Marketing Management and Strategy
Marketing Management and Strategy
Buyer's bargaining power: 4
Suppliers' bargaining power: 4
Threats of substitutes: 4
Threats of new entrants: 5
Retailers differentiate themselves from one and other, this terminates the consumer's perception of competing stores. This is promoted through the strategic development, the marketing‐oriented application of technology, and precise targeting of consumer demands. The author's Strategic Choice Grid indicates ...view middle of the document...
(Jenkinson, 2014) Cites, when the recession hit there was an increase in demand for value for money. Citing further that market research identified that 80% of Aldi’s customer base shopped at their competitors as well. According to (Tower, 2012) citing (Porter 1980) explaining, general substitution is able to reduce demand of a product, as there is a threat of consumers switching to the alternatives. (Tower, 2012) Cites further, in the grocery industry this could be seen in the form of product-for-product or the substitution of a need and can be weakened by new trends, such as small chains of convenience stores emerging. Aldi reacted quickly to this and created a strategy focusing on retaining consumer loyalty. To overcome this obstacle Aldi started to demonstrate product quality according to (Ruddick, 2014) by creating a television campaign, giving the results of their blind taste tests that had been conducted amongst a cross section of shoppers. Endorsing that the majority of consumers that enjoyed the famous brands also liked Aldi’s ‘like’ brands. Effectively communicating Aldi’s quality and value for money. (Neilan, 2014) Explains, Aldi’s direct challenge for the ‘Like Brands’ campaign was to increase market share from 2.3% to 2.5%, worth an extra £130 million in revenue. From this (Neilan, 2014) added Aldi increased its market share by nearly a third to 4.8 per cent.
Economic factors could be a concern to Aldi, because with their new popularity it is likely to influence demand, costs, prices and profits.
Another issue that Aldi overcame according to (Duke, 1993) was the shortage of vacant store sites. Aldi took a defensive position and became competition for the big stores, which in turn enhanced people’s interest in the discount grocery retailers.
(Gill, 2010) Explains that Aldi are supplied by regional distribution centres and where possible, they source their products locally, which is also has further benefits as it helps to support local industry therefore promotes local responsiveness on top of this it is also beneficial to the environment due to a reduced carbon footprint. Attracting different segments of the market. However, there are risks involved in using porters (Porter, 2008)cost leadership strategy. Although Aldi are experiencing the success of growth with this model, everything Aldi does is focused around giving its customers value for money. If Aldi could no longer provide value for money, for example loses contracts with key suppliers or competitors can offer better value for money. Aldi would lose its unique selling point and therefore is likely to lose the majority of its customers.
(Times100, 2012) Highlights that Aldi’s Facebook and Twitter pages encourage communication with its customers. Citing further social media provides a platform through which Aldi can interact with customers. This is an accurate way of finding out what the consumers think of the Aldi brand and its products. From this Aldi can create good...