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Aldi is a german based discount retailer chain marketing essay

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1. Introduction:

Aldi is a German based discount retailer chain establish in 18 countries. It is Europe’s largest retailer. Aldi got market in German, Australia, Austria, Great Britain, Belgium, France, Greece, Ireland, Slovenia, Switzerland, Denmark, Hungary, Netherlands, Poland, Portugal, USA etc…… Aldi is the abbreviation for “ ALbrecht DIscount”. This is a private company , it has started in 1913 by Mrs Albrecht. But after the second World War it has been managed by her sons Theo and Karl. In 1963 Aldi has been divided into two companies (Aldi North and Aldi South), but both of them followed same business model and strategy. Germany is the only country in which both the companies operated.

The company specialized by selling staple products , Aldi shop sells approximately 700 grocery and household products. Those are chilled foods, canned and frozen goods, baked goods, meat & dairy products, household supplies and a special range of locally bought products which customers shopped for on a regular basis.

Enterprise system is a software product designed to integrate computer systems that run all phases of an enterprise’s operations to facilitate cooperation and coordination of work across the enterprise. The intent is to integrate core business processes (such as sales, accounting, finance, human resources, inventory and manufacturing).

Business strategy means a long term plan of action designed to achieve a particular goal or set of goals. It states how business should be conduct to achieve the desired goals. We need to implement Enterprise System software in Aldi to successfully achieve those goals .

2 Main Body:

2. 1 How could an Enterprise System support the business strategy of Aldi:

2.(1. 1 ) Business Strategy of Aldi :

Aldi’s one of the main business strategy is “ Top quality at incredibly low prices- guaranted and radical efficiencies without compromising product quality” .

Aldi selling top quality products but their price is comparatively lower than others because their buyers are expert in their field. They bring fresh fruits and vegetables straightway from farmers. Also, they buy them in big quantity. There is no middleman that’s why they do not need to spend extra money. They negotiate with the hand-picked suppliers about substantial discount. There is a big savings . Also, there is no bagging facilities that means customers have to use their own bag or Aldi charges for bags.

Moreover, there are staff limitations, three to five employees including cashier and manager at a time in each store. To avoid credit card company fees they refuse to accept credit card payments. They don’t have any customer service facilities. By using those above methods they cut cost and provide cheap products.

Aldi always careful about their product quality. If they find anything wrong about their product then straightway they give money back to customer by using product recall method. That means Aldi give an important notice to bring back that product or call customer service helpline to get their money back. Currently they got wrong with Gardenline Greenhouse and Conservatory Heater. They got some instance that the product could overheat and present a fire hazard. So, they stop to selling it and give a notice to take money back.

“ Shopping cart retrieve system is another important strategy of Aldi”. Aldi product is very cheap. So, we can buy all necessary products by spending few amounts of money. Because of that everybody need a cart to shop at Aldi store . If they get it easily then after shopping customers will leave it anywhere . Also, Aldi have to implement someone to organize them. It will be cost effective for Aldi. So, if customer want to retrieve a cart, they have to spend a coin but they will get it back when return that cart. Because of this strategy all carts are organized nicely and don’t need anybody to look-after those.

“ Texas stores open is another strategy of Aldi”.

Aldi expand their business with Texas. They open their first Texas store on Thursday 18th March 2010. Also, Aldi planned to open about 100 Texas stores by 2010. They open 11 shops in the Dallas-Fort Worth area. 9 more shops open in April and another 7 by May. After that Texas becomes Western most state in those are operates by Aldi.

Aldi’s action loudly says likely they will expand their business in southwest. For instance , they have developed a line of Hispanic products for their Texas stores. They will serve those products in Arizona and New Mexico because there are large Hispanic populations.

Another strategy of Aldi business is  ” A new promotion campaign will be introduced over the next 4 months to encourage present customers to increase their use of Aldi’s products by 10%”.

This is about expand in existing market to maintain existing buyers. Promotional offer is their main tactic to attract customers. Aldi provide leaflet and newsletter to inform this offer. Their promotional offer is acceptable for customers. Offer is like buy one get one free of half price. Also, Thursday and Sunday special price.

2.(1. 2) Competitor Analysis:

There are some of the biggest competitors in the supermarket industry, those are Coles, IGA and Lidl . Working out competitor’s objectives gives the business a good idea of their current strategy and suggest what they will do in future. It is useful to know the relative importance that competitors place on profitability, sales volume and market share. This could give managers of the business insight into how competitors may react to their strategies.

2.(1. 3) Strategy Formulation:

In formulation, I am trying to modify the current strategies in ways to make the organization more successful. We already know about Aldi’s strategy and it’s environment, now strategic alternatives can be developed. Strategic alternatives depends on the current strategy of Aldi and the existing status that is experienced.

There are several strategic alternatives that Aldi could undertake. First, they should keep improving mix product market. Another alternative is Aldi could consider to diverse their operations, like they can offer credit or debit cards payment. Third strategic option is that Aldi should do nothing to change their operation as it is currently working and complementing the external environment. Aldi has three strategic alternatives that totally complement their existing strategy and the initiatives taken in the market.

There are three aspects of strategy formulation. Those are- corporate level strategy, competitive strategy and functional strategy.

Corporate Level Strategy: In this aspect of strategy, we are concerned with broad decisions about the total Aldi’s scope and direction. Basically, we consider what changes should be made in our growth objective and strategy for achieving it, the lines of business we are in, and how these lines of business fit together. It is useful to think of three components of corporate level strategy: a) growth of directional strategy, b) portfolio strategy, c) parenting strategy

Competitive Strategy: This involves deciding how Aldi will compete within each line of business (LOB) or strategic business unit (SBU).

Functional Strategy: These more localized and shorter-horizon strategies deal with how each functional area and unit will carry out its functional activities to be effective and maximize resource productivity.

2.(1. 4) Enterprise System Implementation:

Enterprise system will provide real time information, enforce standards, helps to improve business process of the company. Enterprise system deliver as the backbone of an organization’s information needs. It helps to improve business process and achieve fast connectivity with any branch, internally or externally data could be shared in real time. By using this software manager can monitor every aspect of the company’s operations and performance . They can achieve their goal easily.

Enterprise system software must make big changes in Aldi’s business process . It is enabling to better and faster decision making, reduce information reporting cost, decrease management hand-counts. Davenport point out in his book Mission Critical that, without implementing enterprise system it is impossible to do electronic commerce.

If Aldi want to achieve worldwide market they need fast in time communication facilities. They only doing 2pages newsletter nothing else like online ordering or advertisement. They should start e-business, online information, home delivery. Successfully do the electronic business, Customer Relationship Management they need to adopt enterprise system software in their business.

By using enterprise system software many organization in the world performed their business process. This system could help Aldi to achieve high levels of operational efficiency and will be able to respond more rapidly, deliver higher quality and improve cost efficiency.

Aldi can access to ample data on both the market and internal operations. We can see the competitive difference comes from the analysis, interpretation and action depend on this data. Aldi can gain a strategic advantage by finding patterns and opportunities faster and deeper than competitors.

To be a successful organization Aldi has to adopt changing circumstances and able to integrate and process information system. I think enterprise system is able to dramatically decrease transaction and communication costs. Whether the business core strength in efficient supply chain or superior customer service, instant visibility into key business process via service level agreement or performance metrics helps to achieve a competitive advantage in the World market.

This software implementation cost is very high but it is important for long term success of the business. There is not any strong Enterprise System in Aldi Group. I think by implementing Enterprise system like CRM( Customer Relationship Management) system they can develop their business.

2. 1.(4. 1) Customer Relationship Management(CRM):

CRM provides integrated functionality for marketing, sales, customer support and call centre requirements. Functions include-

Call centre management, Sales force automation, Customer contact point management, Order entry and order tracking, Service management and content management.

2. 1. 4.(1. 1) Call Centre Management:

Aldi need to start call centre management system to improve their business strategy. Because consumers are very busy about their personnel life , they don’t have any spare time. For that- sometimes customer try to find information about products availability, product quality and price by calling to customer service. Because there are many competitive markets , consumers got many choice. So, there is no point to spend time and extra money for same product.

Understanding customer needs allows the organization to design customer-specific levels of service and track profitability at the customer level. They have to understand what is customers looking for. If the call centre management system is not good and all informations are not updated then customers will get wrong information. May be some times customers calling for information but nobody pick up the phone then they will loose the customer. This increase value per customer and customer retention.

2. 1. 4.(1. 2) Sales force automation:

Sales force automation (SFA) software is a type of program that automates business tasks such as inventory control, sales processing, and tracking of customer interactions, as well as analyzing sales forecasts and performance.

Aldi need this for integration of sales and marketing to improve efficiency. Sometimes customers want to get timely and precise information about orders. When customer see there is delay about product deliver they need to know current situation. There need quick and reliable responses to all inquiries.

Aldi have to be able to meet their commitment on time. If customers get any bad experience about commitment they will not come back again. They need frequent contract and follow-through facilities.

2. 1. 4.(1. 3 )Customer contact point management:

A contact point is the method a customer uses to communicate with a company. For instance , consider the different ways customer may interact an organization

By visiting retail stores customers seek in-person assistance for their need and also discussion with company peoples. Fastest contact point is through the internet. Now-a-days electronic-commerce is most important method for purchasing certain types of products including music.

Also, customers can contact with company personnel for company’s financial issues. For instance, credit personnel help customer arrange the necessary funds to make a purchase.

Aldi have to implement enterprise system to manage customer contact point. They need to start online ordering also, they should start to accept credit card payment. By providing these facilities they can achieve their goal.

2. 1. 4.(1. 4) Order entry and order tracking:

This is another method of CRM. When customer go for online shopping they need to open an account, they need authorization for online order and payment. Furthermore, customer can track their order by using their account. To improve Aldi business strategy they should provide order entry and order tracking facilities.

Aldi will be able to attract more customer, increase their selling and profit.

2. 1. 4.(1. 5) Service Management and Content Management:

This is all about service and collection of procedures used to manage workflow in a collaborative environment. This procedures can be manual or computer based.

CRM(Customer Relationship Management) system helps understanding customer needs, Aldi has to design customer-specific levels of service and track profitability at the customer level. This increase value per customer and customer retention. This system integrate sales and marketing to increase efficiency. Customers need timely and precise information about orders, quick and reliable responses to all inquiries, ability to meet scheduled commitments on time.

CRM efficiency can be improved by providing current and important information to sales staff. Aldi can reduce sales calls, by sending e-mail, they can reduce communication costs, paper work costs, also integrated system decrease training costs. They can collect customer information by using web based and e-mail based tools.

If Aldi start to use something like bonus card or club card, they will get overall idea about customer- which product customers like most, they can offer promotional items. It is easy way to attract customers to Aldi product. Customer Experience management (CEM) will provide autometed customer feedback.

Customer can compare Aldi product with other company, easily find comparatively cheapest one. Aldi have to start all forms of trading like- direct, traditional, retail, e-commerce, wholesale, combination. Only then it is possible to make it world largest acceptable company.

By using the Enterprise System software Aldi could fulfill their mission. Enterprise System will give information about them Customers will be able to know about Aldi’s efficiency, low price product, product quality, required product availability. Also, Manager can easily get overall idea about Aldi like- which product selling more, customers demand, which product need to be ordered more. Aldi got overseas business , so it will be very easy and faster to get information about any branch in the world. They can do employee recruitment , training, required staff in different Aldi branch, paying salary etc…

2. 2 Barriers to implement Enterprise System in Aldi group:

It is highly cost effective to implement Enterprise System in Aldi, because their main strategy is cheap price product supply. If they spend a lot of money implement Enterprise System they will not be able to sell product by cheap.

The lack of clearly defined CRM strategies and support structures can burn organizations. Contemporary business strategy must realize how to filter the large data warehouses and integrate certain data into marketing and customer service strategy.

Aldi have to face core problems to assess their strategy to the system, a number or actors are involved, internal and external staff. Staff need to be well trained to use the system otherwise it will upset customers that had their calls routed to wrong locations and increase call costs. It is not good enough to just plan resources required to run the enterprise, they need to be managed as well.

2. 3 How Aldi can overcome from barriers:

Aldi have to focus on staff training, order entry and call centre applications to seamlessly coordinate customer information from outside sales staff to inside customer support staff. This narrow focus enables Aldi’s staff to acclimate to the software quickly without feeling overwhelmed. Attaining goals in stages enable staff to take ownership of the systems and gather momentum for the new systems.

They have to implement some specific trained staff to provide these facilities to the customer.

3 Conclusion:

Aldi implemented good relationships with suppliers to ensure favorable prices over considerable quantities. With them, the business guarantees long-term commitments with producers which allow producing more in better conditions and cheaper, orders of whole lorries, saving of packaging costs.

On the other hand, the consumers have a high power of negotiation because they are the target of several retailers. So they just have the choice to choose the one which suits to their budget.

Aldi is Worldwide business company, so if they successfully implement Enterprise System in their business then it will support to establish their business strategy.

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