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Aldi: Marketing

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Harry Holbrook

on 3 May 2014

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Transcript of Aldi: Marketing

Aldi: Marketing
A presentation by Harry Holbrook
for in-touch Marketing

Company History
Founded in Germany in 1913 by brothers, Theo and Karl Albrecht
Aldi aims to offer the lowest prices to customers.
In 1960, the company was split, creating Aldi Nord (North) and Aldi Sud (South).
During the 1970s and 1980s the company grew internationally

In Australia
In 2001, Aldi South opened its first stores in Australia in Marrickville and Bankstown, in addition to a warehouse and distribution centre.
By 2011, Aldi had opened 250 stores in NSW, QLD and Victoria, growing alongside the approximately 9,000 other stores across the world.

Aldi's Approach to Marketing
Aldi is associated with competitive prices and high quality products.
Interbrand rated Aldi 42nd most valuable retail brand in the world in 2014, with a brand value of approximately USD$2.94m.
All marketing strategies focus on its core target market

Aldi aims to convey a constant brand message related to it’s slogan: Spend a little, Live a lot.
This message associates Aldi’s products with high quality, low cost alternatives to major brands.

The Marketing Mix
Aldi’s product range is based around high quality ‘like brands’, also known as ‘home brands’ or ‘private labels’.
95% of Aldi’s products are private label.
The other 5% is ‘must-have’ products produced by external companies such as Milo, Vegemite, Nescafe.

Private label products are produced by Aldi with various brand names created by Aldi e.g. Belmont Biscuit Co., Goldenvale Cereal.
Packaging is visually similar to well-known brands to create an impression that the quality of the product is similar to that of the other brand.
Michael Kloeters, Managing Director of Aldi's Australia Group
“(Aldi’s) quality is as good as the leading brands (…), but you can sell them for less because you don't have to invest in heavy marketing”.

Aldi’s other major product offering is periodic specials.
These products are only offered for a limited amount of time or until stocks last.
Products in the past have included technological equipment, sporting equipment, and clothing.
Periodic specials draw a greater customer base, thus increasing sales of other products.

Focuses on slogan ‘Spend a little, Live a lot’
Competitive pricing strategy with products offered at the cheapest price in market.
Lean operations, economies of scale, and innovative approach to supermarket industry creates cost savings which are passed onto consumer.

Aldi utilises psychological pricing - pricing of products at $1.99 or $4.99, which gives customers the idea that the product is cheaper than it is, resulting in increased sales

Aldi's National Pricing system creates consistent pricing scheme across country. Every Aldi store charges the same amount for products.
Aldi’s pricing may result in consumers perceiving their products to be of a lesser standard.
In order to overcome this, Aldi effectively markets their products as inexpensive, high quality alternatives to well-known brands.
Promotional methods aim to INFORM, PERSUADE, and REMIND the target market about products.

Regular promotional campaigns are used to advertise specific products.
“Expressi Yourself” for Expressi Coffee Machines
“Prices You’ll Love Talking About” for general product range
Promotional efforts centred around these campaigns.

Above-The-Line Promotional Methods
Mass Marketing Techniques:
Television advertisements
Newspaper advertisements
Magazine advertisements
Printed catalogues
In store advertisements
Product testing

Below-The-Line Promotional Methods
Social Media
Targeted Emails

Aldi primarily utilises a producer to retailer to customer distribution channel, however, as most products are private label brands, the production and retail of the product is performed by Aldi.

Aldi is cheaper than Coles and Woolworths by 26%
Traditional store retailing is Aldi's main distribution channel.
9235 stores worldwide.
Over 300 stores in Australia

Criteria for Aldi Stores
10,000 people living in surrounding area
Store on the edge of the CBD with good visibility from main roads and minimal competition.
Onsite parking is often available.
Store layouts are simple to minimise waste
Layout is standard across Australia.
Distribution is exclusive, with only Aldi stores selling Aldi products.
This saturates the market with their products.

The physical distribution of products is efficient.
Produced in countries such as China, transported to Australia by ship, then to distribution centres by truck.
Products then transported to stores by trucks.

SWOT Analysis
Simplicity of operations
Cost efficient
Powerful price points
Private label sourcing
Price edge over other retailers
Understands economics of business
Strong financial and structural base in Germany
Low breakeven stores

Manual systems used
Limited assortment, limited appeal
Minimal perishables, marginal quality
Dependent on well trained cashier
Limited technology utilised
No loyalty program, limits relationship with customers

Expand into other markets
Increase market penetration
Continue to improve quality
Tap into institutional markets
Hold tight to lowest cost positioning
Offer a greater variety of ‘must-have’ brands to complement private labels.
Utilise more advanced technology in stores
Customer loyalty programs

Perceived higher quality products offered at other stores
Other stores offering cheaper products such as CostCo.
Situational Analysis
SWOT Analysis
Business Life Cycle
Product Life Cycle
Financial Information
Business Life Cycle
Globally, Aldi is in the maturity stage.
Profits and sales are at their peak.
In Australia, Aldi is in the growth stage.
Profits and sales are growing annually.
Aldi International
Aldi Australia
Aldi must monitor other major competitors, such as Costco, Walmart, Coles and Woolworths.
Aldi must take action to prevent these competitors from gaining Aldi’s share of the market.
Product Life Cycle
Supermarket products are established so very few products offered by Aldi are currently in the introduction phase.
Periodic specials enter the introduction phase however, due to the heavy advertising of these specials, they rapidly enter growth stage.
These products then decline through cessation.
Expressi Coffee Machines
Sales of capsule coffee machines have increased by more than 70% in Australia.
Aldi Mobile
Telecommunications industry has grown significantly
1.33 mobiles per person in Australia
Aldi plans are considered to be the best value available, with the lowest calling and text message rate.

‘Must-have’ product
Positive reputation
Sales constant
Belmont Biscuit Co. Oaties
Sales are constant.
Similar quality to Arnott’s Shredded Wheatmeal Biscuits.

Similarly to introduction, no products offered by Aldi are in the decline phase, for the same reasons.
Financial Position
Financial position is very positive
Aldi's business structure is private company, so minimal information is released.
Market Share
Aldi's market share continues to grow in Australia.
Introduction of 'Home Grown' Range
Expansion of Stores into SA, Tasmania, and Western Australia
Increased utilisation of online marketing
Diversified product offering
Proposal 1 - Introduction of 'Home Grown' Range
The majority of Aldi’s products are produced overseas in Asian countries, where cost advantages exist.
Research shows that nearly 70% of Australians want more Australian made products.
Proposal 2 - Expansion into Western Australia, South Australia, and Tasmania
Currently, Aldi only has stores on the eastern seaboard of Australia, in NSW, Victoria, the ACT and QLD.
SA, Tasmania, and WA would be idea locations to expand the business into.
Distribution centre and store opened in Adelaide, followed by a store and distribution centre in Hobart, and finally in Perth.
Review after 6 months. If successful, open additional stores in states.
Profits could potentially increase by up to 50% by 2020
Proposal 3 - Increased utilisation of online marketing
Online marketing currently used by Aldi includes social media (Facebook, Twitter), their website, and emails.
Aldi should increase their use of these forms of marketing
in-touch Marketing proposes that Aldi:
Create an online retailing platform to allow customers to purchase products online
Run exclusive promotions and competitions through Facebook and Twitter to attract more people to their pages, and thus to their products.
Proposal 4 - Diversified product offering
Aldi only sells traditional supermarket products.
Products such as coffee machines and mobile plans have sold well.
Periodic sales of diverse products have been effective.
Aldi should offer these diverse products permanently.
Coles currently sells a small range of clothing
Woolworths and Coles both sell technological products.
Aldi will attract a greater number of customers, increase its sales, and in turn, increase its profits.
Location of expansion
Aldi's Target Market
Adults involved in supermarket shopping and the decisions related to these purchases.
Looking to balance cost with quality.
Generally women - mothers, wives, partners.
Profits in Australia:
2008 - $72.6 million
2009 - $91.94 miliion
27% growth between 2008 and 2009
In the same period, Woolworths profits increased by 12.8% and Foodworks made a loss of $2.1 million
2008-2009 was a time of economic recession
Consequently in-touch Marketing is proposing the introduction of the “Home Grown” range of products
Aldi would work with Australian farmers and producers to offer products produced in Australia.
A marketing campaign would be created, with TV, social media, and online advertisements being utilised.
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