Marketing Methods in ALDI Company - Research Paper Example

Introduction Aldi is an Australian retailer of food, drinks and grocery that started its operations in January 2001 and is currently operating over 200 stores all over major Australian cities. According to its website, the company is also the recipient of the 2009 Australian Retailer of the Year due to its remarkable growth and development guided by its principle of providing the highest quality to all customers at an affordable price. Along with the aggressive expansion taking place in ALDI comes many issues and problems. The company is governed by the philosophy of providing high quality groceries to all people wherever they live at the lowest possible price. The term ‘all’ is highly ambiguous and it is a known fact that retailers succeed only as long as they are able to attract the purchasing decision-makers or those which highly influences them. ALDI can therefore be seen as facing the problem of determining the proper avenues for continuously attracting these decision-makers. This is compounded by the fact that Australia’s socio-demographic composition is increasingly becoming diverse due to migration of Asian nationalities to study and to work in this highly developed nation. The purpose of this research is to determine the effective marketing methods that ALDI can adapt to target its main and most important consumers. This is not to say that ALDI is not doing a good job of marketing within the Australian market of the southern area in which it operates. Rather, the proposal seeks to identify and provide opportunities for improvement in addressing its core customers based on the analysis of data gathered from secondary literature in expansion, marketing management and financial controls. Although differentiation is important in this market, it is also important to be very clear in a specific target market. The objective of the current proposal is to get ALDI to pay better attention in providing better measures for particular customer segments in Australia such as that of busy mothers with children. In terms of busy mothers, this target market may want different things from the product when compared to other customers for any number of reasons. For example, single, non-family buyers are buying the ALDI products directly for themselves while busy mothers are buying the products for their offspring. This should lessen the product side of the marketing mix of the grocery chain in terms of the customers’ individuality and slant it more towards the mothers’ good sense. Nutrition and value should be highlighted in the chain’s product lines as a goal along with the fun and community message conveyance. When we consider the ‘mother’ customers, factors such as child influence also comes in. Mothers would tend to gratify their children and more often than not, children often know what they want and how to get it. Therefore, ALDI marketing should also consider in satiating the ‘child consumer’ in influencing the ‘mother purchaser’. Strategies should have the trappings of sense and value so that the purchaser does not mind buying it for the consumer. Again, this will be reflected mainly in packaging and product presentation that highlights the healthy attractiveness of the product to the mother and the fun factor to the child. It is also the objective of the proposed research to determine how to effectively build customer trust with ALDI in Australia and cultivate the so-called ‘customer loyalty’ phenomenon. High quality and affordability is often hard to balance especially in a global market. There will come a time that other retailers can provide higher quality or a cheaper price. ALDI should find ways to culture loyalty to its brand and its stores such that consumers will choose to buy at the retail store. In this case, the market research aims in determining methods in informing the consumer about ALDI in a way that builds trust and loyalty between the consumer and the and puts forth a message of perceived trust coming from the company towards the consumer. The methods should make the customer feel whenever he/she buys in the store or look at ALDI advertisements that he/she is being approached by an entity which inspires, motivates and empathizes with them. The media delivery aspect of advertising for ALDI will focus on advertisements commensurate with the scope of the company’s operations involving specifically television media dissemination, sponsorship of events, and print and web advertisements. It is the contention of the current proposal that ALDI will have to recognize various costs and opportunities regarding these different media outlets for advertising as well as the current trend towards diversifying advertising in a creative manner which will improve grassroots appeal. Methods The goal of the proposed research is to provide ALDI with marketing strategies based on marketing research. Quantitative analysis is preferred since it provides reliable results as it based these on hard data and statistics about a population whereas qualitative studies tend to provide subjective results. The data will come in the form of surveys from the staff of ALDI and a number of its major competitors. (Robson, 2003) Information is needed on determining the exact method of pinpointing the major segments or the core customers of ALDI’s retail products. An investigation shall then ensue to determine the characteristics of the identified major customers which shall then contribute it determining appropriate and proven strategies to address them. The guiding principle shall be the identification of what appeals most to the decision makers in their purchase of products from ALDI. First of all, no substantive steps should be taken towards making the theoretical steps outlined above a reality until an exhaustive analysis of past sales has been conducted. If there is no previous data or that the existing is insufficient, a survey of present customers designed to be exhaustive shall be conducted. The goal in the customer analysis is to know who exactly comprise the core customer, determine the choice criteria they use and how it is changing and how they rate competitive offerings. (Peterson, 2007) Competitor analysis shall also be conducted as the company will be needing exact information about the competitors in this market, in terms of their market share, their promotional strategies, and, most importantly, their pricing. This shall be important in determining efficient distribution channels and best practices. Analysis shall also extend to other excellent examples of retailer success stories who are not necessarily competitors. More research should also be done in terms of the cost-effectiveness of new and bold promotional strategies for reaching ALDI’s target market in Southern Australia. Combining promotion and distribution is important to marketing. The price of this promotion must be assayed in order to measure its effectiveness. The company should also invest some research time into the new phenomenon of guerilla marketing. Often, guerilla marketing firms can create a solid and unique impression of the product, and since individuality is a key selling point in the market, this option should be researched in more detail. Attention must also be paid to how much web advertisements cost, and whether this is a good idea from a costs/benefits perspective. Also, information is required as to whether or not ALDI’s products are going to be distributed internationally, and regarding production and marketing costs, along with other external trends. “The Australian Retailing Trends report describes the most critical trends for the next three to five years and discusses how retailers can best react to these trends... It is hoped that this information will be useful to Australian retailers and other organisations concerned with the growth potential for and changing nature of retail business” (Research, 2009). Results For the proposed research to be a success, secondary data on marketing must be assessed in terms of its matching nature to ALDI operations in Southern Australia. There are many different perspectives to consider when seeking a definition of the word marketing. Kotler, et. al see a modern definition of marketing as the crucial determination of how business are going to succeed in new conditions that are brought about by technological advances and globalization. For example, the authors state that, “In the analog economy, most companies operate three different businesses: a product innovation and commercialization business, a customer relationships business, and an operations and infrastructure business” (Kotler, et. al, 2002, p. 22), and then go on to note that in the new or digital economy in which ALDI operates today, these three different businesses are still present, even if they must be dealt with more dynamically than in the past. Generally, these authors see the old economy as a place of stability and control, and oppose it to the new economy, which is a place of constant change and increasing recognition of customer needs. Using concrete examples as well as rhetoric, Kotler, et. al seek to provide a framework of understanding as to how businesses can adapt and change their marketing strategies to operate in this new type of economy, which requires them to outsource more than ever and build relationships based on teamwork, as often as not, rather than the concept of competition. “To the extent that the information is made public and transparent, it will make people better informed and able to make better choices. New economy organizations tend to be flat, decentralized, and open to employee initiative” (Kotler, et. al, 2002, p. 4). These particular authors use their text to provide an interesting, convincing and detailed argument for the establishment of new marketing principles that are not based on rigid rule structures, but are instead more able to dynamically respond to an ever-evolving present. ALDI is also taking advantage of marketing to advertise its deals: “Our weekly Special Buys are ordered months in advance and are intended to be on sale for one week only to keep our range fresh and interesting. Some of our Special Buys sell very quickly because of reasonable pricing and high quality. Unfortunately it is not always possible to predict which items will sell out faster, but we do our best to supply each store with sufficient stock of each product” (Aldi, 2009). Pricing, of course, is a traditional part of marketing, even with a more progressive theory. While some are progressive about marketing, others have more traditional views about marketing that can be applied to ALDI. As Ailloni (1998) states, “In spite of all the intellectual legerdemain involved in repackaging old terms in new age catch phrases, the marketing of consumer packaged goods was, is, and will remain concerned with only one basic objective: the profitable movement of as many cases as possible.” From this perspective, there is no “new” or “old” marketing: there is just the bottom line. “From the manufacturer’s point of view, consumers and the trade are the two poles anchoring what should be viewed as a continuing process with product development, advertising, and promotional efforts providing the necessary fuel to keep the process in play” (Ailloni, 1998). These traditions are also financial, which can potentially mean less dynamism when a structure is dividing marketing into advertising and promotions with different short- and long-term agendas for each function, in terms of profit that can be derived by the grocery chain. Financial controls are also important to an organizational paradigm like ALDI’s, because they are connected to other issues that are considered to be increasingly vital in the present. Some of these issues include corporate ethics and accountability, and others include disclosure, but in any case, the importance of financial controls is a baseline from which interpretation stems. In the current cultural and economic setting of the corporation or business internally, financial controls are becoming increasingly related to issues of transparency and internal stabilization, from perspectives of both auditing and shared vision. “Public companies increasingly include management reports on internal controls in their annual reports even though no regulators require them” (Thomspon, 1997). New rulings may change this trend to emphasize the more mandatory nature of releasing financial controls reports. In the current environment, the role of the shareholder has also increased in scope and importance. Previously, companies like ALDI were able to, to a large extent, virtually ignore the shareholder in most situations that were not construed to be directly adverse in Southern Australia. For example, a company expanding its operations overseas might, after posting the first sales losses in fifty years following the international move, draw criticism from its shareholders in regards to the basic operational and organizational structure of the effective advertisement. All advertisements basically have four features, according to Etzel et al. (1996): a verbal/visual message, delivery through some sort of media, payment that is made to the media by the advertiser, and an advertiser whose product is identified and recognized. Conclusions and recommendations The rationale for focusing on advertising as a key issue, is that it seeks to focus on the target market for ALDI’s products and services and educate this market about why they should choose to hire ALDI’s product over the competitors. Whether they are dedicated purchasers of this grocery brand, infrequent purchasers, or even lapsed purchasers, what the investor side of the marketing demographic wants in the product reflects on them personally as well as on other consumers for whom they are buying the product. They want something in advertising that reflects this facet of their demographic in terms of a financial service provider. Another issue is public relations for the company. The rationale for outsourcing PR is that it frees up ALDI’s resources in this area and also provides an objective and professional perspective. The rationale for not using direct marketing is that most financial service firms which use direct marketing are not building on a base of customer quality (loyalty), but rather sheer quantity. “Supermarket chain Aldi has accused retail giants Coles and Safeway of muscling out smaller rivals by striking deals that prevent them from setting up business in suburban shopping centres” (Egan, 2008). The rationale for sales promotion involves reflecting ALDI as a product which has a high degree of value to the status-minded consumer. Consumer trust is also gained by flexibility, and in terms of price, flexibility is the main issue with the purchaser side of the segmented target market. This section of the market has an income status that is stable, and who has more money to spend freely. Therefore, pricing of the different product lines should reflect this difference in customer segmentation, and therefore give the customer a clear idea of status differentiation in terms of marketing ALDI as an effective choice. Although this market may be more willing to pay more initially for something faddish than the busy stable market segment, it should not be the intention of the company to cash in on a quick fad and lose the long-term perspective warranted by this important market. Therefore, the company will follow a brand loyalty strategy that places a great deal of importance not only on market entry pricing, but also on establishing perceived value in the customer base. REFERENCE Ailloni, D. (1998, March 16). Marketing by any name is still about sales. Brandweek. Egan, C (2008). Aldi brands Coles, Safeway retail. The Age. http://www.theage.com.au/national/aldi-brands-coles-safeway-retail-bullies-20080628-2yjt.html Etzel, Michale J., Walker, Bruce J., and William J. 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