Understanding the Marketing Environment, Research Paper Example

Abstract

The foregoing market analysis looks at the proposed expansion of ALDI Group’s retail grocery outlets, and the strategic integration of the international wine industry into the Company’s prospectus for development of supplier relationships toward sustainable growth by way of this product segment. Due to the high tariffs, taxes and additional costs generated by subsidies in the wine market, export of wines means incorporation of those additional costs into the price to consumer by retailers. The price chain has definitive influence on ALDI Group’s strategy in planning expansion of its wine product lines, and is deeply affected by externalities related to cost inflation in the various national markets. To this end, the Company has crafted a strategy that takes government cost inputs, and attendant regional regulation on industry and sales within the Group’s markets toward a sustainable model of growth in its wine products segment. ALDI’s appreciation of regional wine industries has enabled the company to partner with wineries to offer its customers the highest quality product at the most affordable price.

In 2008, ALDI’s global revenues reached an estimated $65,700.0 million in tendered sales. Distribution of revenues across markets reveals growth in some regions of the world, and retraction in others. Adequate analysis of sites for aggressive advancement of wine varietals within ALDI stores across the board requires data on the overall picture of the various market regions and segmentation analysis of both the wine industry and its customers, for future integration of operations and knowledge sharing with industry partners toward realization of the Group’s planned expansion in this product area.

Introduction

Since branching out into the United States in 1976, the German discount supermarket chain now exceeds approximately $5.8 billion in annual revenues, or 10% of ALDI Group’s global share. Wine sales expansion in this national market will contribute to an existing market where consumers have been associating the corporation with ‘exceptional values in wine and beer’ since 2003 (ALDI USA 2010). In the United States, there has been a high degree of response from middle-class shoppers looking for high quality at a discount. The two national markets are both growth regions. The planned expansion of ALDI Group in the U.S. is in direct competition with Wal-Mart, which provides an apt territorial map for locating customers, and breaking gravitation toward big-name brands. The US retail grocery industry is comprised of about 65,000 supermarkets and other grocery stores with combined annual revenue of about $465 billion, of which seventy percent of those sales are generated by fifty of the largest companies (Hoovers Industry Report 2010).

Aldi Group employs an ‘operating system’ as the key concept in the Company’s market analysis and this idea corresponds well to our suppliers whom have long applied the ‘Six Sigma’ approach to manufacturing excellence in order to achieve ongoing, strategic, revenue producing, insights and solutions, sales and marketing needs in its’ operating system. The operating system includes an interface between decentralized inventory control systems in the various regions, and accountability at Aldi Headquarters in Germany. Part of the rationale for such an integrated model of tracking products aside from cost analysis and logistics, is the contributory effect that well designed inventory control offers market analysis through best-of-class shopper insights and category management methods and technologies. The overall systemization of Aldi Group is intended to rapidly activate and operationalise shopper insights with the goal of building more ‘shoppercentric’ stores, from displays and planograms to new partnerships in supply.

Market Force 1: ROI and the Consumer

Specific benefits in linking market knowledge with operational logistics are many, and include improved speed to market, more accurate hypothesis testing, increased revenue and more efficient spending. Key internal management involvement in Aldi Group’s inventory control and tracking system includes the Company’s global and regional marketing, sales and marketing research units; working on a unified platform to align brand strategy with retail strategy, and overall product to market execution. Specific steps required include:

• The creation of a well designated and funded ‘task force’ toward bridging the gap between the Company’s current wine product lines, and consumer marketing and sales;
• A unified marketing and sales strategy, including regional tactics of advertising according to cultural tastes;
• Building the quantification of Retail Operations Inventory (ROI) into the process from the start;
• Coordination of an insight network with suppliers and distributors so that actors might keep abreast of changes within Aldi’s retail markets, and expertise provides an aggregate of information for sharing with suppliers for more efficient production to market partnerships;
• Differentiation within the wine category(s) for new product segmentation. As suppliers, wine manufacturers specialize first and foremost in the viticulture of their product; leaving consumer selection to the auspices of their distributors and supplier sales agents;
• Value added with new varietals or price points in the wine industry may vary according to crop year, and also to shifts within global tastes in consumer demand.

Market Force 2: Linking Industry to Shopper Segmentation

Shopper segmentation research tells us much about the nature of consumer interest in certain products over others, and the qualities attributed to ‘luxe’ categories of grocery products like wine, upon in-store selection. From taste, type, vintage, and price point to often less known measures of decision making such as prestige and nation of origin, wineries and their products are subject to a range of decision making influences and patterns, not always within the control of advertising nor reach of the retail marketing team. Instrumental to changes within the national markets that Aldi Group benefits from the market research and analysis of its suppliers, and quite a few of the better known brand names associated with alcohol and wine stock products offer invaluable market insights into the current state of the industry through SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses. An example the type of industry generated analysis available to retail research analysts interested in the ‘total market picture’ can be seen in Barcardi Limited’s 2010 rendering of India’s emergent market in this segment. Although complex in relation to prohibition factors, the national economy reflects potential forthcoming sites of investment by conglomerates like ALDI that will be looking for broad based economies of scale with significant middle class ascension and young adult demographics, two indicators for future sustainability in revenues.

Datamonitor: Bacardi Limited

Market Force 3: Consumer Immersion

In the 21^st century, rapid transformations in global capital and flexible production to market operations are reflected consumer choice tendencies. New Generation methodologies recommended for mitigation against threats, and enhancement of opportunities in the Company’s existing consumer market should focus on the supplier and product relationship; toward advancement of capacity building in chain management of finance and resource planning. Consumer Immersion techniques includes incorporation of brand architecture, and emotional visuals within packaging. Methodologies include: 1) Global Consumer Immersion; 2) Expert Interviews; 3) Ethnographic Interviews; 4) Trend Tour/Experiential Visits; 5) Self-Guided Consumer Video Presentations & Video Ethnographies.

Strategies: Mitigating Threats and Promoting Opportunities

Contemporary market analysis is comprised of various strategies from ROI based RDE and SWOT environmental analyses, to consumer immersion R+D techniques. Tight integration of each aspect of researched business strategy is dependent upon assessment and knowledge sharing in regard to consumer impact, core competencies, inventory, liquidity, logistical operations, product life-cycle, and resource management. ALDI Group’s expansion will indeed be dependent upon unified marketing and sales strategy, including supplier inputs in the wine industry. Ultimately, ‘thinking global and acting local’ has paid off for the conglomerate; and especially in the Company’s ability to address regional tastes with growers in those locations towards culturally salient tactics of advertising both international and national brands to those consumer markets.

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