Investigating Business: Marketing Placement of Aldi in Qatar - Report Example

s s of Aldi is one of the leading discount supermarket chains with around 9000 flagship stores functional in around 18 countries. The turnover for the company according to the recent figures is around €50bn. Basically the company is German in origin and was founded by two brothers, Theo Albrecht and Karl somewhere around 1946. However, the store was originally founded in 1913 with their mother being the owner, however, the brothers changed the name and outlook of the store when they took over. The brothers strived to build chains for their store and their hard work resulted in around 300 shops by 1960 (Brandes 2004: 12). However, when the numbers of chains exceeded that, they decided to split operations of the company in two groups, i.e. Aldi Nord and Aldi Sud. Aldi Nord is basically the Aldi Market which has its headquarter in Essen whule Aldi Sud has its main headquarter in Ruhr. Both these groups have distinct yet specified operational areas. Both these groups were legally as well as financially separated in 1966. Both are separately owned by the brothers. Thus the company isn`t new in terms of its origin and it has its roots for around a century now. Sustenance of the company for so many years speaks volumes of its reputation and operational successes. For this reason, opening up one of the Aldi supermarket discount stores in Qatar apparently seems to be a fine idea. Yet, it must be kept in mind that the stores are so far successfully running in Europe and Australia, and thus prior to opening up the store in place like Qatar a thorough analysis needs to be conducted. Thus, the paper would aim at conducting a SWOT as well as a PESTEL analysis for the store in context to the target market i.e. Qatar. SWOT Analysis Aldi with the tagline ‘spend a little, save a lot’ is currently functional in the lifestyle sector which has the comparative advantage of selling at highly affordable prices. Yet, the retail stores don`t compromise on quality and offer luxury products for its customers at highly affordable prices. Prior to conducting an analysis, the audience which the store aims at grabbing must be understood. Research indicates that the market segment which Aldi generally aims at appealing is the one which is looking for quality vegetables at competitive prices (Data Monitor 2007: 22-23). However, most of these audiences is aiming for household purchases while quite a smaller segment aims at utilizing the store for commercial purchases. Furthermore Aldi has been positioned in the market for all these years in such a way that the general audience claims to reckon the private labels which the company has to offer. Though it is placed in Germany, the company still aims at international visibility and thus it is critical to observe international trends and needs of the local market to place itself safely in the market. In this context, a SWOT analysis may be conducted to study it strengths, weaknesses, opportunities and threats to see if the company may be placed in a market like that of Qatar. SWOT Analysis Strength 1. Most of the products offer high quality 2. Price range is highly competitive/affordable 3. Strong international presence 4. Operational costs are low 5. Thousands of international local stores Weakness 1.Comparatively simpler in outlook as compared to lustrous brands 2. Hasn’t been able to turn into a global brand 3. A few products have reportedly been low quality Opportunity 1.Must invest in branding to beat competition 2. Must turn to Asia and Middle East to enhance profits Threats 1. Doesnt offer a ‘holistic shopping experience’ 2. Shoppers don`t get that ‘brand like feel’ while shopping here thus competitors may grab their share Strengths: Aldi is a retail store which deals with products not limited to food items, vegetables, beverages, sanitary items and other kinds of household related products. However, most of these products are those which contain the company`s own labels, which implies that mainstream brands aren’t marketed or sold too often in these stores. Thus, a strength of the company lies in the smaller size as compared to other retail stores which stock a multitude of brands while enhancing sales of only one kind of brand i.e. Aldi`s own products (Coe & Wrigley 2009: 111). Similarly, Aldi doesn`t utilize traditional marketing tools and techniques where the stores aren’t too fancy like other luxury branded stores are. It has a simple mechanism where the pallets containing various products are re-filled once the products are sold out, which again implies that it doesn’t need to hire many people. Thus, the cost saving strategies of the stores gives Aldi the edge in maintaining competitive prices. Also, Aldi doesn’t invest in marketing generally however; a weekly newspaper is issued from Germany where the updated prices are published. Sometimes, in countries like UK and USA, Aldi may publish a few ads to enhance exposure. Furthermore, the company realizes the role it must play for the community and thus it has a policy of labeling the products accurately, also ensure that the products are safe and also environmentally not damaging, while it also practices a policy of fairness for its employees. However, in addition to focusing on the strengths, the weaknesses may also be pointed out. Weaknesses Though the company stands out in terms of prices and presence in a wide market, yet the weakness lies in the failure to expand the stores in areas like Africa, Middle East and Asia. Furthermore, since the stores are comparatively smaller, it may not be considered as a typical ‘brand’ given that the company doesn’t believe in investing in branding. Also, other competitors like LIDL have been able to impact the market globally while Aldi continues to be an international brand, yet can`t be considered as a global brand yet. Also, some of the household items are also allegedly reported to be low quality at time impacting the reputation of the company (Seth & Randall 2011: 88). Therefore, having studied the strengths and the weaknesses of the company, several threats as well as opportunities may also be pointed out. Threats The company fails to offer a holistic and an extraordinary shopping experience to the customers in the current age of newer audience which is looking for more than just low priced goods. Also, private labels can be tossed away with much ease by the other established brands. Opportunities However, the company also has an opportunity window by investing in advertising to explain its position to the potential customers and also to enhance exposure and presence. Similarly, the company must expand its range of stores in Middle East, Asia and even Africa to turn it into a global brand. (Mentel 2013: 15-16) PEST Analysis PEST Analysis Political 1. Qatar politically stable 2. Investor friendly legislations 3. Aspiring to seek bilateral and multilateral relations with European states 4. Government and people have a vibrant cultural and political values with respect to retail industry Economic 1. Qatar has the 9th highest GDP in the world 2. Hydro-carbons based industry 3. Seeking to expand economic ventures by enhancing international ventures Social 1.Socially conservative as opposed to European mindset 2. High inclination towards international products 3. Religious and cultural factors affect the social mindset Technology 1.Technologically simpler in outlook 2. Not much focus on research and development 3. Technology isn`t a crucial aspect, reliance on less complicated technological ventures Thus, given the SWOT analysis, the brand has a potential to expand its profits in a market like Qatar which will also help the company overcome its weaknesses. Yet, before making generalizations, it is crucial to make a PESTEL analysis. The political situation in Qatar is quite flexible for a company to operate with the caliber similar to that of Aldi. Political Factors: The legislations and also the political environment is encouraging enough for such companies, where stores like Al-Meera supermarket are functioning with much success. Economic Factors: Economically, Qatar is looking forward to turn the hydrocarbon based economy into a more vibrant one where international investors must be encouraged, thus companies like Aldi must take advantage of this welcoming policy of Qatar where international brands might find a space to invest (Asia Dept 2013: 14-15). Social Factors Furthermore, the social trends in Qatar related to consumption are also seeing a drastic change. Ever since Qatar has opened gates for European companies, the presence of international brands and markets are widespread and thus, the people have started trusting international brands. Thus, the inclination of local customers towards Aldi wouldn’t come off a surprise where they would definitely encourage international products at a competitive price. Technological Factors Since Aldi isn`t technologically quite a demanding company and is still functional in such a way that minimal utilization of technologically advanced electronics constitutes its policy, the infrastructure of Qatar also suits the Aldi`s policies. Also, Qatar is environmentally sensitive more in terms of its hydrocarbon`s industry while a retail store like Aldi would only add to its commitment to environmental causes, and thus Aldi won`t have a challenge to operate in this context as well. Lastly, the market of Qatar is quite encouraging for international companies especially European companied like Aldi and thus the legislations are quite simplistic and won`t place a hurdle for the functioning of the retail store. Thus, PESTEL analysis of the market of Qatar in context to the placement of a flagship store like that of Aldi is quite optimistic. (Association of British Chamber of Commerce 2011: 99) Conclusively, placement of Aldi in Qatar seems to be quite a good investment for the company as well as for the state of Qatar. The company operates with simplistic procedures and market friendly prices make it an appealing venture for the people in Qatar who would make the potential market audience for Aldi. Also, Aldi may seek an opportunity to expand in the entire region after having invested in Qatar alone. In other words, since the PESTEL analysis for Qatar is quite optimistic, and experiment for a store in Qatar may serve as a base for expanding a range of stores in the entire region. Also, Aldi may reinvigorate its position in the international market by emerging out as a global brand with a potential to open stores in any corner of the world. Also, with such an expansion, the company may also get an edge and confidence to focus more on branding to emerge as a chic brand yet offering competitive prices in the globe. Thus, it is highly recommended in light of research and analysis that Aldi must invest its resources in expanding business in Qatar given an optimistic scenario highlighted via this paper.     Bibliography: ASIA DEPT., I. M. F. M. E. A. C. (2013). Qatar. Washington, International Monetary Fund. http://public.eblib.com/choice/publicfullrecord.aspx?p=1607156. ASSOCIATION OF BRITISH CHAMBERS OF COMMERCE. (2011). Qatar: market brief. Macclesfield, Ten Alps. BRANDES, D. (2004). Bare essentials: the ALDI way to retail success. London, Cyan/Campus. COE, N. M., & WRIGLEY, N. (2009). The globalization of retailing. Cheltenham, UK, Edward Elgar. DATAMONITOR (FIRM). (2007). Aldi case study premiumizing grocery offerings in discount retail. London, Datamonitor. http://www.library.auckland.ac.nz/eproducts/ebooks/Datamonitor/cscm0123.pdf. MINTEL. (2013). Supermarkets: More Than Just Food Retailing - Europe - November 2013. Mintel. SETH, A., & RANDALL, G. (2011). The grocers: The rise and rise of the supermarket chains. London, Kogan Page. Read More