkets in order to improve its competitive edge among its leading competitors such asWoolworths. According to the situation analysis, the “down down” price strategy appears to stay since for many years, it has acted as its competitive edge. Hence, the low price strategy will assist the company in competing for the customers ( Mckeown, 2012).

The main focus of Aldi is to offer the lowest possible price to the customer while operating their stores at the lowest cost as well. I have already stated how Aldi does not invest in advertising or any research of any kind and the main investment is in building new stores or logistics to supply those stores. But Aldi’s also uses the strategy of tricking its customers to do all the

4. Promotion: - Coles promote their products by providing a good quality products and services to their customers. Moreover Coles advertise their best quality products through television and radio. Also it promotes their new products into the shelves of the supermarket stores. It also gives all the details of the product on its website.

6. Store Layout: Store layout is crucial for customers to move. Shoppers won’t need a map to navigate their local Aldi, with a 5 star rating for store lay out. Coles, IGA & Woolworths received 4 stars for their layout.

Since there are a wide range of products available, the pricing for both Coca Cola and Pepsi is done according to the Market demands and the geographic segment and thus both the products pricing are set around the same level. Neither of the brands can win if they enter into a price war, simply because the cost of manufacturing and transportation is huge. The advantage to either of the companies was if they enter into a brand war. Since, Coca Cola always had competitors constantly driving them to be smarter, better and faster and since they were successfully been existing for more than a century, they have had to remain consistent with their pricing strategy. Throughout the years, Coca Cola has made many pricing decisions, but eventually the ultimate goal is to maximize the shareholder value. Coca Cola uses lower price point to penetrate new markets to face competition and also to raise brand awareness. This strategy is strongly implemented till it repositions itself as the Premium beverage as compared to its competitors.

By taking a more collaborative approach, major improvement could be made. One way is by embracing the concept of “Collaborative Planning, Forecasting and Replenishment” (CPFR) which have been developed and successfully employed by leading food retailers. It foresees that data is shared and discussed actively between retailers and suppliers, e.g. by producing joint forecast on annual production volumes, also considering foreseeable flunctuations. With a better understanding of the mutual dependencies, the planning basisi could be improve and complexity reduced. On the short term planning basis, making aviable sales data collected in-store 9from the scanner-equipped cash registers) to suppliers in real time allows suppliers to produce more accuratelty to the actual demand, and thus reducing cost for buffers and excess inventory (Trebilcock 006). Of course, Aldi will have to receive a certain share of these benefits. Going one step further would be to add ”Category Management” to Aldi’s supplier collaboration approach to optimise assortment towards the end of customer needs.

Nevertheless, the vertical value chain created by Aldi benefits the company’s corporate strategy. To be a local supplier,

On the other hand, both Aldi and Lidl prioritize their business at a low price and cost minimization basis. These two companies intended to lower their costs of operation, such as the elimination of non-value adding service and no-frills approach, and pass the benefits on to customers in the form of lower price products. Moreover, according to the case, both companies offer less product range than other mainstream retailers such as Tesco. Therefore, the concept of lean should be adopted by these two companies as their functionalities

Aldi’s will be expanding with 400 stores in the United States to keep up on pressure price. It is a privately held German retailer, known for cheap prices on private brand food products, being sold in rudimentary stores, has recently included inexpensive fashion to its availability. This will be a competitive factor for low priced retailers.