Friday 25 November 2016

Aldi vs Lidl


In today’s business environment, marketing is a crucial concept, particularly when it comes to satisfying the needs of consumers. This is because they play a very important role (metaphorically) within the organisation. For example, by determining how successful or not the business is. Marketing can be defined as ‘the management process responsible for identifying, anticipating and satisfying customer requirements profitably’ (Chartered Institute of Marketing). Any organisation that adheres to this basic procedure will in turn benefit from happy customers who may recommend the company to others (word of mouth). Thus, this may mean that the organisation will benefit from a growing reputation and positive image as well as more customers visiting their business to purchase products and use their services. However, to do this effectively, an extensive amount of research must be undertaken as this will aid the company in finding out, analysing and understanding what their customers and potential customers need and want. This is when all companies need to ‘consider the marketing mix’ (BBC Bitesize, Business Studies – N/D).

The Marketing Mix

The marketing mix is an extremely useful tool to use within any organisation. This plan should be adopted to when trying to analyse any information that was gathered through research which was carried out by the business at hand. The Economic Times (N/D) website states that: ‘The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brands or product in the market’. The importance of the marketing mix is highlighted on this website furthermore as it is made evident how ‘all the elements of the marketing mix influence each other’. It is also suggested that the elements ‘make up a business plan’ for organisations which is extremely helpful. However, if this is not followed through correctly then it can go wrong which means that the business could potentially suffer from many negative consequences.

The Marketing Mix usually consists of 4 main P’s – price, product, place and promotion. However, this can be developed furthermore into what is known as the Extended Marketing Mix which adds on an additional 3 P’s. These are people, process and physical evidence. Therefore, there are 7 P’s in total.  

1.      Price – How much customers pay for a product

2.      Product – The features and appearance of goods and services

3.      Place – The point where products are made available to customers

4.      Promotion – How customers are informed about products

5.      People – Those who pay a key role in selling the products and services that the business offers.

6.      Process – How the service is delivered

7.      Physical evidence – What is on offer to the customers














Within this blog, examples of rival companies, such as Lidl and Aldi, which have implemented this course of action will be shown and their adoption to the 4 main P’s will also be demonstrated.

Lidl

Lidl was discovered as a ‘small, independent grocery’ in Germany in the 1930s. However, in the 1990s, Lidl ‘began opening stores outside Germany’. They ‘started in France’ before opening their first UK store in 1994. Now, there are more than 600+ stores in the UK alone. Lidl hold great belief that this has all been achieved due to the ‘dedication’ of their people and their ‘simple vision’ which is to provide ‘high quality at low prices’. - (Lidl website)


Aldi

In 1914, a woman called Anna Albrecht ‘opened a small food store in the mining town of Essen, Germany’. However, in 1948 ‘her sons took over the business and expanded to 4 locations’. Originally, the name of the business was ‘Albrecht Discounts’. However, in 1962, it ‘was shortened to ALDI’. From here on, Aldi stores began opening all stores all over, with the first UK store opening in 1990. Like Lidl, Aldi also intend to the provide ‘great value and quality’ to customers. Their main goal is ‘to provide’ ‘customers with the products they buy regularly and ensure that those products are of the highest possible quality at guaranteed low prices’. – (Aldi website)


Lidl vs Aldi - Product

It is fair to say that Lidl and Aldi have been competing against each other since the beginning of time. Some may say that this is because both companies adopt to very similar approaches, particularly when it comes to attracting customers to their stores. This can be demonstrated in their array of irresistible high quality products which are lowly priced, yet still provide consumers with ‘value for money’.  Since both businesses have been labelled as ‘low budget supermarkets’ within the media, it is clear to see why they have both have such a strong base of loyal customers who visit their stores. This is because these low budget supermarkets have just as much on offer as the well-known supermarket chains such as Tesco and Morrison’s. Therefore, when it comes to doing a weekly shop at Lidl or Aldi, customers never struggle for choice, especially when it comes to deciding what they desperately need or simply want to put in their basket or shopping trolley to satisfy their needs.

·         Branding



 The Business Dictionary states that branding is the ‘process involved in creating a unique name and image for a product in the consumers’ mind, mainly through advertising campaigns with a consistent theme’. However, it is also suggested that the overall aim of branding is to ‘establish a significant and differentiated presence in the market that attracts and retains loyal customers’. This form of marketing strategy was highlighted clearly when it came to researching the mains aims and key focuses of Aldi and Lidl.

A key way in which Aldi wanted to gain more customers to their shops (both globally and across the UK), was to demonstrate that their ‘brands are of equal quality to well-known brands’ for example Heinz and Fairy Liquid. To do so, they carried out ‘blind taste tests’ amongst a ‘cross section of shoppers’. The result of this activity showed that most customers who liked the well-known brands, also liked the brands that were provided by Aldi, which was sometimes even their own. Therefore, this highlighted that when put to the test, the high-quality brands provided by the bigger supermarkets chains were not as different as the lower priced and own-branded products provided by Aldi. The results from this research enabled the ‘basis’ of Aldi’s ‘Like Brands’ campaign to be formed. Thus, this allowed Aldi to ‘communicate its quality and value messages effectively’. However, the introduction of Aldi’s ‘Swap & Save’ Campaign back in 2014 caused a huge uproar, particularly within the media as this was their way of trying to convince consumers that ‘shopping at Aldi would be cheaper’ in comparison to anywhere else. This will be discussed in more detail later within this blog.

When it comes to branding, Lidl is another ‘low budget’ supermarket which has not fallen far from gaining praise not only for its staggeringly low prices but also for the quality of its products. Quality, defined by Google, is ‘the standard of something as measured against other things of a similar kind’. Lidl received ‘13 gold medals in the annual Own Label Food & Drink Awards’ survey which was conducted by a Grocer magazine. This result showed that just because prices are low, this does not mean to say that there is a lack of quality and flavour within the products - ‘low prices do not necessarily mean’ that ‘quality and flavour’ are being ‘sacrificed’ (Mail Online, 2015).

Price

According to an online source (learnmarketing.ne, N/D), pricing is said to be ‘one of the most important elements of the marketing mix’. This is because it is ‘the only element of the marketing mix, which generates a turnover for the organisation’ (learnmarketing.net, 2015). It can also potentially make or break the organisation. Therefore, organisations must seriously consider what pricing strategy they should use before implementing it into their business and most importantly, products because if the wrong strategy (or strategies) is or are chosen, then this can have many implications for the business. There are various pricing strategies that can be used within today’s business environment. For example, market penetration. This is when an organisation charges ‘lower prices for new products to help them enter the market and gain market share quickly’ (learnmarketing.net, 2015). However, which pricing strategy is used, purely depends on the company at hand, and the products and services they provide as this is at the heart of the organisation.

Through exploring Aldi’s use of the marketing mix, we can quite clearly see how they distinguish themselves from other stores through the pricing strategies that they use. One of the main pricing strategies used by Aldi is competitive pricing. This is when an organisation prices its products at ‘slightly lower prices than competitors’. In addition, from my research I have discovered that ‘Aldi’s products are 30% cheaper than those offered by its competitors’. Therefore, Aldi are gaining a competitive advantage. This also allows Aldi to invest any profits that they make back into their business. As a result, this will enable them to start planning. For example, expanding the business into different countries or simply opening more branches. This means that Aldi are meeting ‘its business objectives for growth’. By adopting to this method, it shows that Aldi are being efficient and cost effective.

Unlike Aldi, over the last few years, Lidl has struggled to fight for the top spot at being the best in their field (low budget supermarkets). This has been highlighted particularly when it comes to offering consumers with the best prices. It is unclear as to what pricing strategy (or strategies) that Lidl use. However, through extensive research, it has been quite clearly demonstrated from an online source (Prezi.com) that a lot of Lidl’s rivals are carrying out ‘price matching strategies’. A price matching strategy is when an organisation is ‘willing to match’ those prices of competitors (Prezi.com). Any organisation that adheres to the price matching strategy is basically assuring their consumers that ‘they have found the best price’ (bizjournals.com) and place to shop. However, any business that has already implemented this course of action ‘probably has low prices already’ (bizjournals.com). If not, then the business at hand will have wasted both a huge amount of time and money ‘changing their prices on every order’ (bizjournals.com). However, because of Lidl’s competitors adopting to the price matching strategy, this has proven to have many sever knock-on effects to Lidl. For example, this means that Lidl is losing their competitive advantage, which was what drove their business to success in the first place. Now, this potentially means that the company could struggle to survive in the future. Thus, Lidl has already started planning  for the future of the company by putting many long-term objectives in place for the company. For example, their aim is now to ‘grow their market share and to open new stores in higher traffic areas…’ (Prezi.com). Furthermore, they also intend ‘further develop the deluxe range’(prezi.com). If Lidl were to do so, then this means that they could increase their prices maybe for a certain length of time, such as during festive period so that they are meeting seasonal demands or they could even adopt to a specific pricing method for certain products all year around.

Place

According to an online business case study, ‘the place element of the marketing mix involves identifying where the product or service will be sold’ – retail. However, according to Cleverism.com it can also be known as the ‘process and methods used to bring the product or service to the consumer’. From Aldi’s marketing mix, we can see that they intend to do this by expanding their outlets and opening more stores throughout and across the globe (as well as within the UK). Currently within Aldi stores, the layout is ‘simple’. This is because they intend to keep ‘waste’ and cost levels to a minimum. This also demonstrates Aldi is striving to be social responsible. For example, by reducing the amount of wastage that they have it means they are help protecting the environment. This shows the desire that they to be perceived well by the public and consumers. In addition, since place is all about ‘how the product is bought and where the product is bought’ i.e. the location(cleverism.com), this helps in increasing awareness of the company and the products that they provide. When it comes to opening new shops, there are many aspects that Aldi like to take into consideration. Some of these were identified on an online case study based on Aldi. They include: where the store is located. With this concept, Aldi like to ‘focus on…good visibility from a main road and not too much competition nearby. Thus, this means that Aldi will be in a better position, both financially and within the market as it will allow them to benefit from a greater market share. In addition, this has many advantages for the organisations as they will eventually begin to see an increase in their revenues and profits.

It quite easy to see how Lidl have contrasting views compared to Aldi, particularly when it comes to the ‘place’ element of the marketing mix. As previously discussed, Aldi like to locate their stores and branches in central locations for all to see. However, Lidl seem to adopt a more different approach when reaching out to consumers. This is made evident as much of their shops are ‘out of the way and not in central locations in towns and cities’ (Prezi.com). However, this may put Lidl at a serious disadvantage as there would be a limited number of consumers visiting their store. However, having said that, it may also prove to be extremely effective as the staff will be able to deliver better customer service to consumers. In addition, this may help Lidl to gain new customers as current ones may recommend the company to a friend or simply share the experience that they had their with others.

Promotion

Promotion is the process involved when it comes to ‘raising customer awareness of a product or brand, generating sales and creating brand loyalty’ (Google). Promotion can include anything from advertisements to special offers. However, from my research, I have found it very interesting to see that it is very common for most companies to use more than one method of promotion at a time. This is called the ‘promotional mix’. However, companies must consider several factors before they decide which promotion method they should use. These include aspects like: their competition, their marketing budget etc (tutor2u.com). Promotion is one of these most vital sections of the marketing mix as it helps increase awareness of the ‘existence and positioning of products’ (tutor2u.com). Businesses also use promotion in order ‘to persuade customers that the product is better than competing products and to remind customers about why they want to buy it’ (tutor2u.com).

When it comes to the promotional aspect of the marketing mix, it is interesting to see that Aldi use a variety of techniques from both above the line and below the line promotion. Above the line promotion is where ‘mass media is used to promote brands and reach out to target consumers’ (Google). For example, the television. Recently, Aldi have had their television adverts praised for nothing but good humour. This is clearly portrayed in their ‘Like Brands’ campaign. This campaign was launched in 2014 to demonstrate the fact that they are ‘like’ other brands, ‘only cheaper’. The advertisement shows ‘…a famous brand as a benchmark for quality side-by-side by an Aldi product’ (Aldi website). Again, this reinforces the fact that ‘Aldi products are cheaper than leading brands but equal in terms of quality’. Aldi has stated on the campaign section of their website that: they ‘love to make people smile’. From this, they also state that ‘they’ve always managed to make a good impression by sprinkling a little humour’ into their ads’. However, above the line promotion can be expensive. Whereas, below the line promotion ‘is an advertising strategy in which a product is promoted’ (Google) through direct mail campaigns etc. This method was used by Aldi when they wanted to advertise the message of their ‘Swap & Save’ campaign. The campaign shows the amount of money that customers ‘could save if they swapped their weekly shop to Aldi’. From an online business case study based on Aldi, it is stated that: ‘they use a variety of communication methods and channels to increase the impact of its promotional activity and meet the aims of AIDA’. From my research, I have found that ‘AIDA’ is a business model that can be used when trying to demonstrate ‘the aim of any promotional activity’ (businesscasestudies.co.uk). AIDA stands for Awareness, Interest, Desire and Action.

Lidl has shown to excel when it comes to promoting their company and products. Lidl’s 2014 campaign, ‘#LidlSurprises’ was described by an online source (3doordigital) as a ‘genius marketing campaign’. This campaign took place in September (2014) in London, where members of the public were ‘invited to attend an exclusive farmers market’. On the day, guests were given free food samples to try. This included ‘fresh fruit to cheeses and steaks’ which were ‘enjoyed greatly and praised enthusiastically’ by attendees. However, when they ‘expressed their wish to purchase the products’, buyers could not believe what they were seeing ‘when the vendors pulled out a Lidl paper bag to pack up their purchase’. Lidl worked in conjunction with Twitter and well-known food bloggers to promote this event.  In addition, on the run up to the event, leaflets and flyers were also handed out to members of the public. Finally, this once again highlights Lidl’s dedication for the company to succeed.

Overall, through analysing the marketing mix and its uses, it’s clearly demonstrated how it can enhance the performance and contribute towards the success or failure of a company within today’s business environment. This has been shown within Lidl and Aldi as they have both experienced many success and failures since the beginning.

















References



3.      Lidl website –


4.      Aldi website –


5.      Online business case study –


6.      Business dictionary –


7.      Daily Mail –


8.      Cleverism –



10.  Biz Journals –





15. https://www.google.co.uk/search?hl=en&site=imghp&tbm=isch&source=hp&biw=881&bih=420&q=lidl+logo&oq=lidl+&gs_l=img.3.0.0l10.1186.1856.0.3586.5.5.0.0.0.0.86.373.5.5.0....0...1ac.1.64.img..0.5.370.8JvbBiNm1hs#imgrc=0atavxSUSyfVpM%3A
16. https://www.google.co.uk/search?hl=en&site=imghp&tbm=isch&source=hp&biw=881&bih=420&q=aldi+logo&oq=aldi+logo&gs_l=img.3..0l10.965.3252.0.3842.9.9.0.0.0.0.115.578.7j1.8.0....0...1ac.1.64.img..1.8.573.aWmGi8brqHg#imgrc=hJgw1OqoDCBTxM%3A
17. https://www.google.co.uk/search?hl=en&site=imghp&tbm=isch&source=hp&biw=881&bih=420&q=marketing&oq=marketing&gs_l=img.3..0l10.903.2635.0.4984.9.7.0.2.2.0.147.625.4j3.7.0....0...1ac.1.64.img..0.9.650.qEquPa3YUTQ#imgrc=ZL-RX5_mlh39GM%3A


















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