The labels and offering a small number

The aim of this report has been to exemplifythe strategic profile of the discounters Aldi and Lidl. The first part of thereport argues their generic strategy along with the objectives and strategicfocus of being cost leaders with a vast growth potential in the British market.However, as seen throughout the report,the discounters are enhancing their price oriented strategies with highlight onproduct quality and value for the money. Lourenço, C.

and Gijsbrechts, E. (2013)argue that “Hard discount chains have realized that growth strategies based onprices are not without limits, and that an overreliance on price-basedcompetition makes them vulnerable to incoming discounters”. This the reason whyboth Aldi and Lidl are moving into e-commerce and multi-channel strategy.As presented in this paper, it can beconcluded that Aldi’s and Lidl’s strategic profiles show a great proportion of similarities,continuously aiming on keeping low prices, accentuating the quality of theirown brand labels and offering a small number of store keeping units per productline. (Aggarwal, 2003)Thepromotional activities of Aldi have been transformed once they entered the UKretail market. Aldi’s policy of limited advertising in Germany, has beenaltered into advertising on mass media in the UK. Aldi’s promotions have beenextensively introducing TV advertisements such as the “Like Brand”campaign featuring TV adverts which are focusing on specific products.

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Throughthis campaign Aldi reinforces the message that their products are cheaper thanother brands however they are equal in quality. They represent diversity aswell as humor which helps them build trust and emotional connection with thetarget audience. Additionally, Aldi uses leaflets within stores which displays productswith limited availability and seasonal offers available in stores. The Swap andSave campaign proves the target audience how much they could save if theyswapped their weekly shopping to Aldi.

Moreover, Aldi is present on socialmedia channels, Facebook and Twitter pages through which platforms theyincrease the outreach to their target market. Aldi also uses direct emails communicatingvariety of seasonal messages. Aldi’s represents the fundamental part of theirbelow-the-line promotion. Whenit comes to above-the-line, online display and direct mail advertisements, Lidlhas been the leader advertising spender during 2016 and 2015. (Mintel, 2017). MidstJanuary, Lidl launched their “Big on quality, Lidl on price” campaign, with theintention to reinforce their position as a high-quality brand.

This was acontinuance of their quality positioning followed by their Lidl Surprisescampaign launched in 2014. Collectively, the two leading discounters Lidl andAldi accounted for 88.6% of the total recorded above-the line, online displayand direct mail advertising. (Mintel, 2017)Aldi and Lidl hyped the priceaggressive discount format by continuously increasing their market share indifferent parts of Europe and the United States. (CITE)The two discounters have permanentlychanged the dynamic of the grocery retail market by forcing down margins. Thelow prices are built in their initial business model.

(Gale, 2017) The combinedimpact of Aldi and Lidl on the general price sensitivity becomes larger,putting extra pressure on incumbent competitors such as Sainsubury’s, Tesco,Morrisons to also decrease prices. (Hausman and Leibtag, 2007)”ALDI practices an important type of good-value pricing atthe retail level called everyday lowpricing (EDLP)”. (Kotleret al.2017, p.327)By employing the “Everyday low pricing”strategy Aldi and Lidl have managed to introduce innovation in the UK grocery pricingby representing a point of differentiation from the competitors. The strategyhas reduced their costs of running irregular discounts.Besides the previously mentionedstrategy, other commonly used pricing strategies by Aldi, include:·      Competitivepricing- Aldi always places their prices lower than the competition.

·      Marketpenetration- Aldi charges low prices for their products as a strategy to enternew marketplaces and gain significant market share.Aldi’s approach concept of limitedassortment of fast moving products. So, the company typically use two similarbrands for all category of the product. Aldi own brands accounts for around 95%of all stock and the rest are national brands (Mintel, 2017). This structureallows the supermarket to have a large range of products but less variety. Theproduct range includes, food items such as fresh produce as well as frozenproduce, wines and non-food items such as health and beauty, clothing,household products and small electronics.

If we now turn to Lidl, it can beobserved that the stores showcase their private label products or products fromless familiar brand. Lidl stores allocates almost 20% of their store area tothe sale of non-food items, such as electronics or household products. In-storebakery departments represent a point of difference when it comes to Lidl’sproduct range.

Other new addition to Lidl’s product range has been the launchof their new fashion range in cooperation with the supermodel Heidi Klum. Theproduct range includes clothing, footwear and accessories and was a part of NewYork Fashion Week 2017. (Lidl, 2017)Furthermore, both discounters haveadded premium lines to their product range, as a move towards the middle-classgrocery retailing. For example, in 2016 Aldi’s Christmas range included caviarwhile Lidl sold a whole cooked lobster. Furthermore, both supermarkets haveintroduced their award-winning wine and spirits product lines, organic food,Italian cuisine. According to a Mintel’s report, 66% discount shoppers thinkthat food discounters’ premium ranges are just as good as elsewhere.

As the British supermarket landscapegets more saturated, retailers such as Lidl and Aldi are continuously extendingtheir assortment with attractive national brand offerings as a strategy todistinguish themselves from the rest. Currently, 70% Lidl’s products are sourced in theUK (Mintel, 2017). Besides that, it is important to mention that offeringnational brands tailored to the UK customer, helps them build strong and sustainablecustomer relationships and strengthen their competitive position. (Deleersnyderet al.

, 2007)In conclusion, both discounters aim tokeep their product range as simple as possible, and the product differentiationwithin a product category is much more restricted. This technique seems like ittakes away the choice from the customers, but when it comes to managing productselection, offering more variety is not always the best option. Empiricalresearch in the field of retailing, consumer packaged goods and financialservices has shown that in many cases offering an array of products can lead tolower purchase likelihood and lower customer satisfaction. (Chernev, 2003).

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