Marketing practices and strategies for Aldi

Introduction of Aldi

Aldi is a leading retailer with over 8,000 stores worldwide. Since opening its first store in Germany in 1913, Aldi has effectively established itself as one of the highly regarded retailers in the international business market.

Aldi’s main marketing objective is to grow its market share around the world. Its emphasis is on providing high quality products and excellent value for customers. Aldi offer customers a smarter way to shop. Aldi.com states that they promise to “provide our customers with the products they buy regularly and ensure that those products are of the highest possible quality at guaranteed low prices.” Aldi is a strong supporter for the environment, health and nutrition. Aldi always sources fresh fruit and vegetable produce from local growers. Aldi is expanding as many new stores have been established in suburbs where the cheaper groceries are of great value to the community such as the Introduction of Aldi in Toukley where a good quantity of the population includes the elderly people where they can have access to groceries that suit their budget. Below is from https://corporate.aldi.com.au

Aldi brief Company Portfolio In the US alone approximately 1220 stores in over 30 states and the estimated sales revenue generated from all the stores in 2013 was US $7.9 billion. In Germany 3000 Aldi stores are located as Germany and over 70% of German households shop at Aldi and Germany was the origin of Aldi but Aldi has continued to spread across Europe and to Australia. Aldi continues to grow as Aldi has quadrupled its customer base over the last 8 years from 1 million to 4.2 million shoppers.

This graph shows how Aldi started its market share at 2.9% in 2005 and now it has risen to 10.3% in December 2013 and Aldi has over took IGA in market share.

Market segmentation Supermarket differentiation

Product differentiation is the process of developing and promoting differences between the business’s products or services and those of its competitors. Aldi’s grocery range is about 95 per cent private label and it offers everyday low prices that are around 30% cheaper.

Demographic: income and Lower income earners and people who have limited income to spend

Geographic: suburban and rural populations

Psychographic: not concerned with product range or after sale service (packing of bags). Environmentally friendly packaging and locally produced fruit and vegetables

Behavioural: Customers want good quality products at a cheaper price. Don’t need the well-known advertised brands.

Aldi targets the public in choosing where to get the best value for money for their groceries and to gain new customers. Cheaper groceries may influence on whether people choose Aldi over the major competitors.

Customer service/ pre and after sale and layout

Customer service is lower at Aldi, unlike major competitors where staff can assist you in finding a product. Aldi makes product finding very easy as you can see from the image to the left where the shopper is immediately introduced to the sweet foods and the snacks right when you enter. As categorising the stock and simple layouts may decrease the need of extra staff on the floor reducing the cost for human resources and it all helps in bringing cheaper

prices to the shopper as stated by Aldi they are 30% cheaper. Aldi is the first supermarket to create a shopping list on smartershopping.com.au so shoppers can create a list before they shop.

Aldi is known for its efficiency and another reason for customer service being low at after sale service is low is the shopping cart rental system. This initiative helps reduce the environmental category as it helps reduce the dumping of trolleys into our bushland and anywhere which may harm or impact the creatures that are living in the environment.

Aldi customers target market

The layout is simple as it consists of a simple routine for shoppers as you can follow a path to get your groceries. Aldi layout is always clean and the products are easy reach for the customers, the previous photo from the previous page shows this as you can see how the employees made it easy for customers to pick items from the bottom shelf as they are suck out a little, unlike competitors where the shelf’s are in a vertical line which can be difficult pick items from below. Products such as toiletries, fruit and veg and refrigerated goods are displayed in their categories similar to other supermarkets but there is less choice. The layout also helps in providing convenience for the customer as they are able to grab the items without the effect of many different brands affecting the customer’s choice. Aldi is always quiet and this is due to how they are energy efficient as Aldi’s equipment is designed to minimise noise.

Aldi Competitors offer more choice and also they have self-serve Also at Aldi the employees are seated this is an element of differentiation as seating the employees can create a more efficient business as they are quicker in scanning items and the positioning of the technology is right in front of them making sales time quicker and it more comfortable for the operator. In doing so Aldi barcodes are larger so it scans first time and the conveyer belt is larger so it caters for people waiting in the line. This is a quote from a regular Aldi shopper “One of the things I love about Aldi is the layout. All the sweets and snacks are right there in front of the door so it’s really easy to walk past and not have to think about them again. Sections are grouped by meals; dinner things with dinner things, breakfast things with breakfast things etc, makes sense. http://www.danimezza.com/2011/02/how-to-shop-at-aldi/”

Environmental initiativesEnvironmental friendly bags/no plastic bags

Aldi has shown understanding towards this as according to the Aldi website “we are particularly proud of our plastic bag policy. We encourage our customers to bring their own shopping bags, or alternatively they can purchase durable shopping bags from Aldi which can be reused time and time again”. Aldi encourages all customers to purchase their ecofriendly bags and re use them over and over again. Aldi also mentions how they are pleased with the introduction of their plastic bag policy “We find this encourages people to reuse the bags instead of throwing them away. At least 35% of our customers reuse our carrier bags or our reusable bag.”

Aldi has estimated that in a year the no plastic bag system has prohibited the disposal of 150 million regular plastic bags. Since opening our first store in 2001 we have never stocked single-use plastic bags and remain the only major grocery retailer in Australia who does not offer free plastic bags across all stores

Phosphate free laundry powderAldi decided to stop selling phosphate laundry powder as part of their green action plan. Phosphates are used in laundry and dishwashing products because they help soften hard water and break down dirt, but once released in waste water they can cause algal blooms that starve aquatic life of oxygen.

Aldi is proud to be the first Australian supermarket to demonstrate action towards phosphate free laundry products out of their supermarket as said by Stefan Kopp Managing director of buying “ALDI Australia is proud to announce that as of the 16th of February 2013 all of its exclusively branded everyday laundry products will be Australian made and phosphate Free” “We understand that phosphates can harm Australia’s waterways as well as Australia’s beautiful marine life” Aldi also states that moving to phosphate free laundry powder is transforming the Australian retail landscape and each product is Australian made which by purchasing will help stimulate domestic economic and job growth.

Free Battery recycling program Aldi have created a battery recycling program and according to corporate responsibility at Aldi they are the first supermarket in Australia to offer a free recycling service for household batteries inn every store. Aldi catalogue mentions that 38 tonnes of batteries have been returned from when the program started. Aldi offers to the public rechargeable batteries which cost $6.99 for a pack of four and they can be used many times and these batteries help the environment.

Product (branding, positioning and packaging

Aldi have their own specialized brands which create a positive financial outlook for Aldi. Although product mix is low at Aldi they are still able to achieve a strong customer base with their cheaper products and convenience which is achieved by the simple layout and quicker checkout practices.

Although Aldi doesn’t changing their food products, they do vary their products that aren’t food. For example in winter they offer Snow gear and warm camping gear so Aldi sells products by seasonal influences.

The Aldi name brands offer quality for example bread as many customers are aware of the price and quality that is showed by the Aldi promise of a high quality product and how that product fits in to their minds as a consumer such as price/quality and the competitors sell bread at a higher price meaning that high quality needs to be achieved to guarantee sales.

Aldi is able to expose their “own” brands to the customer as many of the shoppers are going to purchase these less known brands for the price and the quality. Woolworths claims that Aldi is infringing on the intellectual property rights of existing brands and misleading shoppers, claiming it is merely taking marketing cues from existing categories. An Aldi spokesperson states how “The reality is that consumers know the high quality and low cost of our everyday range of products. Aldi brands do appear similar to leading competitors.

Aldi brands aren’t advertised on mass media so the price and quality of the product is what gains the consumers attention.

Packaging and displaying the product at Aldi is quite different from the competitors as you can see from this image bellow as the employee is moving stock not by placing individual items on the shelf (cold items require this but most items don’t) but they display stock by using a hand held forklift which is a quicker and cost effective way that makes stock transportation easier and it attracts consumers attention.

Aldi minimises unnecessary packaging. Aldi shipping cartons don’t contain shrink wrapping plastic and Aldi has their own recycling station to dispose the cartons. The produce crates used to transport products are used over and over again and returned to the supplier so Aldi can eliminate unnecessary wastage

Promotion, sales promotions and public relations

Promotion is important in achieving awareness in the product that the business is trying to sell and to bring in to the market. Promotion mix uses Advertising, and Advertising Media and special offers such as the recent liquor promotion. Below the line promotions and above the line promotions are a source of advertising and engage shoppers in swapping to Aldi.

Above and below the line promotions are used by Aldi. This is strongly influenced with the growing usage and popularity of social media and Facebook also Aldi is now advertising on television. Although advertising is seen on the Aldi website they are reluctant to advertise availability of stock in a particular store through Facebook “Unfortunately we are unable to advise on stock availability via Facebook. Please use our store finder located on our website to find others stores in your area which may have stock” .This is a message that Aldi replied on a comment from a customer regarding if their store had a fridge.

E marketing is an example of below the line promotion is on their Facebook page where Aldi is successfully advertising their product; above is an image of their phosphate free bio washing

liquid there is also information about how it is the winner of a competition and this promotes how reliable and how the product has quality to match its expectation. Although Aldi’s Facebook page is a major below the line promotion strategy, Aldi also has a little recipe guide book that on the front cover it says” saving you money at the checkout” this additional content engages customers in purchasing Aldi’s products.

Above the line promotion includes television, television, radio, magazines and newspapers that reach a large number of people. Although this method can be costly it is essential in increasing the market share of Aldi.

Aldi uses 20 second advertisements on television to promote their like brands as the advertisement promotes a single product using a person and a phrase that reflects on an Aldi product and promotes the cheaper price. Aldi uses humour which helps to build trust and an emotional connection with target audiences.Printed catalogues are located in store (around 1 million copies printed each weak) and they show special’s with groceries and Special buys which is got to do with other in store items that are cheaper than competitors prices such as bed sheets and towels.

Aldi uses point of purchase displays such as sign’s about the current swap and save campaign and special promotions. “Aldi invests very less amount money for promotion. Aldi offers which will change each week and are available till stock lasts.”

Public relations

Aldi sells their coco beans within their chocolate products such as the brand Choceur must be ethically sourced and Aldi make sure that ethical and environmental laws are met. The

UTZ certified cocoa are standards for sustainable farming of coffee, coco and tea with better opportunities for farmers, their families and our planet. They ensure safe and healthy working environment, no child labour and protection of the environment. Aldi states that “this doesn’t affect the famous product flavours but just a commitment about making our chocolate better on a whole new level”

Aldi donates $2 from a 12 packs of 600ML water to the “one voice” charity. Aldi is promoting a positive image as Aldi says “by buying the water you will be providing young people living in on the streets with counselling and a safe place to shower, shave and brush their teeth” Aldi support equal life for Australian children. Aldi uses the headline “water Equals life for Australian Kids” The product being water has created an initiative that Aldi have created, developed and achieved which is supporting an Australian charity “one voice” which they have donated over $60000 from sales and funded a mobile shower unit to support disadvantaged youth.

Aldi also donates all of its unused food to relief food organisations such as foodbank, Ozarvest and secoendbite

Pricing

Pricing is a crucial aspect in the marketing plan. Aldi prices are cheaper than competitors and they offer quality of which is up to the standard of major retailers in the industry.

Aldi was the first grocery retailer to introduce a national pricing policy as they believe that no matter where you live you should be able to have access to cheaper groceries. Unit pricing is a strategy that Aldi uses as it gives the customer the ability to compare different sized groceries which is a requirement by law.

Price penetration – Aldi charges the lowest price for items to gain a larger market share. The swap and save campaign reflects this as price penetration aims to take existing market share from competitors.

Competition pricing is used when there is high completion. Aldi uses below that of competitors’ policy – Aldi prices items a little lower than competitors for example Alcohol pricing is slightly cheaper.

Psychological pricing - Aldi uses this in some of its products for example English mustard as $2.50 instead of $3.00. The minor difference in price makes a huge difference in the customer’s mind.

Loss Leader is used at Aldi as special non groceries items are sold at low prices to attract the consumer’s attention so that they may be influenced to buy the cheaper groceries that Aldi sell. Examples include snow gear, bead sheets and toiletries. Although Aldi makes low profit on the non-grocery items Aldi will make up for it with their grocery sales.

Place & distribution Place is an important aspect in the marketing mix as it involves where the products will be sold, how the products are brought to the store and how activities from Aldi makes their products available for people to purchase . Aldi keeps its store layout simple as said earlier so they can focus on cheaper costs for the public. Aldi has obligations of minimising waste in the transportation of goods from the supplier to the store.

An Aldi warehouse is located at 10 Burando Rd Prestons NSW 2170 on an 11.8 hectare

site. This centre supports stores in southern Sydney. Physical issues include how goods need to be transported safely from distribution centres and also stored correctly in the warehouses so product so high product quality is maintained

Aldi bulk buys their products directly from various suppliers across Australia and stores its products in warehouses across Australia. Examples of this is how the core range of Aldi’s products which include food, beverages personal care and cleaning products are sourced centrally for all Australian stores.

Aldi is growing, introducing new stores around new areas and Aldi considers the following when introducing new stores

The amount of people living in the area e.g. above 30000 (demographic) The position of the store, such as Aldi may want their store to be placed on a main

road where a large amount of people may be able to see the store. A recent example is on Pennant Hills road where an Aldi store is being constructed.

The accessibility of the store and the parking available The location of its competitors at Dural Woolworths is located right next to Aldi but

it is very popular as it is a cheaper alternative, also locating it on a busy road may be a positive as few competitors are close buy and it offers the convenience

People and processes

People

Although Aldi’s customer is low unlike the completion where staff are there to guide you to a product. Aldi has a fewer range of products so extra staff aren’t needed. Aldi wants to reduce any costs and keep the product prices cheaper.

It is essential that all Aldi staff members are trained, friendly and acquire the appropriate skill level for the job that they are performing at Aldi. Training also makes the employee satisfied about their work and Aldi employers and managers also make sure that the employees understand how efficiency is the main philosophy of Aldi so every employee can work accordingly. Aldi employees are paid above market rates.

New employees go through a training program in store to understand how the retail operation works, to regional office tasks such as logistics, trading and financial planning. On the job training occurs in many different ways for example: coaching – where skilled staff members will help the new Aldi team members learn skills. Also 1 on 1 training is uses, job rotation – to ensure the employees understand how to perform a range of tasks and working and observing what a trained employee does at Aldi. Store manager’s act as trainers as well as they observe work that they give to the trainee so they can do it alone without any assistance. Aldi employees are also paid higher than any other supermarket in Australia.

Customer satisfaction is important for Aldi and ensuring that all shoppers enjoy shopping at Aldi. Aldi shows customer recognition through their Facebook page where complaints sometimes are made and solutions and answers are given to unhappy customers.

Processes are efficient and the customer has the expectation of purchasing the cheaper products with matching quality and efficient checkout practices. The customer also expects how Aldi promises to keep wastage low in all their marketing practices. Aldi sells the fund raising products to achieve customer environmental satisfaction from the customer.

Global Marketing

Global branding

As Aldi is a large transnational corporation as it is located mainly in Europe, UK, USA and Australia. Brothers Theo and Karl Albrecht opened the first Aldi store in 1913 Germany using the Older light blue Aldi logo. The company refined its strategy and built up significant reserves in the post-World War II German grocery market. Aldi then expanded into other areas of

Europe. The company made a big impact in Belgium, where analysts estimated the chain had 260 stores and US$1 billion sales by 1992. In 1960 the company was split (shown on the image) and a new Aldi dark blue logo was created; now this logo operates in countries all over the world. Its brand is associated with value for money and worldwide Aldi is recognised around the world as imaged on shopping centre alongside leading supermarket competitors.

Aldi is known globally for being simple in all businesses processes and Aldi is ranked 1 in simplicity and Rosie Baker from adnews says that simple brands gain deeper trust and loyalty - and earn greater profits.

Standardisation- Aldi own brands account for around 85% of all stock and the rest are national bands that are recognised all around the world for example some breakfast cereals and coca cola. You will get the same quality,” said Jones, who works in the consultancy’s Richmond, Virginia, office. Standardisation helps Aldi as it can focus on the same promotion strategies and less time spent on research and development on new pricing and promotional strategies.

Global pricing- Aldi maintains the 30% cheaper products around the world and the everyday low prices are kept the same all over the world. The special buys (non groceries) are available in different stores around the world with the same low price as you would find In Australia, for example in the US you can buy a Gardenline Adirondack Stacking Chair for $14.99*. Aldi is the only grocery business that has global pricing.

Bibliography

Our commitment to environmental sustainability, 2014 Aldi, accessed 10th May 2014, <https://corporate.aldi.com.au/en/corporate-responsibility/corporate-responsibility-at-aldi/our-commitment-to-environmental-sustainability/>.

Barlass, T 2011 Scrub-up gives Aldi green tick, The Sydney Morning Herald, accessed 14 May 2014, <http://www.smh.com.au/environment/scrubup-gives-aldi-green-tick-20110402-1csbm.html>.

Creating value through the marketing mix, 2014 The Times 100, accessed 7 May 2014, <file:///G:/Aldi%20MARKETING/Introduction%20-%20Creating%20value%20through%20the%20marketing%20mix%20-%20Aldi%20%20Aldi%20case%20studies,%20videos,%20social%20media%20and%20information%20%20The%20Times%20100_html%23axzz2uzfmHJ00.htm>.

An analysis of Aldi, 2013 UK essays.com, accessed 22 May 2014, <file:///G:/An%20analysis%20of%20aldi.htm>.

Aldi Australia, A 2014, the place to learn about, and share all things ALDI!,Facebook, 1 May, accessed 15 May 2014, <https://www.facebook.com/photo.php?fbid=726086837448820&set=pb.290994417624733.-2207520000.1400752259.&type=3&theater>.

Aldi Australia, A 2014, the place to learn about, and share all things ALDI!,Facebook, 16 April, accessed 16 May 2014, <https://www.facebook.com/photo.php?fbid=716448608412643&set=pb.290994417624733.-

2207520000.1400752407.&type=3&theater>.

Market share narrows between Coles and Woolworths, while ALDI makes important gains, 2014 Roy Morgan research, accessed 3 May 2014, <file:///G:/Aldi%20Marketing%20Australia/Market%20share%20narrows%20between%20Coles%20and%20Woolworths,%20while%20ALDI%20makes%20important%20gains%20-%20Roy%20Morgan%20Research.htm>.

Webb, C 2008 Business, The Age Business Day, accessed 17 May 2014, <http://www.theage.com.au/business/aldis-simple-recipe-for-success-20080725-3l48.html>.

Karolefski, J 2002 Aldi, Brand Channel, accessed 22 May 2014, <file:///G:/Aldi%20MARKETING/ALDI%20brand%20%20brandchannel_com.htm>.

Moore, S 2010 Aldi Action Plan, Pdf, accessed 15 May 2014, <www.packagingcovenant.org.au/.../ActionPlans/ALDI%20Stores%20(Au...>.

Aldi case study, 2012 Case Study, accessed 10 May 2014, <file:///G:/Aldi%20MARKETING/ALDI%20Case%20Study.html>.

Mitchell, S 2013 Mexican standoff, Sydney Morning Herald, accessed 2 May 2014, <http://www.smh.com.au/business/retail/mexican-standoff-woolworths-takes-aim-at-aldi-over-packaging-20131210-2z2cv.html>.