[TYPE THE COMPANY NAME]

MARKETING MIX
CRITIQUE

Introduction
With over 8,000 stores worldwide, Aldi effectively established itself as one of
the highly regarded retailers in the international business market. By
emphasizing on providing high quality products and excellent value for
customers, Aldis main marketing objectives is to grow its market share
around the world. Not only offer customers a smarter way to shop, Aldi also
is a strong supporter for the environment, health and nutrition. Specifically,
Aldi always offer fresh fruit and vegetable produced from local farms. In
addition, Aldis stores are focus on suburban areas where the cheaper
groceries are of great value to the community.
This Marketing Critique will analyse the micro and macro environment factors
that affect Aldi marketing results, provide an outline and evaluation on Aldi
current Marketing approaches and finally, provide redesigned marketing
mixes to make recommendations to Aldi marketing managers.
The critical issues facing Aldi include 1) only some product categories have
sound performance, 2) low capability of distribution compared to Coles and
Woolworths and 3) not yet establishing online shopping platform.
1. Marketing Environment Analysis Micro Trend
1.1. Competitor trend - Competition on the basis of price
According to Porters Five Forces, the fundamental force that forms industry
competition is rivalry among existing competitors. Two giant retailers Coles
and Woolworths are the major competitors of Aldi. As reported by Roy
Morgans Supermarket Currency in December 2013, Woolworths maintains
the highest market share proportion at 39%, followed by Coles at 33.5%
(Appendix 1).
Because of the price consciousness of consumers, supermarkets primarily
compete on the basis of price. Thus, retailers now focus more on the
significance of price by implementing greater transparency in their pricing
structure. For instance, Coles and Woolworths have been engaged in price
campaigns to provide staples like milk and bread with the lowest price.
Moreover, according to Magner (2015), the online retail market shares are
dominated by Coles and Woolworths with 11.3% and 11.2%, respectively.
While Aldi has not established online shopping platform, this fact will be one
of the biggest threats to Aldi.
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1.2. Supplier Trend Considered supplier as partner in delivering

customer value
Suppliers play a vital role in providing resources for the company to create
and deliver customers value. A rise in supply cost may increase products
price and lead to a decrease in companys sales (Kotler & Armstrong, 2012).
Suppliers can exert an influence on the producing industry by selling raw
materials at higher price or by having a monopoly. In addition, in the
expansion of stores, Aldi needs to find more suppliers who can meet the
required quality and volumes. Thus, building long-term relationship with
suppliers is one of the main factors to support for Aldis low price strategy.
Because of the fear that contracts would be canceled as retribution, suppliers
prefer dealing with a few trusted companies. In contrast with the strategy of
Coles and Woolworths in reducing supplier prices and charging extra 3% to
cover marketing costs of sale products, Aldi always absorb the losses on
sales into its own profit margin (Battersby, 2013). Thanks to its simplicity in
negotiation and fair treatment with suppliers, Aldi is on the right way to gain
over supplier from other competitors.
2. Marketing Environment Analysis Macro Trends
2.1. Technology Trend - The increase of internet retailing
The penetration of internet has taken over traditional approach to shopping
and brought convenient and immediate shopping experience to consumer.
According to figures reported by Australian Bureau of Statistics (2015), over
76% of Australias 15.4 million internet users made a purchase over the
internet in 2012-2013. In the next five years through 2015-2020, the annual
revenue from online retail is expected to increase by 9.3%, to total $21.8
billion (IBISWorld, 2015). The growth of online retailing through smartphones
and tablets will pose opportunities for Aldi to approach a wider range of
customers with lower marketing expenditure. In comparison with traditional
advertisement as printed newspaper or television ads, online marketing
helps to minimize the excessive cost and enhance the flexibility of the
company. For instance, organizations can design different online promotions
to approach different market segments.
However, in the other hand, online marketing brings out a threat to Aldi by
creating more competition between organizations in retail industry. Due to its
low cost and saturation, online marketing strategies are prone to be
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replicated as Macmillan and Tampoe (2001) stated that anything generating

efficiency will be copied by other organizations. Accordingly, the similarity in
appearance of product or promotions will be a challenge for customers to
distinguish between different brands.
1.2. Culture Trend - The growth in demand for organic products
Cultural factors have a vital role in how people think and how they consume.
Kotler & Armstrong (2012) stated that peoples views of themselves and
peoples views of others are the principle drivers behind contemporary
cultures. People prefer products and brands that help to express themselves.
As consumers have concerned more about their health and environmental
impacts of their food, there is a shift in consumer preferences towards
organic products.
In 2014, 69% of adult Australians claimed to have purchased at least one
organic product in the past 12 months, with over one million Australians
regularly purchasing organic products (Australian Organic Report 2014).
Consequently, the revenue of organic farming industry in 2014 is increased
to 1.38 billion (Appendix 2). Because of the surging demand for healthier
food over the years, Aldi could benefit significantly from niche market by
providing foods to improve the health of their customers.
However, because of high cost in production and distribution, the price of
organic products tends to be 1.5 or 2 times higher than the conventionally
grown products (IBISWorld, 2014), it may present challenges for Aldi to
maintain the competitive price. Thus, Aldi has to both reduce the production
cost and remain the competitive price to avoid losing customer.
3. Marketing Mix Evaluation and Critique
Current Approach
Produc
t

Evaluation

Aldi stocks majority of private The limit in its product range allows
label with around 1000 items it to gain bulk-purchase deals with
suppliers. According to Aldi Media
(Aldi Corporate Brochure, 2012)
Statement 2015, Aldi is the most
Food products including 100% of preferable retailer rated by suppliers
fresh meats, 97% of dairy and the highest net rating for
products and 97% of fruit and quality of relationship (Appendix 3)
vegetables are sourced from
Australian farmers (Euromonitor, In addition, Aldis non-branded
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ranges are considered as the major

differentiator between competitors
Aldi is a pioneer of various (Burt & Sparks, 2003)
initiatives,
such
as
the
elimination of artificial colourings Accordingly, Aldi can earn the
and the removal of phosphate reputation from stakeholder parties,
as being socially responsible for
from its laundry detergents
customers
health
(Piacentini,
MacFadyen & Eadie, 2000)
2015)

Aldis strategy of sourcing product

directly from Australian farmers is
consistent
with
organic
trend
mentioned in section 2.1.
Therefore, product is one of the
competitive advantages of Aldi.
Price

Aldi currently practices price

penetration,
which
involves
charging a low price to quickly
reach a large segment of the
market (Dean, 1976)
Unit pricing is a strategy that
Aldi apply to disclose the price of
products in terms of unit.
Aldi also use psychological and
promotional
pricing.
For
instance, a packet of cookies is
priced as $1.99 instead of $2.

Aldis unit pricing is preferred as it

saves time and effort for customers
in doing calculating and comparing
items (Aldi Australia, 2015).
However, frequent price promotions
can increase the number of dealprone customers who only buy
products when it is on sale. In
addition, constantly reduced prices
can be destructive to a brands
value image and profitability (Kotler
& Amstrong, 2012)
With the current competitor trends
stated in section 1.1, price strategy
is the key factor that helps Aldi
takes existing market share from
competitors.

Place

Aldi

stores

located

in

outer To achieve the ultimate goal of

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suburbs and less affluent sites

with convenience in parking and
accessing the store, few nearby
competitors.

reducing price, Aldis strategy of

place can help to reduce rent cause.
However, a limited number of stores
and no online shopping service
make Aldis place strategy a
Aldi now operates 367 stores weakness.
and is expanding west, opening
as many as 115 stores in South
Australia and Western Australia.
It plans to operate stores in
higher and more upmarket
locations (Aldi Australia, 2015)
However, Aldi has not provided
online shopping with online
payment and delivery as Coles
and Woolworths.
Promot
ion

Focus on families by marketing The aim of promotion is to inform,

products for all households persuade and influence consumers
members.
decision to purchase (Boone and
Kurtz, 1992). Accordingly, Aldis
Above-the-line promotion:
promotion strategy aims to build
trust and an emotional connection
Special
sale
items
are with target audiences.
presented on weekly promotion
brochure.
However, Coles and Woolworthss
promotion seemed to be more
Aldi
runs
20
humour dominating
with
different
TV
advertisements on television to campaigns throughout the year
promote their like brands.
featuring famous celebrities and
owned prime time.
Below-the-line promotion:
E-marketing
like
Facebook,
Twitter, mobile app is effective in
advertising
their
products
(Appendix 4).

Physic

No-frills concept is applied to This strategy helps to reduce their

5

al

the interior designing of all the operational costs. Also, the display
stores.
of limited brands avoid timeconsuming
and
confuse
for
Aldi layout is designed for customers
in
making
choices
customers to easily find and between different brands.
reach the products. The pathway
between product shelves is However, today, besides product
wider and follows a simple and price, shopping experience such
routine (Appendix 5).
as decorations, displays stimulations
of senses is concerned more by
Aldis atmosphere is quiet, customers (Bitner, 1990; Sivadas &
friendly and appeared warm- Baker-Prewitt, 2000). In summary,
welcoming.
the simplicity in Aldis designing can
bring negative effects on customers
Aldi barcodes on products are experience.
larger for employees to scan
them easier and quicker.

Proces
s

Aldi
process
simplicity and
friendly.

implied
the Aldis process strategy is efficient
environmental- when the wastage is kept low and
the
environmental
factors
are
always concerned.
- To avoid effort and staff in
collecting trolleys, shopping cart Aldi has estimated that the disposal
requires a coin deposit, which is of 150 million regular plastic bags
refunded when customers return has been prohibited. (Aldi , 2015)
the trolley
Cashier is always required to check
- No usage of plastic bag
out. Thus, it can create long queue
when there is no self-checkout.
- No self-checkout machines.

People

- The number of employees is According

to
Judd
(1987),
a
kept as low as 15 in all stores company can achieve competitive
(Aldi,2015)
advantage
thanks
to
the
differentiation of staffs. Therefore,
- Aldis training also makes the
keeping employees satisfied is the
employee satisfied about their
way Aldi express its efficiency and
work
moral responsibilities in the eyes of
- Aldi employees are paid higher customers.
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than any other supermarket in

Australia. (Aldi store jobs, 2015)

4. Marketing Mix - Redesign

4.1. Place
Distribution is one of the weakest components in Aldis Marketing Mix; thus,
there are many points that need to redesign in the place strategy of Aldi. In
terms of number of stores, 367 stores of Aldi is much less numerable
compared with Coles and Woolworths who owns 745 and 933 stores,
respectively. On the other hand, 91% of all Australians live within 10km of a
Woolworths store (Adnews, 2015); whereas, Aldis stores focus on suburban
and rural populations. Consequently, Aldi should expand the distribution
system, especially in populated areas to make it convenient for customer to
shop.
In addition, as evidenced from Roy Morgan research on popular online
shopping product in 2014, 1,586,000 Australian purchased Food and
Beverages in last 4 weeks, which almost tripled in comparison with this
figure in 2011 (568,000). Online shoppers in Australia spend more on
average per order than anyone else in the world, at $142 in 2013, up 20%
from 2011 (Cmo.com.au). Thus, because of the growth of e-commerce in
Australia, Aldi should establish online shopping platform to increase market
share as well as total revenue.
4.2. Physical
No-frill concept of Aldi store may help to minimize cost; however, it should be
changed to enhance customer experience as well as stimulate sales.
According to Donovan and Rossiter (1982), people tend to spend time and
money in the environment that elicit feelings of pleasure, whereas
unpleasant environment is not preferable. In general, the atmosphere of the
store can affect the shoppers perception on quality of the product (Darley &
Jen-Su, 1993).
To avoid the perception of the public that the retailer is down-market
(Verdict, 2009), Aldi is recommended to refresh its brand and revamping
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store interior design to give their customers a modern shopping experience.

Store image and important contributions such as decorative features, colours
displays stimulations of senses such as smells can gain more visit from
customers. For instance, some soft melody can make visitors more relaxed
and want to stay longer in the store. Additionally, Kotler and Amstrong
(2012) have stated that even when competing offers look the same,
customers may perceive a difference based on company or brand image
differentiation. In order to overcome the perception of down-market, Aldi
should change their logo into more simple and fresh design.
4.3. Promotion
Aldis majority of advertisement is to emphasize its lower price compared to
other rivals, such as Like brands. Only cheaper commercial advertisement.
However, low price can lead customers to perceive products as low quality
(Rao and Monroe, 1989). At first, these campaigns can attract customers by
the price advantage; however, it can not maintain customers in the longterm. Because of the increase in customers concern about the quality of
products, the commercial campaign will be more effective if it mentions that
the low price will come together with high quality.
Moreover, due to the fact that 79% of Australian population goes online
everyday (MerlinFx, 2013), their interaction with brand through social media
is at high level. People has the ability to express their opinion, support or
dislike through online forums and social media posts. In order to increase
Aldis reputation, building customer relationship through online platform like
Facebook or website can be helpful. According to Locock, Dopson, Chambers
and Gabbay (2001), opinion leader has a huge impact on peoples decision to
make a purchase; thus, Aldi can hire renowned blogger to promote for its
products.
5. Recommendations
5.1. Recommendation one
As a foreign retailer, Aldi may face dramatically different retail environment
when crossing countries, continents and cultures (Kotler & Armstrong, 2012).
Thus, it should adapt any changes in the trend of home country, which is
Australia. Compiled from Nielsen & ABS Population Growth Estimates, in
Australia today, 7% of the population is Asian, and by 2050, this figure is
estimated to be 21%. The rise of Asian population will result in a shift in
8

eating habits and demands; specifically, the categories that will grow include
rice, noodles, soy milk, fresh vegetables, Asian vegetables, pork, duck and
chicken (Nielsen, 2013). Thus, Aldi are encouraged to expand its categories
in Asian food and materials. Also, to grab more attention from customers, it
can develop a campaign with recipe attached into each cooking products.
5.2. Recommendation two
As reported by Nielsen (2014), majority of shopper increases their loyalty to
one brand thanks to Cash rewards (64%). Therefore, Aldi should increase
loyalty promotions and improve service customers after sale to gain more
brand loyalty from customers. For instance, providing member cards and
cash rewards will be a motivation for customers to revisit the store.
Additionally, Aldi should marketing more on their health concern initiatives,
like being the first Australian supermarket to demonstrate action towards
phosphate free laundry products.
5.3. Recommendation three
According to Harvey (2000), the vast competition has occurred between
branded manufacturers and own-labeled manufacturers, stating that
manufacturers of branded product have considered own-label products as
destructive factor of their investment and innovation. Therefore, due to the
fact that 70% of Aldis products are own-labeled, Aldi could receive
unfavorable opinion from public. Aldi should offer more products from various
brands to both reduce the disadvantages of own-label as well as attract
customers who are loyal to certain brands. This can help to avoid losing
customer to other retailers because they will find all their daily needs in one
store.

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Appendix 1

Appendix 2

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Source: Australian Organic Market Report 2014. Retrieved from

http://austorganic.com/ao-market-report/

Appendix 3

Source: Aldi Media Statement. (2014). Retrieved 11 May 2015, from

http://www.abc.net.au/reslib/201505/r1420865_20430558.pdf
Appendix 4

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Source: Aldi Australia Facebook Page (2015). Retrieved from:

https://www.facebook.com/ALDI.Australia?fref=ts

Appendix 5

Source: Danimezza (2011).How to shop at Aldi. Retrieved from

http://www.danimezza.com/2011/02/how-to-shop-at-aldi/

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