Marketing Communications Management at ALDI Group - Case Study Example

Marketing Communications Background ALDI has a long standing reputation of "keeping it cheap so that shoppers can too". Discount food retailer ALDI Group has become one of the world's biggest grocery chains, running about 7,500 stores worldwide. By offering deeply discounted prices on about 700 popular food items (a typical grocery store has 25,000) and weekly special buys, it had cultivated customers who are "Cheap and Cheerful". No frills ALDI (short for "Albrecht Discounts") bought cheap land mostly on city outskirts, built cheap warehouses, kept a tiny staff, and carried mostly private-label items, displaying them on pallets rather than shelves. ALDI has more than 780 stores in 26 US states, but Germany (where ALDI has a 40% share of the grocery market) accounts for about two-thirds of sales. Brothers and co-founders Theo and Karl Albrecht own the company. This case study analyses ALDI's intentions to spend up to 500 million pounds in order to build new stores and refurbish old ones and its marketing campaign and strategies to improve its image and brand building. What are the purposes of the ALDI campaign Describe the intentions and investigate the different marketing communication methods that ALDI have used. ALDI had a long standing reputation of being a cheap discounted chain and often in West Germany, before about 1990, ALDI shops were often ridiculed as being cheap shops selling poor-quality goods. ALDI's customers were alleged to be only poor people who couldn't afford to shop elsewhere. ALDI also had a hard marketing strategy in that it refused to sell branded products and stuck to its private label products claiming that it helped to cut prices. Although ALDI is very popular in its own target segment, the company decided that a complete revamp was needed. The 500 million pound budget was aimed at improving the existing stores and building new ones. The image of the store was to be upgraded to target middle Britain while carrying of specialty products was aimed to bring in up market customers and retaining them. Above all the image upgrade was aimed at encroaching into the market shares of its close competitors Tesco and Sainsbury. The ultimate aim was to have 217 more stores by the year 2010, totalling about 500 in the U.K alone. ALDI's strategy for marketing consisted of a TV campaign helped along by an outdoor poster activity and newspaper advertising. The common thread that binds them together is the catch phrase," Spend a little, live a lot". ALDI which embarked on this campaign had never undertaken any kind of PR activity during its past years of existence. The hard discount concept is all about keeping expenses to a minimum so the stores can undercut the main supermarkets on their limited ranges of 650 to 1 200 products, depending on the operator. ALDI's website tries to push the quality angle. It talks about quality products and wide choice "that combine with prices that never fail to astonish first-time shoppers [...] our stringent selection process enables us to offer our customers own- brand products whose quality matches that of leading brands." ALDI has also has entertained the media at one its store openings and tried to improve its visibility in the eyes of the general public through the publicity. In the US, it has used weekly inserts in the newspapers to garner public attention. What segment of the consumer market are ALDI seeking to attract And what do you think are the most effective ways of reaching this segment ALDI is now trying to attract the up market consumer, typically the "cash rich, time poor" segment characterized by high incomes, higher standard of living and sophistication of lifestyles and having more specialized tastes. ALDI is trying to lure this segment in to its premises by serving up products that appeal to their palette. It is trying to reposition itself to break away from the "cheap discounter chain" image in order to achieve this. The concept of quality rather than the price is the key. The Television would be a good media to reach this segment due to its affluence. But the targeted message needs to broadcast at the appropriate "Prime" viewing time, due to the fact that most of the families have double incomes, meaning both partners are in the work force. Hence media messages need to be tailored for visibility at the appropriate time when it is most likely to be viewed. Using celebrities to endorse the inspirational foods from ALDI would give its image a boost. Strategically placed billboards, and lighted neon signs at places frequented by those "power" buyers like upscale malls, frequented restaurants and places of recreation will draw attention. Media habits of this segment would allow for similar positioning and targeting strategies. The Internet has evolved in leaps and bounds. Sending promotional mailers about its new gourmet line and weekly specials would help lure the required customers. Weekend inserts in the newspapers are bound to be effective since it offers a better probability of being scrutinized than during the week. Similarly well-laid eye-catching ads in the preferred widely read magazines of this target audience would help the perception of ALDI as part of the venues for purchase. Package inserts (consisting of coupons for ready to eat foods, gourmet and specialty treats and frozen take-away meals in frequently consumed products like cereal etc.) will align to the customer need and generate interest. Painted advertisement on the side of the public transport may draw the eye of the affluent consumers in vehicles waiting at the traffic lights. Design an appropriate poster for conveying the essential messages of ALDI's campaign. ALDI's campaign needed to portray the following key components Target up market customers Project higher quality image More choice of products Flaunt specialized gourmet line of foods Improved layout and dcor of stores Included the catch phrase, "Spend a little, live a lot." Welcome to the New Improved ALDI - for you! Great Deals! Guaranteed Quality!! Be spoiled for choice!! Walk in, Pick up and Have a great day!! Check out our new gourmet specialty offerings: Smoked salmon, Chilled crayfish tails Couscous and Pinot Grigio wine! Spend a little, Live a lot! For the best quality at unbeatable prices! Identify and evaluate alternative marketing communication methods that could have been used to assist ALDI in achieving their objectives. Integrated marketing communications is a way of looking at the whole marketing process from the viewpoint of the receiver. The communication objectives are as follows: Awareness is the creation of recognition of the entity in the target segment. Knowledge is empowering the target audience with sufficient information to consider their options. Liking is projecting a positive image in order to win the favourable opinion of the target segment. Preference is trying to build a shift in liking for the product in comparison to similar ones by a USP (unique selling proposition) which escalates the value of the product in relation to the others. Conviction is giving a nudge to the customer to strengthen the intent to purchase a product. Purchase finally occurs when the customer is further propelled by an irresistible deals or offers which convinces the customer and culminates in a sale. In the case of ALDI, it has a discount chain image. Since it is targeting a more up market segment it needs to downplay the earlier image and work harder to become a contender without turning away its existing base. Hence it needs to reprocess its improved image and emerging up market trends that will influence the affluent customer to visit the store. Ideally the messages delivered should gain attention, hold interest, arouse desire, and elicit action, (AIDA model). The message content and structure should be well planned to elicit the desired response in order to achieve the targeted goal. Communication channels may be classified as personal and non-personal communication channels. The most important personal communication channel is the customers who contribute to word of mouth publicity. People ask each other all the time about the best place to shop, eat, go out etc. and in the case of ALDI its existing satisfied and loyal customer would be its strongest asset to encash its image on. Word-of-mouth publicity is also low cost and convincing, because the experience is first hand and reputable. ALDI could solicit the customer's view on its improved image and offerings and post it on its website, so that its credibility increases. Offering special deals to loyal customers encourages them to come back as well as tell others about their bargains. Using celebrities and famous people to endorse their products enhances the feeling that the quality is good enough to be used by them. Non-Personal Communication channels include media, atmosphere and events. Donating to community organizations or sponsoring local events will allow ALDI the visibility to its enhanced image. Donating to community organizations or sponsoring local events will allow ALDI the visibility to its enhanced image. With the technological advancement today, surfing the net has become the norm. Making the website search engine friendly will help bring more traffic to the website. Also making the website more user friendly and easy to navigate will help bring customers. The time is ripe for promoting online shopping. Online shopping is a major new opportunity for retailers and the UK offers a good market for this with the highest percentage of people online across the EU. Already more British food shoppers have converted to online grocery shopping than in any other country. It is growing in popularity due to its immense convenience complementing today's life style. Discuss other changes ALDI are making in the Marketing Mix. ALDI has gone the right path in its strategies. It has revamped its stores and made it more shopper friendly and clean and bright. It has enhanced its choice of products and increased its product numbers. Its fresh food lines have been enhanced to cater to the healthier palette of today. Its non food lines have been enhanced and are on exceptional offers like special buys sometimes include a powerful telescope for 39.99 [pounds sterling], a 69-piece microscope for 14.99 [pounds sterling] and an interactive learning computer to 5-8-year-olds for 29.99 [pounds sterling]. Delivering this new concept to the customers requires a marketing mix. Advertising, Sales promotions, Public relations and publicity, Personal selling and direct marketing are all various options to bring in awareness to bring the customer to ALDI. Coupons, Sampling hours, Mail-in offers and or rebates, On-the-spot discounts and sweepstakes are all geared towards gaining a customer and keeping their interest alive to keep them coming back. Store memberships which offer discounted prices are a great way to ensure loyalty and accumulation of points, air miles etc. are a novel way to induce them to keep spending at the same location. There is no unique perfect marketing mix for all companies. In each stage the requirements are different. While more advertising and publicity is required in the initial stages, word-of- mouth often keeps the momentum going through the growth phase. When the interest drops, advertising and offers are geared up to keep the interest sustained. Proper evaluation and feedback are necessary to see where that attempts are succeeding and where they are not and the strategies need to be revamped as they move along. It's a dynamic process and depends on feedback received through surveys, questionnaires, and customer satisfaction on trying out products. In deciding on the marketing mix, ALDI needs to examine the cost, advantages and disadvantages of each promotional tool. The ability of the consumer to readily recall the message and the frequency of the exposure will give input to ALDI about its mix and the degree of alignment to the needs of the customer. ALDI will also be benefited by the knowledge of its past and current images and that of its competitors. It has used Television, newspapers and billboards. Strategic placement and timing are important. It would be beneficial to try some direct marketing and more internet savvy marketing to cater to the modern era. ALDI has had a good opening in Rugby; hopefully it will continue its trend. Sources About us ALDI [Online] http://uk.aldi.com/ 4th Nov 2005 UK hard discounters face perception problem - Food Industry Report - public wary of quality at food discounters [Online] 21 Nov 2002 http://www.findarticles.com/p/articles/mi_m0DQA/is_2002_Nov_21/ai_9493151 4th Nov 2005 Kotler, Philip Marketing Management Prentice Hall The Millennium Edition. 2000 Aldi Absolute [Online] http://www.absoluteastronomy.com/encyclopedia/a/al/aldi.htm 4th Nov 2005 Karolefski, John Aldi [Online] 10th June 2002 http://www.brandchannel.com/features_profile.asppr_id=74 4th Nov 2005 Read More