Aldi Case Study

Aldi Case

1. Use facts from the case to assess the extent to which different components of Aldi’s marketing strategy (from merchandise, price, place, communication, customer service, to in-store shopping environment) are aligned with one another, and with the key needs of the target market.

Merchandise, Aldi supplied high turnover and fulfillment of basic customer needs products. Over 80 percent of the products were dry goods, with the remainder being made up of refrigerated products, frozen foods and other. Only 5 percent of the products fell outside the company’s own portfolio of private labels. Aldi strictly enforced quality tests for all lines of products, both to keep customers happy and to meet legal requirement. Also, Aldi performed daily taste tests of its products. With these conditions, products from Aldi had high quality.

Price, Aldi held a 16.7 precent market share of total food retail sales. The company had 51 percent of the German fruit juice market and half of the processed meat and sausage market. With high market shares, the company's prices were often 20 to 30 percent blow those of regular supermarket. Aldi’s top administrative board and general managers decided the sales price of each item. Aldi employed an everday low price strategy to “surprise buys”. As Aldi can provide private label, Aldi can price its goods.

Place, Aldi’s operations were organized in cells. When a new cell was created, a distribution center was either opened or redirected to sever the new group of stores. Aldi used a hub-and spoke distribution system and aimed to have each distribution center serving 60 stores within a radius of 50 kilometers. Aldi’s delivery trucks were responsible for retrieving the empty pallets form the stores. Aldi’s distribution center didn’t keep the majority of their stock for more than 24 hours and Aldi’s distribution centers were equipped with re-loaders that were used to separate 40 large pallets into 80 smaller pallets every hour, so Aldi can transport three pallets simultaneously. This action indeed kept the high speed of delivery and equipped store as quickly as Aldi did.

Communication. In every Aldi, only a telephone used to communicte with the distribution center. Order sizes for each store were determined by a computerized system. Union was forbidden in Aldi. Employees were forbidden to accept any gifts. All the actions were aimed at efficiency.

Customer service, as Aldi had strict test system, all the products that Aldi provided were in good quality. Aldi supplied best stuff at this price. So, what Aldi sold was seldom return. But, Aldi accepted all customer returns without question.

In-store shopping environment, Aldi had four wide aisles where all the products were displayed in their original shipment boxes. Emergency exits were clearly marked; no in-store decorations, clean store, and everything were seen to be purely functional. One-way mirrors were installed so that employees could keep an eye out for shoplifters. This in-store environment made shoplifter to lift products and facilitated the pallet to go in.

2. What particular strategic marketing decisions made by Aldi might have given it certain competitive cost advantages over low cost leaders such as Wal-Mart?