Module Name (Marketing and the Business Environment)

Course Name (MBA GLOBAL)

Term and Intake ( Term 1, February 2019)
Lecturer name (Juliane Henze)

MARKETING AND THE BUSINESS

ENVIRONMENT

Student Name: Siddharth Dhanda

Student ID:Q1000905
Email address: siddharthdhanda@gmail .com
Date of assignment submission:11/07/2019
TOWARDS A GLOBAL MARKETING FUTURE 


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 Executive summary
This current study has presented a comparison of marketing strategies over multinational retail
companies. The retail companies that have been selected for comparison are Lidl Stiftung & Co.
KG and Aldi. This study has highlighted on depicting BCG analysis of Aldi multinational
company. In this study, porter’s five forces analysis has been conducted on Aldi international
organisation to determine its position in the global market. Aldi generally deals in grocery items
and best selling products of them include wine, cheese, meat, kitchen staples, condiments and
bakery items. Ansoff’s matrix usually consists of four varied innovative strategies that business
organisations can incorporate to include growth in global retail market or in their products or
both. Few recommendations have also been suggested for Aldi through which it can implement
growth in them.


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 Table of Contents
Introduction 4

Company overview 4

Findings analysis 4

Section 1: Marketing mix 4

Analysis of marketing mix 4

Evaluation of marketing strategies 7

Relating strategies with outcomes 8

Section 2: Global environment related factors 9

BCG analysis 9

Porter’s analysis 11

Current offerings 12

Section 3: Recommendations 13

Ansoff's matrix 13

Marketing opportunity in foreign country 15

Suggested product or services 16

Communicating value propositions with efficiency 16

Conclusion 17

Reference list 18

Appendices 20

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Introduction

Global marketing is a process of orienting the marketing strategies to adapt the global market
environment and extort benefits from them. Analysing the market environment, international
business organisations can engage in strategic development for gaining competitive advantage
and stabilise international business. Apart from advertising strategies, marketing strategies
involve market analysis by using various tools and business environment analysis. This study
aims to analyse the potential marketing opportunities and recommend strategies based on in-
depth market analysis. The use of marketing analytics tools such as marketing mix, BCG Matrix
analysis, Porter’s five forces and Ansoff matrix analysis can support comprehending
international market efficiently for the international companies such as Aldi and Lidl Stiftung &
Co. KG.

Company overview

Aldi is private retail company in Germany that can be found in 11,234 locations around the
world. The products of food, beverages, and other essentials are of leading preferences in the
market. The combined turnover is more than €50 billion, making it one of the leading retail
stores in Germany (Aldi.com, 2019).
Lidl Stiftung & Co. KG is Germany based supermarket with products of food and other retail
products and having more than 10,000 stores in 28 European countries such as Austria, Bulgaria,
Ireland, Italy and such along with US. The current value of this company is high with a revenue
of €104,3 billion. The total turnover is €46.1 billion that represented over 60% of the total retail
chain turnover (Lidl.de, 2019).

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Findings analysis

Section 1: Marketing mix

Analysis of marketing mix

Marketing strategies are supportive to address customer needs and increase company opportunity
in international market through gaining competitive advantage. As for Aldi and Lidl, both are
highly reputable retail companies of Germany and have exponential opportunities in the
international market. As commented by Eteokleous et al. (2016:580), the application of
marketing strategies can be helpful in evaluating the foreign market to analyse the potentiality in
international market. Thus, the companies are needed to evaluate the market by analysing the
marketing operations and their impact on the target market.

Factors Aldi Lidl Stiftung & Co. KG

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Product ! Design- basic and convenient
design of stores and products to
address larger customer market
! Features- organic products
with high nutritional value and
health-conscious
! Product variety- Simply nature
(organic foods), liveGfree
(gluten-free), Never Any (meat
products), Earth Grown
(vegetarian products)
! Quality- high quality
! Packaging- convenient
packaging featuring simple
nature and healthy contents
! Design- high standard with
engineered and creative designs
with the aid of imported
products
! Features- maintaining private
label products with high
discounts
! P ro d u c t v a r i e t y - S i m p l y
Sumptuous Swiss Style Muesli,
Alesto Dried Mango, Baresa
Green Olives Stuffed With
Garlic, Deluxe Colombian
Supremo Roast and Ground
Coffee
! Quality- high that sustained
customer satisfaction by 78%
between the age range of 18 to
34 years
! Packaging- imported packaging
with engineered processes for
making it cost effective
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Price ! Pricing method- differentiated
pricing
! Policies- value-based pricing
! Strategies- competitive pricing
! Allowances- 13%
! Discounts- based on corporate
responsibility
! Rebates- 45% of working
capital
! Gross profit margin- 7%
(€211.3 million)
! Pricing method- differentiated
pricing
! Policies- competition-based
pricing
! Strategies- cost-based pricing
strategy
! Allowances- 10%, chiefly
focusing on snacks, company
transportation, and benefits of
insurance and retirement
! Discounts- 90% products are
considered under discount to
increase customer flow
! Rebates- 30% on working
capital
! Gross profit margin-
descended to 25.5%
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Place ! Distribution channels- · Distribution channels- selective
selective distribution with push distribution with intensive direct
marketing strategy marketing
! Product handling- engineered · Product handling- engineered
system, industrial trucks, system, industrial trucks, stacking
stacking frames frames
! Transport- road, rail and air · Transport- road, rail and air
transport transport with Regional Distribution
! Coverage- Germany, Australia, Centre
US and such · Coverage- Austria, Bulgaria, Ireland,
! Distributors- UK & Global Italy, Portugal, US and such
Distributors, and such · Distributors- own company branch
! Inventory control- Radio of Lidl act as the distributor
Frequency Identification · Inventory control- Barcode
inventory system inventory system

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 Promotion ! Advertisement- online, · Advertisement- television,
d i r e c t o r i e s , m a g a z i n e s , directories, catalogues, online such as
newspaper Karmarama Debut campaign to
! P u b l i c re l a t i o n s - m e d i a promote the brand awareness “Big on
relations, public affairs, social quality, Lidl on price”
media, community relations, · Public relations- media and
c o r p o r a t e a n d s o c i a l corporate responsibility, public affairs
responsibility · Direct marketing- internet
! Direct marketing- catalogs, marketing, catalogs, direct response,
telemarketing, direct-response social media services
marketing, face to face selling · Sales promotions- brand campaigns
! Sales promotions- brand and discounts
campaigns and emotional · Publicity- high discount rates
connections, seasonal offers
! Publicity- high brand visibility
Table 1: Comparison of marketing mix analysis
(Source: Aldi.com, 2019, Lidl.de, 2019)

Evaluation of marketing strategies

With the analysis of the marketing mix, it can be seen that the products of Aldi are aimed to
address the market of lower to upper-class people, whereas, Lidl is highly focused on gaining
customer satisfaction with low prices of product and increasing the availability of discounts for
maximum products available. The packaging, quality and features are selected based on the
products and the target market effectively. It can be seen that the increased number of storefronts
and convenience in availability helped Aldi in increasing their opportunity in foreign markets
compared to Lidl. Nonetheless, Lidl has facilitated customer attraction with discount packages
(Lidl.de, 2019). As stated by Chabowski & Mena (2017:1), pricing strategies are focused on
market demand and product availability. Differentiated method supported both the companies
effectively.

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However, the competitive pricing of Aldi and cost-based pricing strategy of Lidl supported the
companies in addressing their individual target market effectively. Thus, the gross margin is also
affected and resulted in €221.3 million for Aldi, whereas, the gross profit margin for Lidl has
descended to 26.5% with the expansion of launch costs (Lidl.de, 2019). The selective
distribution channels push market strategy and inventory control helped Aldi to surpass Lidl,
Penny Market and Dollar Tree. On the other hand, the barcode inventory system helped in
improving the management and company growth for Lidl and making is suitable to handle larger
products and customers in domestic as well as in foreign market (Lidl.de, 2019).
Application of intensive strategies for marketing, Aldi has successfully overtaken the rival
companies- Lidi, Penny Market and Dollar Tree and obtained a boost on the profit share by
19.8% (Aldi.com, 2019). The analysis of customer analysis and market analysis, Aldi has applied
the strategies for customer involvement and selective distribution of products, making the market
share to be increased by 5-7%. On the other hand, the distribution channel of Lidl focused on
intensive marketing helped in gaining competitive advantage over ALDI, Biedronka, Netto,
Walmart, Waitrose, Giant Eagle and such. Moreover, the application of promotional strategies
such as customer involved campaigns and highly discounted packages have supported in gaining
the operating income of €41.53 billion (Lidl.de, 2019).
In addition to marketing mix analysis, these international companies have implemented strategies
such as market segmentation and strategised marketing operations based on customer demands to
penetrate and capture new foreign markets and stabilise their existence in the current market
positions. As explained by Lamberton & Stephen (2016:146), social media influence and public
relations are effective in increasing market presence for international companies. In addition, the
application of advertising and direct marketing opportunities, international companies can lead to
conduct extensive market penetration.

Relating strategies with outcomes

Analysing the marketing mix tool, Aldi and Lidl can implement marketing strategies in the
domains of product, price, place and promotion in order to facilitate the growth of the business in
foreign markets. Moreover, competitive advantage can be obtained through the proper marketing

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strategies for these two companies. Analysing the market demand and competition in the market,
the strategies are needed to be modified to increase business opportunity. As for Aldi, the product
strategy helps in representing the present concern of health and organic food, which lead to the
increase in profit by 7.8%; however, the simpler designs labelled Aldi as a cheap brand compared
to Tesco and M&S. Therefore, product design can be modified to attract new customers. On the
other hand, the engineered packaging system and discounted product variety have helped Lidl to
increase its popularity by 7% after 2014 that can be assessed with the records of customer
satisfaction rate (Lidl.de, 2019).
The pricing and placing strategy of these two international companies supported the growth of
these companies in different countries and deal with competition (Kraak et al. 2019: 33). Though
they both applied differentiated pricing, the competitive and penetration strategies of Aldi and
Lidl resulted distinctly due to their presence in the existing countries. Aldi aimed to strengthen
the presence in foreign countries, whereas, Lidl tried to increase business ventures in new places
through penetrative pricing strategy based on cost-based pricing method. Thus, their strategies
supported business growth significantly. Moreover, Sheikh et al. (2017: 179) comment
distribution channels and inventory control becomes supportive of the pricing strategies of these
companies. The distribution channel and pricing strategies helped Lidl increasing their coverage
in the Austria, Bulgaria, Ireland, Italy, Portugal, US and such.

Section 2: Global environment related factors

BCG analysis

BCG matrix is a specialised framework or tool that aids in evaluating strategic positioning of
certain brand or company and its potential. This study has focused on demonstrating BCG
analysis of Aldi multinational company. According to Erevelles et al. (2016: 901), there are four
categories in which business portfolio of Aldi can be classified; dogs, cash cows, stars and
question marks.

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 !
Figure 1: BCG matrix of Aldi
(Source: Erevelles et al. 2016: 901)
Stars: Number 1 strategic business, financial services and number 2 products can be denoted as
star products in BCG matrix. Aldi has hold about 20% share for number 2 products and expected
to increase about 5% within the next five or six years. As per Gillespie (2015: 33), number 1
products are those that have generated the greatest amount of sales in comparison to other
products of Aldi. Aldi is also planning to develop more innovative features on such products so
that more customers get attracted to Aldi.
Question marks: local food strategies, confectionery products and number 4 products can be
categorised under question mark category. In confectionery items, Aldi has recruited less amount
of share. Current goal of Aldi is to penetrate market in order to increase sales of such products.
Cash cows: International food strategy, number 3 brand products and supplier management
services of Aldi can be considered as a cash cow. As per Sheikh et al. (2017: 179), the reason is
that they are operating over decades and earning a good amount of revenue for Aldi. On the other
hand, number 3 products are holding certain market share of an amount of 25%. About 30% of

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market share are held by international food strategies. In recent days, it has been observed that
people show less interest towards consumption of international food items and hence market of
those foods is declining slowly. Aldi’s upcoming strategy is to include some innovations in these
products so that they can get a chance to grow and hold their demand in the global market
(Torkkeli et al. 2019: 48).
Dogs: Artificial flavoured products, synthetic fibre products and plastic bag strategies of Aldi
have been proved to be dog in BCG matrix. In the past five years these business products or
strategies have done negative amount of profits and therefore declining rapidly. Although Aldi is
expecting that these products and their services can only grow with changed environmental
conditions. As per Lee et al. (2015: 29), flavoured items are recently not favoured by common
mass in terms of their impact upon health. Current strategies of Aldi are to call back those
insignificant products in order to rectify their negative profit amounts.

Porter’s Five Forces analysis

Porter’s five forces analysis can be considered as a device that utilises five different industry
forces to understand competitive forces and its intensity. It is also evaluated to determine
profitability level of an organisation (Oh et al. 2015:220). In this study, porter’s five forces
analysis will be conducted on Aldi international organisation to understand its position in the
global retail market.
Competitive rivalry-High:
There are some major retail industries having major competition with each other. They are Asda,
Sainsbury, Tesco and many others. In addition to major competitions, Kiessling et al. (2016: 272)
state there are also local retail marketers who make their products available at very cheap prices.
Some other major competitors can be termed as Wal-mart, Coles and Woolworth. The
competition triggered in terms of price as well as quality of products. Hence, it can be concluded
that there is a higher range of competitive forces in retail industries in Germany.
Threat from new entrants -Medium
In Germany, threat from new retail entrants is considered as high as there are relative facilities
that empower new industries to grow with ease (Erevelles et al. 2016: 901). In spite of having an

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exclusive brand image of Aldi, competitors who will offer reasonable or lower price value will
enter retail market easily. In order to be in the competition, Aldi need to offer certain discounts or
other reward options as well.
Suppliers’ bargaining powers-low
Bargaining power of suppliers is low in case of Aldi Retail Company because there is more than
one supplier in grocery retail industry. Therefore, certain suppliers usually fears to lose supply
orders of such a big brand to some other suppliers. As per opinion of (Prajogo, 2016: 246), this
empowers Aldi to bargain and get products at the lowest price possible. It is an effective process
to enhance profit margins.
Buyers’ bargaining powers-High
There has been observed as high bargaining powers among Aldi customers. The reason is that
they tend to shop in lower priced supermarkets such as Asda, Tesco or Spar and Londis. With
such variety of supermarkets and varied food retailing choices, customers gain a lot of bargaining
power. According to Kiessling et al. (2016: 272), it has been estimated that, people of Germany
usually remain consistent to one retail options about 7%.
Threats from substitutes-High
The specific product items or groceries that are sold by Aldi cannot be considered as unique.
Similar product items are also sold by many other local as well as international retail marketers.
There are several other retail options from which similar food items or other retail products can
be available (Eteokleous et al. 2016: 588). Hence threat from substitute products of Aldi seems
to be moderately high.

Current offerings

There are a lot of products that can be considered as the best products of all available items
available with Aldi. They are wine, cheese, meat, kitchen staples, condiments and bakery items.
Bakery items: Baked items such as croissants, copycat cookies, cookies, nuts and others are
among the most favoured food items as rated by consumers. Salt on top, garlic onion and flaky
or swirl dough with seeds are delicious and sumptuous to eat (Chabowski & Mena 2017: 22).
Each of these bakery boxes may cost around $3.89 per box.

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Condiments: Condiments such as flavoured ranch, olive oil of Aldi are considered as very
healthy and tasty to their customers. Each one of this ranch generally costs about $1.49. One can
get special discounts or offers on special occasions as well (Jogaratnam, 2017: 109).
Wine: Aldi’s collection and quality of wine has attracted a lot of customers over the years and it
is assumed as sold in best prices available (Aldi.com, 2019). Aldi has also won Chardonnay
Sonoma coast award in the year 2016 for selling quality wine products.
Cheese: Aldi’s specially manufactured and selected cheese lines are difficult to beat by other
retail companies. The reason is that they indulge in selling one of the best products starting from
only $2.79.
Meat: there are several expensive meat items like turkey, beef and salmon are featured as bargain
prices. As per Erevelles et al. (2016: 902), their meat items are starting with the price value of
$9.99.

Section 3: Recommendations

Ansoff's matrix

Ansoff matrix can be considered as strategic planning device that gives certain framework to aid
marketers, senior managers and executives devising innovative strategies to implement future
growth. Ansoff’s matrix generally consists of four different strategies that business organisations
can adhere to incorporate growth in either certain market or in their products or both (Jaakkola et
al. 2016: 1377). These four different strategies include market penetration, product development,
market development and diversification.

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 !
Figure 2: Ansoff’s matrix of Aldi
(Source: Kraak et al. 2019: 33)
Market penetration: Market penetration strategy is considered as least risky strategy that utilises
existing capabilities and resources of Aldi. As per Leonidou et al.(2018: 3), investing in market
shares or offering can offer new opportunities so that Aldi can flourish in existing market with
their existing products. Aldi must plan for their market penetration by enhancing their advertising
campaigns with seasonal products (Kraak et al. 2019: 33). Aldi may also offer some discounts or
point rewards for their valuable customers to attract a lot of consumers and keep ahead of
competitors. Marketing campaign at regular intervals may provide adequate fuel to penetrate the
existing market with existing products. Aldi can add new attractive features to their websites so
that it can attract online customers in addition to local customers.
Market development: Market development refers to specific strategies to sell existing range of
products in a new market options. In this case, Aldi can select Malaysia as a new market option
where Aldi can sell their existing range of products (Lamberton & Stephen 2016: 147). Aldi may
also offer varied prices to Malaysian customers to ensure products of Aldi become famous and
favorable to Malaysian consumers as well. Market development generally holds more risk rather

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than market penetration. However, Aldi is a multinational brand which can take some amount of
risks to explore in a new market.
Product development: Product development refers to the introduction of a new product or
alteration of some existing products in the existing market. This strategy beholds many risks
rather than the previous two strategies (Lindgreen & Di Benedetto 2017: 33). Hence, Aldi should
spend resource over research and development of their products later.
Diversification: Diversification generally refers to growth strategies including both product
development and market development. It is considered as highly risky in comparison to others.
Hence Aldi must not indulge into taking such big amount of risks.

Marketing opportunity in foreign country

Aldi needs to develop their business processes so that they are able to attract the customers of the
markets in which they are developing their sakes process. In case of foreign countries, it is seen
that the company needs to develop their strategies as per cultural background of the people
present there. Profits can be earned by the management of Aldi once they are able to convince
the customers of the markets with the products that are sold by them. Opportunities that are
available to the company needs to be analysed properly with the application of BCG Matrix
Model, Porter’s Five Forces Theory and Ansoff’s Market Vector Matrix and develop a clear
image of the marketing processes that needs to be adopted. This can help the management to
develop their strategies in an ethical manner and develop business profits. Influenced by the
ideas of Gregory (2015:7), it can be recommended that the products that are more preferable
among the people of the foreign markets needs to be analysed and the company needs to increase
the variety of the particular product to develop sales figures. Ayers &Odegaard(2017:73)
suggested that increase of product range and varieties makes the consumers try the varieties thus
causing sales of them. As a result, it is seen that different varieties of the same products are sold
in increased numbers and Aldi is able to develop business profits properly. Premium Pricing
Policies needs to be used and the products that are famous among the customer need to be
marketed. Further, the places and target markets needs to be selected as per the demographic
conditions of the area. For example, Aldi needs to find out the areas that are mostly accessed by

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people and develop their stores in such areas. This can increase their sales figures and improve
business processes of the organisation. [Referred to Appendix 1]

Suggested product or services

As per the data collected by the management of Aldi, it can be commented that the products and
services needs to be effectively developed so that the company is able to develop the customer
foot count figures. The product ranges can be developed as per the choices of the markets where
the products are being sold. For example, products like meat, wine, cheese, baked items and
condiments are among the most famous products of the company. These products are unavailable
in the markets of Malaysia in the stores of the company. Kim & Min (2015:43) suggested that,
bestselling products of the company need to be made available in stores all over the world so that
they are able to develop popularity and develop a brand image of the company. Apart from these,
services and behavioural patterns of the company need to be developed properly so that they are
able to increase their revenue. Innovative technologies need to be incorporated in the stores of
the company and thus increase attraction of customers. Inclusion of various technologies is also
able to keep the consumable products in the stores fresh thus increasing satisfaction of
customers. The stores also need to be decorated in such a way that publicity of the company is
increased. Certain products that are among the bestselling category needs to be used for
advertisements by the company thus developing high-brand visibility of the products.

Communicating value propositions with efficiency

The value propositions for innovative and technological services are effective in obtaining higher
preference and business stabilisation in Malaysia. The competition with Malaysian supermarkets
can be surpassed with effective market analysis and incorporation of the innovative strategies as
recommended above. Moreover, availing a larger product variety in more storefronts can
influence customers for increased preferences (Wood et al. 2016:475). In order to create an
effective value proposition, a clear understanding of the audience and providing differentiated
proposal to address each aspect of possible improvement in the strategies. Increasing product
range and varieties for the target market can help in business development. Aldi can incorporate

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the unique selling proposition for doing business in a customer-oriented manner and get
revolutionary engagement from customers to make the business flourish in the target market. In
addition to this, the pricing strategy can be modified to address different economic groups of the
customers. The value offers are needed to be developed with the perspective of the target market
to make the value propositions more effective for international business expansion. Nonetheless,
the messages are needed to be highlighted through social media have done with the help of the
public relations team to reach larger population and geographic region.

Conclusion

In order to develop as a global company, the management needs to remain focused on the
management and business strategies as these are the most effective and efficient bodies that
develops globalisation strategies. In this study, two companies, Aldi and Lidl have been selected
to analyse their marketing strategies and the business to understand their impact on global
business opportunities. The study has focused on the marketing mix strategies of both the
organisations and developed a clear image of the products that are sold by it. Apart from this,
Aldi has been taken as the company for development of the Global Environment related factors
through analysis of BCG Matrix and Porter’s Five Forces Model. Ansoff's Marketing Vector
matrix has also been applied to develop ideas of the ways in which the company can develop
itself in other countries of the world. Recommendations related to pricing, promotion, products
and target market that needs to be selected by the management of Aldi has also been discussed in
the study. The importance of communications and development of proper knowledge related to
marketing has also been discussed in the study and the ways in which communication among the
members can be increased have been discussed in the study.


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Website:

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Aldi.com (Online) About us (2019) Available from https://www.aldi.com [Accessed on: 5 July
2019]
Lidl.de (Online) About us (2019) Available from https://www.lidl.de/ [Accessed on: 5 July 2019]

Appendices

Appendix 1: International retail strategy

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(Source: https://www.javelingroup.com/retail_consulting_services/strategy/
international_retail_strategy/)

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