MARKETING CHANNELS COMPANY ANALYSIS FOR

ALDI
PREPARED BY
TYLER THOMPSON, DAVID GUMBERT,
ASHLEY NEESER, MAKAYLA STOUT

Table of Contents
Executive Summary..............................................................3
Company Analysis.................................................................4
Product................................................................................ 4
Consumers...........................................................................5
SWOT ANALYSIS....................................................................5

STRENGTHS................................................................................5
WEAKNESSES..............................................................................7
OPPORTUNITIES..........................................................................7
THREATS....................................................................................8

Channel Environments.........................................................10

Strategic Planning and Channel Management.............................11

Competitive Environment..........................................................12
Horizontal Competition............................................................................14
Sociocultural Environment.........................................................15
Legal/ Political Environment......................................................15
Technological Environment........................................................17
Economic Environment..............................................................17

Target Market Profile and Company Objectives.....................18

Target Market Demographics.....................................................19

Psychographics.........................................................................19
Target Market and ALDI.............................................................21

Channel Strategy................................................................22

Distribution Objectives..............................................................22
Distribution Strategy................................................................22
Marketing Strategy...................................................................22
Product....................................................................................23
Negotiation..............................................................................23
Ownership................................................................................23
Information..............................................................................23
Promotion................................................................................24

Channels Objectives and Strategy........................................25

Channel Design & Members.......................................................25

Channel Management................................................................27

Summary............................................................................29
References.........................................................................30

Executive Summary
ALDIs is a cheaply priced grocery store in the retail industry. ALDIs
offers quality private-label products at low prices and is located in 17
countries in 3 continents. The company is committed to keeping prices
as cheap as possible for the customer. Roughly 90 percent of the
products offered at ALDI are exclusive brands, which meet or exceed
the quality of national brand names (ALDI, 2015). ALDI is regarded as
one of the fastest growing grocery chains in the world. In 2014, ALDI
had a growth rate of 20 percent, which lead to its largest market share
yet at 7.9 percent (Quann, 2014). This growth is from having a
competitive advantage in pricing, which ALDI gets through unique
practices that trim costs on their end to keep prices a low as possible.
The following document analyzes the current channel structure
for ALDI. Research was conducted in order to grasp a better
understanding of ALDIs current channel structure by looking at their
SWOT analysis, situation analysis, channel environments, current
channel design, target market, channel strategy and objectives, and
the management decisions made. By looking at each of these in detail,
we have concluded that ALDIs current channel design has lead to
them gaining solid traction in the retail industry. Their differentiation
has impacted they way they conduct day-to-day operations throughout
the channel. Due to the fact that ALDI is growing at such a high rate,

we do not feel that they should change the current set up of their
channel design.

Company Analysis
Karl Albrecht first established ALDI in 1913 in Germany. ALDI s
philosophy is to provide the highest quality products at the lowest
possible prices. They are committed to offering a friendly experience
for all customers who shop at their stores. ALDIs exclusive brands
allow for cheaper prices. By using a concentrated buying power, ALDI
is able to price groceries, at up to 50 percent less than the national
brands (ALDI 2015). They ensure that their products are of the highest
quality before placing them throughout their store. ALDI also
contributes to the green movement by requiring customers to bring
their own bags. This method motivates customers to safely recycle and
reuse their bags. ALDI acts as both a retailer and a wholesaler. The
company purchases other competing products and places them into
different packaging. They do this, because it lowers the cost of the
items they offer. ALDI then acts as a retailer by selling the product
directly to final users.

Product
ALDI offers similar products that other grocers offer; however,
they repackage their products with their own exclusive names. The
4

products range from all natural to processed goods. ALDI receives their
products from other manufactures and then repositions them with their
own exclusive logos. After modifying the products with their in-house
brand names, ALDI then distributes the products to the retailers. This
strategy makes it plausible for the company to sell their products at
the lowest prices possible, while also ensuring top-notch quality.

Consumers
ALDI serves mostly middle to lower income consumers who are
in search of quality products at affordable prices. ALDI is a leading
retailer with over 8,000 stores worldwide. ALDI serves as a limited
selection grocery store, so consumers usually visit them for particular
items. The limited selection method has proved successful for the
company, because it sets their products and prices apart from other
contenders. Consumers are more likely to visit ALDI for certain goods,
if they know they can get them for cheaper than they would at other
grocery stores. ALDIs typical customer is a female over the age of 60
years of age with a monthly discretionary income of less than $140
(Peterson 2015).

SWOT ANALYSIS
The following information highlights the strengths, weaknesses,
opportunities, and threats for ALDI. This information is helpful for

discovering things that ALDI currently does to impact the brand, both
positively and negatively.

STRENGTHS
ALDI has been doing extremely well in the ever-growing retail
industry. They are more specifically referred to as a discount
supermarket chain. A discount supermarket chain is defined by the
Business Dictionary as a, [department store] which offers its items at
a lower price than many other retail stores (Business Dictionary
2015). These types of grocery stores control a significant portion of
retail traffic in Europe. Many experts have expressed that ALDI is the
epitome of the discount supermarket chain. According to a source from
BrandChannel, ALDI has a format that appeals to budget-minded
shoppers, as well as those on low- or fixed income (Giorgi 2011).
Moreover, their mission is to offer quality products at an unbelievably
affordable price. As of December 1, 2015, ALDI operates 9,600
locations throughout the United States, Europe, and Australia.
ALDIs focus on food and products that come from sustainable
resources is another one of their strengths. They pride themselves on
offering quality merchandise with everyday low prices. Over 90 percent
of the retail offered are ALDI exclusive brands. Products offered are
thoroughly assessed before being put in the store. The company offers
a wide array of products, which range from fresh meat, dairy, paper
products and more. Another strength of ALDI is their ability to reach
6

the health conscious consumers. The company offers a Fit & Active
product line, as well as a Simply Nature line that focuses on all
natural, organic ingredients. ALDI is ranked among the top 20 retail
companies in its industry with the most loyal customers. This emphasis
on offering affordable products that include sustainable fresh
ingredients has helped ALDI increase sales and enhance the image of
their brand.
Another strength of ALDI is their Unbeatable Double
Guarantee. This guarantee allows consumers the ability to replace
products, as well as earn a full refund of their money. ALDI prides itself
on ensuring a high level of quality and satisfaction of its products sold
throughout store locations. ALDIs efforts to back-up their image with a
full replacement and refund has helped the company stay connected
with the very people they want to be shopping at their stores.

WEAKNESSES
One of ALDIs main weaknesses is that they run a very bland
advertising campaign. This is because the company is very selective
of the brand name products they display. Most products are identified
with an ALDI label. Moreover, advertising is an expense that some
companies wish to avoid. They forgo running aggressive campaigns in
order to compensate their employees well. They offer workers higher
wages so that they are able to work longer hours. As a result, this
offsets the need for many employees.
7

Another weakness for ALDI is their lack of customer service. ALDI

lacks an abundance of customer service people, because it chooses to
pay its employees more income. The company cant afford to employ
many workers, because they wouldnt be able to afford to pay the high
wages. This means that the employees they do have are constantly
busy and working in the back or up front at the registers. This hinders
their ability to build relationships with their customers because of the
lack of one-on-one communication. Most consumers value customer
service and shop at stores for that perk only.
The company is also vulnerable when it comes to their size.
Competitors like Wal-Mart and Kroger are substantially larger and able
to hold more products on shelves throughout their stores. This lack of
space results in limited refrigerated products that many households
need. This minimal space also causes discomfort among customers. It
is extremely difficult to shop in small aisles and remain relaxed,
especially in peak periods throughout the year.

OPPORTUNITIES
ALDIs biggest opportunity could be introducing new
technologies. According to the company website, ALDI does not accept
checks or credit cards. This is most likely due to the lack of technology
that is used to approve a check or credit card. Essentially, this means
that certain customers are driven away from shopping at this discount
store, because they do not have cash readily available. In this day and
8

time, many consumers are switching to using credit cards only. Credit
cards make it easier to store and manage their finances. Up-to-date
technologies that accept credit cards could greatly increase the
amount of customer traffic at ALDI stores.
There is also an opportunity to invest more in advertising. The
more customers are exposed to something, the more likely they are to
pursue it. With more advertising efforts, ALDI has the ability to reach a
new target market. Certain advertising campaigns could include, print
media, social media, and outside advertising.

THREATS
Right now, ALDIs biggest threat is the extreme competition in
the retail industry. Especially in the grocery sector, there has been
extreme growth over the last decade. Currently, ALDIs biggest
competitors are Marsh, Kroger, and Ruler Foods. Analysts from Citi
Investment Research believe that, the entry of ALDI, who tends to
compete on price more than brand and innovation, is unlikely to
provide manufacturers with a better route to market (Watts 2015).
ALDIs competition also includes several other discount supermarket
chains, such as Woolworths Supermarkets and Coles Supermarkets. As
this industry continues to grow and evolve, ALDI will have to work to
remain competitive in the marketplace.
ALDIs inability to provide a full shopping experience limits their
ability to appeal to certain consumers. Their competitors, Wal-Mart and
9

Kroger, offer a wide product assortment and have the ability to

navigate multiple channels of distribution. Their lack of offering a wide
array of products will prevent them from engaging customers and
encouraging impulse purchases. Wal-Mart customers are more likely to
buy on impulse due to the variety of merchandise. ALDI on the other
hand, offers a narrow assortment and takes away from the opportunity
to attract impulse decisions.

Strengths

,
Weaknesse
s,
Opportuniti
es, and
Threats
Analysis
Strengths

ALDI

Walmart

Meijer

Kroger

What are your

business
advantages?

Building
partnerships, cheap
prices,
geographically
spread out

Widely known,
strong brand image

Privately held,
more family value
oriented

Building new
partnerships, been
around the longest
(longevity)

What are your core

competencies?

Buying & selling

within Aldi stores,
time-based
management

Wide range of
products offered

Wide range of
products offered

Lots of promotions,
discounts, more
focused on food
related products

Where are you

making the most
money?

Cheaper products,
off-brand products

Home goods,
everyday products

Home goods,
everyday
products

Food sales,
convenience items

What are you doing

well?

Efficient, offer
affordable/inexpensi
ve products, strong
global presence

Scale of operations
exceeds the level of
competitors

Efficient
network of supply
chains

Well-established
regional brand,
second largest
general retailer
besides Walmart

Weaknesses

10

Avoiding the
introduction of higher
quality
products/specialty
products, labor
relations

Avoiding the
introduction of
higher quality
products/specialty
products

Low/minimal
advertising

Online buying and

lack of online
resources for making
future purchases

What areas are you

avoiding?

Low/minimal
advertising

Where do you lack

resources?

Un-advanced
technologies

Little differentiation

Captial
restrictions due to
being privately
held

What are you doing

poorly?

Not offering
enough food options

Unfair labor laws

Competing on
price with
competitors

Inconsistency
across stores, quality
control

Coupon deals
that lead to 3%
loss in profit

High operation
costs, lack of
ecommerce

In-store
execution is
inconsisten

Increase in
advertising, need to
get away from union

Development of
own private
labels, consumer
buying habits,
one stop shop

Increased
emphasis of private
labels

Where are you

losing money?
What needs
improvement?

Only accept cash

(no cards of any
type), lack of more
products
Yet to make an
impact globally,
better/more
advertising

Too large of
inventories

Publicity

Opportunities
Any beneficial
trends?

Improving
customer service

Technology,
expanding into global
markets, healthy
choices

Niches that
competitors are
missing?

Reduce the use of

plastic and paper
bags, customers
bring their own

Lack in name brand

products

Focusing on
groceries

in-store health
clinic programs

Lack new
technologies

Online shopping
presence increasing

Automated
check out process

Internet buying,
ecommerce

Bringing in new
technologies that
update the inner
portion of the stores

Promotion of Ecofriendly products

Convenience
shopping and
healthier food
options

Expansion of store
openings, remodeling

Obstacles to
overcome?

Increasing
technology, offering
higher quality
products

Increasing
resistance from local
businesses

Expanding the
company from the
Midwest region to
a national grocery
store

Accrued a lot of
debt, poor facilities

Aggressive
competitors?

Marsh, Kroger,
Ruler Foods

Meijer, Costco,
Sams Club

Successful
competitors?

Marsh, Kroger,
Ruler Foods, Meijer,
Walmart

Marsh, Kroger, Ruler

Foods, Meijer,
Walmart

New technologies?

New needs of
customers?

Threats

Walmart
Marsh, Kroger,
Ruler Foods,
Meijer, Walmart

Marsh
Marsh, Kroger,
Ruler Foods, Meijer,
Walmart

11

Negative economic
conditions?

Government
regulation?
Changing business
climate?

Vulnerabilities?

Rising commodity
prices

Poor economic
conditions in the
Midwest where
Meijer is based
out of

Increasing labor
costs, slumping
economy

Quality control, FDA

regulations

FDA regulation
on groceries

FDA regulations

Higher consumer
expectations
(technologies,
quality of products
offered)

Increased
competition from
online and brick and
mortar competitors

High consumer
expectations on
hyper efficiency

Inflation rates

Cannot cater to
customers seeking
complete shopping
experience

Negative
community
perception

Labor union,
Meijer has had
many issued
claims

Recalls hinder the

ability to offer low
prices

FDA regulations

Labor union costs

hindering their
growth in the
industry

Channel Environments
The channel environment for ALDI is straightforward. They are
trying to sway customers from expensive brand products, to their own
cheaper private-label off brand merchandise. Their private-label items
are very similar in looks to the name brand merchandise. When
shopping at ALDI you will not see the cereal Cheerios, you will find
Crispy Oats (pictured below). Crispy Oats is ALDIs version of Honey
Nut Cheerios, which they are able to offer at a much cheaper price.
ALDI uses this method for most of their products.

12

One of
the ways they are able to provide these cheaper brands is because
production flows from the manufacturer, to ALDI warehouses, and then
directly to ALDI stores. Warehouses are spread out and located in
different regions. Each warehouse has a specific amount of stores that
they ship their products to. This set up is very important for the
channel because the store deals with products that are perishable. By
having regional warehouses, ALDI can deliver new, fresh products to
the store regularly and in a timely fashion.

Strategic Planning and Channel Management

ALDI has strategically placed itself in the market from both a
pricing and a channel design standpoint. In doing so, they have
positioned themselves as a low price grocery store. They undercut the
prices of competitors to attract customers because of the setup of their
supply chains. ALDI is able to implement this setup through its supply

13

channels, which ranges from the suppliers up until the product enters
the sales floor.
ALDI transports its own goods, which costs a lot up front but
pays off in the long run. They had to purchase the trucks and hire
individuals to drive them. After the initial upfront costs, they save
money by not having to outsource transportation to another company.
Keeping it in house saves them money, which allows them to keep
prices as low as possible. Managing their own warehouses is a strategic
move on ALDIs part. They are able to store inventory in their own
system, which allows them to get product on the shelves faster. If they
are running out of a product at a store, they deal directly with an ALDI
warehouse to get the product restocked. They are not reliant on a third
party warehouse. The use of middlemen means that products could be
out of stock without prior knowledge. With the current set up, ALDI
stores know they are the main priority of the warehouse, and that
getting their products will happen in a timely fashion.
Additionally, the current strategy of ALDI supply channels makes
management much easier. While ALDI has a variety of suppliers, they
cut out the middleman and take on that responsibility on their own. It
is one less interaction that channel managers have to make with an
outside company. By operating internally, decisions and actions can
take place much quicker because everyone has the same distribution
objectives. They can relay the information directly to the supplier,

14

without having to ensure that it works for multiple companies in the

supply chain. They are able to deal directly with suppliers, which
makes things much less complicated on their end.

Competitive Environment
ALDI has a very specific model when it comes to the pricing of
their products and how they want to position themselves related to
competitors. Their philosophy is to be the cheapest grocery store in the
market. To achieve having the lowest prices, ALDI employs many cost
cutting practices to give them a sustainable advantage over
competitors and are not easy to replicate.
Unlike some of their competitors, ALDI does not offer a wide
variety of products. That being said, consumers are more enticed by
lower prices rather than a vast assortment of products. To keep prices
low, ALDI does things a little different. They charge 25 cents to use a
grocery cart and customers are required to bring their own bags or
may purchase upon checkout (ALDI.com).
ALDI also does not have a customer service department at their
stores, meaning everything is packaged and everything is self-service.
Competitors from an implementation standpoint could potentially
easily copy this. This is done by eliminating their existing customer
service departments and adding a fee to use their carts. The problem
competitors would run into by making those changes could increase
the risk of running into some customer backlash. Customers who have
15

been shopping at competitors stores have become accustom to how

the current operations are set up and might not be pleased with the
changes.
ALDI is also able to save money by using a very simple way of
getting products onto the shelves once is has been delivered into the
store. According to Forbes, ALDI has no shelves in their stores; instead
products are transported on pallets (The Hartman Group, 2015). This
gives ALDI a competitive advantage that is not easily copied. This
alleviates the need for ALDI to hire people to stock the shelves, which
cuts costs on their end and allows them to offer the lowest possible
prices. ALDI is able to use this method because of the layout of their
stores. ALDI stores are simple in layout, and have little variety of
products on the shelves. They have less variety when it comes to each
product, where a competitor like Walmart has multiple suppliers
offering the same product. When grocery stores have multiple
suppliers of one product they usually have slotting fees and
agreements for product location on the shelves. For this reason,
competitors need to take more time stocking their shelves to make
sure the layout of products is within the agreements that they have
with their suppliers. This requires more of an elaborate logistical
operation, which adds costs and doesnt allow them to keep prices low
enough to compete with ALDI.

16

Horizontal Competition
ALDI faces some competition from other grocery stores that are
focused on offering cheaper prices, such as Walmart and Kroger.
Walmart is known for having low prices, but they still do not compete
with ALDIs pricing. They do however have advantages in other areas
that consumers take into consideration. Walmart has a competitive
advantage when it comes to product assortment and convenience of
shopping. Consumers can find anything they need at Wal-Mart. They
offer anything from groceries, to outdoor lawn supplies, to electronics
and auto services. Kroger also has advantages over ALDIs. They have
a similar strategy when it comes to pricing, in that they focus more on
price. Kroger has an advantage in that they are focused on groceries
and offer a much wider selection of products. Even though the other
stores might offer something different, ALDI still has the advantage in
arguably the most important aspect in the consumer thought process,
price.

Sociocultural Environment
ALDI has over 8,000 stores, in 17 different countries, located
around the world. The stores are located in Europe, Australia, and the
United States. Being located in so many countries, ALDIs need to be
flexible with their channel structure because the consumers in each
country have different standards and expectations. ALDI prides itself
on being an environmentally friendly company, which is evident
17

throughout their supply chain. According to the ALDI website, as of

2011 100 percent of their stores were fitted with an energy
management system (ALDI.com, 2015). This system provides
additional controls over the heating system and reduces the overall
energy consumption of their stores. ALDI also offers reusable,
ecofriendly bags that customers can purchase or they have the option
to bring their own. This eliminates plastic grocery bags that are not
environmentally friendly. At ALDI many locations you also have the
option to recycle dead batteries (ALDI.com, 2015). These are
programs that they use to help promote being an eco-friendly
company. As a whole, people are becoming more conscious of taking
care of the environment, and ALDI is trying to differentiate themselves
from competitors and win potential customers over by proving the
environment is important to them.

Legal/ Political Environment

By being located in 17 different countries ALDI has a lot to
consider when operating in each region. Similar to the sociocultural
environment, the legal and political environment can vary widely from
country to country. Each government has its own sets of laws and
regulations regarding both how the business operates and on the food
itself. In the United States we have the Federal Food and Drug
Administration, which closely monitors different foods for potential
health issues. Focusing on the US, the FDA has very strict guidelines
18

regarding the handling of food throughout the supply chain. Starting

with the manufacturers, ALDI has to ensure that the suppliers of the
products are meeting these guidelines. The FDA also has regulation
labels, such as food content. Among those pieces of information that
need to be included on the packing are the nutritional facts, expiration
dates, ingredients and additives (FDA.gov, 2015). There have been
talks that the FDA will require more nutritional facts on labels. If this
were to happen, ALDI would have to completely ensure that all of their
labels are up to date.
ALDI has to make sure that they stay on top of issues going on in
the market that could potentially affect their products. Recently there
has been a bird flu outbreak in chickens in the United States that led to
48 million chickens being taken out of the supply chain. ALDI has to
ensure that none of their suppliers chickens are affected. If a supplier
does have a problem, that problem must be contained and the
contaminated product doesnt reach the customers. If the
contaminated product does reach customers, ALDI could face lawsuits
from the customer and potential sanctions and fines from the FDA.
Both are costly, and bad for the brand image.

Technological Environment
Technology has never been more prominent in everyday business
than it currently is, and it can very easily give a company a
competitive advantage over opponents. Technology helps businesses
19

both project and track consumer buying trends. This is very important
for ALDI, because it allows them to stock the shelves with only
products that are going to sell. They can utilize the retail space and
easily project how much of each product they want to place throughout
their store. By tracking the sales of goods, it allows ALDI to have a
running total on inventory. Having this running inventory allows ALDI to
order new products before they need to be restocked.

Economic Environment
Economic conditions play a big role in how ALDI operates. If the
economy slips into a recession, consumer spending drops drastically as
consumers cut out purchasing wants and tend to buy more based on
needs. ALDIs business plan is predominantly not affected by the
recession. People dont have as much expendable income during a
recession meaning they are looking for cheaper options when they
shop. With ALDI being one of the cheapest grocery options on the
market it is well suited to capitalize on poor economic conditions. They
are able to maintain demand during these times, but that doesnt
mean they dont feel the effects of the recession. The cost on ALDI to
manufacturer and transport products during a recession will change.
This means that even though demand is up for products, the margins
they are making on these items could decrease.
When the economy is doing well ALDI could also lose some of the
demand for its products. As people have more expendable income,
20

they tend to start looking for better merchandise, which means they
arent taking price into consideration as much. Pricing is ALDIs bread
and butter; its how they attract customers. When people arent as
price conscious, ALDI loses their biggest advantage they have on
competitors.

Target Market Profile and Company Objectives

Like it says in their slogan: Spend a little, Live a lot, ALDI is

always trying to convey to its customers that you do not need to spend
more in order to have quality products. ALDI targets individuals in
suburban and rural areas. They offer their customers products that are
priced about 30 percent cheaper than their competitors because
consumers are more frugal with their spending and only buy
necessities. To give their customers the quality they want at a low price
they offer their own brands and private labels. This is important
because todays consumers want to balance both quality and price
when making buying decisions. To target individuals that do not mind
buying off brand products they offer them at cheaper prices than other
competitors. The reputation of the brand does not always effect
consumers decision decisions making as much as price does. ALDI is
targeting consumers with lower incomes such as millennials, lower

21

middle class families and elderly with limited incomes that are looking
for bargain prices.

Target Market Demographics

Millennials that fall into this category are between the ages 1832 years of age. These consumers are likely to be in college or just
entering the work force and beginning their careers. As college tuition
has increased many students today are working part-time or full-time
jobs throughout their college years, which accounted for 70 percent of
students (Rapacon 2015). The average income for these students is
only about $15,000. A survey shows that college graduates in 2015 will
be making a starting salary of $50,651(2015, Nov 18).
Although families are slowly recovering from the recession, the
U.S. poverty rate and incomes have mostly stayed the same. Middle
class households make between $35,000 to $100,000 a year and
account for about 66 percent of the population (2014, April 25). This
category could include consumers from generation X ages 33-47 or
baby boomer ages 48-65. Today there are roughly 46.2 million
Americans that are 65 years of age or older (Income of Today's Older
Adults. n.d.).

Psychographics

22

Unlike other grocery stores, ALDIs products are more than 90

percent exclusive brands that meet or surpass the quality of other wellknown national brand names. ALDIs average customer is not
concerned with well-known brand names, product range or after sales
service. Their main priority is to offer quality products at the lowest
possible price. The buying behaviors of each category in their target
market differs a great deal in comparison to one another.
The Millennial generation has many unique traits unlike any
other generation that influence their buying habits and behaviors such
as economic, political and social influences, making it difficult for
marketers. This generation has lived through two recessions, which
have both impacted how they handle their money as well as their
definition of success. The things that are most important to them that
impact buying behavior are value, authenticity, and how and where a
product was made. The value of a product is one of the most important
things to millennials. Value can refer to the quality of the product or
brand and will differ with each individual depending on how they
perceive that product or service which affects price as well. They also
want to understand how value is being added by purchasing that
product. Knowing that a brand or product is authentic meaning that
consistency between messages and marketing tactics should be the
same. Millennials want to know that the products they buy are made in
and ethical way and that are safe for the consumer (Gailewicz, 2014).
23

The spending habits of the baby boomer generation are very

different from other generations. In a 2012 study by the National
Center for Policy Analysis stated that because of the spending habits of
baby boomers many are nowhere close to retirement (2012, Oct 15).
Education, health care, and supporting children are what a majority of
their money is spent on. The main difference between how millennials
and baby boomers spend, is the motivating factors behind what they
are buying. Baby boomers are less adventurous and likely to stick to
what they know and trust. In terms of health, baby boomers are more
likely to just read what is highlighted on the nutrition label rather than
doing extra research on their food.
The Silent Generation is the generation that has different
influences that affect their buying in todays society. The things that
they value most are savings, morals and ethics. This is the generation
that grew up with the idea that conformity was how you succeed in life.
In our current evolving society, this generation is slow to change and
embrace new ideals. They like to buy quality products made in the U.S.
and purchase foods that tend to be associated with low
fat/sugar/salt/cholesterol foods. This generation is not tech savvy and
prefers written or face-to-face for communication (Williams, K., & Page,
R. n.d.).

24

Target Market and ALDI

After discussing how each generation thinks, it should be clear

why ALDI is targeting these different types of consumers. The
philosophy and mission are in tune in some way with each of these
generations beliefs. ALDI makes a conscious effort to reduce costs in
anyway possible to benefit the consumer. They reduce costs by having
customers bring their own bag, eliminating non-essential services, cart
rental system, specially designed packaging and not operating 24
hours a day. They make sure that the quality of their products meets or
exceeds the national standards. They also offer their customers a
double guarantee on exclusive brands and refunds if customers are not
satisfied. ALDI has done a good job in showing its customers the added
value of its products that they offer in its innovative business model.

Channel Strategy
Distribution Objectives

ALDIs distributions objectives that are currently in place are all

contributing to lowering their prices for the end customer and
maintaining quality. ALDI limits their product variation to certain types
of product assortments in their stores. This lets them buy those
specific items in large volumes which then gos on to lower the prices

25

for their customers. Another way they are saving money is through
their distribution practices. ALDI is minimizing waste in transportation
costs by placing regional warehouses in designated areas that receive
inventory then ship directly to the store location.

Distribution Strategy

The distribution strategy that ALDI highlights in everything they

do is keeping costs down throughout the flow of products in the supply
chain to ensure they can offer the lowest possible prices to their
customers.

Marketing Strategy

ALDIs main marketing objective is simple: keep costs low and

maintain high quality by using a differentiation focus strategy. They are
also using their marketing strategy to increase customer loyalty and
increase their market share. ALDI uses multiple strategies to achieve
these objectives. They specialize in private brand labels so they can
control costs. One reason private brands benefit ALDI so much is
because they can limit the promotion.
Another focus of their marketing strategy is to show the public
that all of ALDIs brands are equal quality to other well-known brands.
They are using pricing strategies as well, which include market
26

penetration, competitive pricing, and strategic pricing. Market

penetration helps them because it helps them enter the market and
gain market share quickly. They incorporate competitive pricing in
order to keep up with competitors.

Product

The product that ALDI provides its customers with is of higher or

equal quality than private labeled brands on a national scale. One
reason the price can remain low is because of how little the product
moves from party to party. ALDI orders its products in bulk from the
supplier. The product goes from warehouse directly to store location.

Negotiation

Supplier > warehouse > retailer > consumer

Ownership

ALDI has products that are Like Brands to other well-known

national brands. They use packaging that is very similar to those
brands as well. The food they use and package with their brands are
the same products that the national brands are using but with a
different logo. The reason ALDI can sell these items at such a reduced
price is because they buy each of the products they sell in bulk and

27

once their private labels are on the product they have control over
them.

Information

Suppliers > advertising agency > Wholesalers > Consumer

Promotion

ALDIs strategy for promotion is to communicate the value of

their products through different types of communication such as
television, radio, magazines and newspapers. Their brands are private
labels promotion therefore; they do not need to spend money on that.
Their products go from the supplier to their warehouses then to the
retailer, and finally the consumer. Promotion aids them to increase the
awareness of the brand as well as recognition, increase demand for
products, improve brand image and highlight the superiority of their
product and services. Promotional activities that they have participated
in include their most recent campaign Like Brands that featured 20second television advertisements who focused on a particular product.
The campaign featured a well-known brand placed side by side with
the ALDI brand product with the slogan Like Brands. Only cheaper.
ALDI also prints about 1 million leaflets a week, which are distributed
to stores and customers in the surrounding area. Newspaper
advertising is another way ALDI promotes its Like Brands. The Swap
28

and Save campaign is another campaign that showed customers the

value of their products. This showed consumers what shoppers could
be saving if they shopped at ALDI. ALDI also uses other lines of
promotion, such as social media, e-mail, endorsements, awards, and
public relations. This provides the company with more control of what
they are promoting to their market (ALDI case study .n.d).

Channels Objectives and Strategy

Channel Design & Members
ALDIs channel design is arranged to provide a limited
assortment of private label products to their customers. By using this
method, ALDI is able to focus more on its vendors than customers. It is
their belief that customers will remain loyal as long as they continue to
provide high-quality goods at the lowest possible prices (Rosenbloom
589). Buyers at ALDI are always looking for new items so that they are
able to offer a significant volume of products. As a result, companies
that want to supply their products to ALDI have the opportunity to
submit an application on their website (Aldi 2015). This is extremely
important to the channel design because its members could change
constantly based on the quality of merchandise producers are able to
offer.
ALDI has a very short channel structure due to the fact that they
have their own warehouses that assist in the storage, transportation
29

and logistics of products. A role in one of our distribution centers will

place you in ALDIs engine room - disciplined, structured, and
constantly striving to achieve goals. With all the challenges of
supporting a rapidly growing operation, youll be supported by great
conditions, generous remuneration and a culture thatll bring out the
best in you (ALDI 2014). This short channel structure allows ALDI to
save costs and limit the amount of middle-men needed to achieve
distribution objectives. An important participant of the channel is the
facilitating agencies that assist with external operations. In order to
provide customers with private-label products, they hire brand
packaging design firms to design the labels of their packaging. These
firms include Blackthorn design, Equator design, Kaleidoscope and
Bobbischoff. As advertising facilitators, they are in charge of the font,
color and overall design of the packaging of ALDI private-label
products. Below is a structure of ALDI current channel structure:

30

Manufacture
rs &
Producers
Marketing
Channel

Aldi
Warehouse
Aldi Stores

Aldi
Transportati
on Firm
Facilitating
agencies

Storage Firm
Advertising
Agencies

The channel members consist of countless companies who

manufacturer their products in the United States and United Kingdom.
In the UK, Stonegate Farmers Ltd has an established history of over 15
years with ALDI. They pride themselves in being one of the major egg
producers and packers in the UK. ABP, Co is the supplier of ALDI fresh
cut beef AAK UK specializes in the development, production and
application of edible oils and fats, and has been trading with the
company since 2007. Other suppliers include JZ Flowers International
Ltd and James OShea Farms (ALDI UK 2014). ALDI is also a leader in
selling products such as PCs and electronics. This is possible because
of their established upstream relationship with Medion, a full service
marketing support vendor based in Germany (Rosenbloom 590). With
an upstream or pull method, customers are exposed to weekly

31

promotions that offer high-quality electronic products from well-known

manufacturers.

Channel Management
The packaging of ALDIs products provides minimal issues for the
company. In Australia, The Australian Packaging Covenant Action Plan
2010-2015 has helped minimize the environmental impact of their
products (Aldi 2015). This initiative is aimed at environmentally
conscious consumers who are aware of their ecological impact. ALDIs
is also able to eliminate unnecessary wastage by producing crates
used to transport products over and over again and then returned to
the supplier. The issue with this is that ALDI is increasing their chances
of contamination by using the same cartons repeatedly.
A major concern with ALDIs packaging is how similar they look
to real products. Accused of impersonating Saucy Fish, ALDIs version
called Saucy Salmonwas near identical, from the sleek black
vacuum pack, the fish-shaped window on the cardboard sleeve, and
the ingredients themselves (Bell 2015). Many brands and consumers
disapprove of this practice because companies spend copious amount
of money on researching color, design and packaging, while
supermarkets like ALDI get a free ride by ripping off the packaging.
Since it can be argued that these look-alike products are forms of
trademark infringement, ALDI is considerably vulnerable to law suits
from other companies.
32

Pricing issues and concerns up and down the marketing channel

consists of only a few issues since ALDI has a short channel. ALDIs
offers a double back guarantee to their customer that states, If, for
any reason, you are not 100 percent satisfied with any product, we will
offer a Double Guarantee where we will gladly replace the product AND
refund your money. To receive the Double Guarantee, the product
packaging and any unused product must be returned to your local ALDI
store manager (Aldi 2015). By offering customers this money back
guarantee, they are losing revenue from the manufacturer down to
the retailer. The retail industry is seeing a big change in return policies
because of the amount of theft that occurs. Customers are
knowledgeable that companies want to maintain good customer
service, so it is easy to steal items and return them for money that was
never spent in the first place. For this reason, a trend in offering in
store credit prevents companies from losing profits.
Promotion throughout the marketing channel is important in
achieving awareness in the product that the business is trying to sell.
ALDIs main source of advertising comes from their website,
www.aldi.us. Consumers are able to see weekly specials, recipes, new
store openings, and enter in sweepstakes. Other forms of promotion
include minimal television advertising, and coupon catalogs that are
sent to residences. To improve the channel, ALDI is becoming more
active on social media sites such as Facebook, YouTube, Instagram and

33

Twitter. These sites aid in exposing target markets to the products in a

more frequent way than what they would normally be accustomed to.
In relation to the Product Life Cycle, management decisions have
been made to prevent ALDI from going into the decline stage. By
practicing eco-friendly packaging they have added to the growth of the
company by appealing to a new target market. More individuals are
becoming aware of their carbon footprint. They want products that will
keep the environment sustainable and healthy. With this new target
market, they are able to stay profitable and continue to remain
competitive in the market. As stated before, promotional efforts are
increasing within the channel. This is important for management
because costs will likely rise to keep up with these efforts if they prove
beneficial for the channel. As a result of implementing these strategies,
ALDI realized their need to foster new growth stage and extend the
maturity stage,
Issues affecting the industry are factors that most companies
cannot avoid. For ALDI, the bird flu outbreak among chickens was an
issue among many grocery chains. Millions of chickens were taken out
of the market, causing the price to increase. This results in consumers
paying more for eggs and chicken. Another problem that can occur is
contamination or bacterial issues. Farmers use pesticides to prevent
insects from eating crops. These chemicals are dangerous to human
bodies and cause illness.

34

Summary
To be completed

References
ALDI : About ALDI : Our Philosophy. (n.d.). Retrieved December 2, 2015,
from http://aldistorejobs.com/about-aldi/our_philosophy
Aldi Group - Company Profile, Information, Business Description,
History,
Background Information on Aldi Group. (n.d.). Retrieved
December 2, 2015,
from
http://www.referenceforbusiness.com/history2/3/Aldi-Group.html
ALDI Is A Growing Menace To America's Grocery Retailers. (2015, April
14). Retrieved November 14, 2015, from
http://www.forbes.com/sites/thehartmangroup/2015/04/14/aldi-isagrowing-menace-to-americas-grocery-retailers/
Aldi Marketing. (n.d.). Retrieved December 2, 2015, from
http://www.slideshare.net/paulmuston3/aldi-marketing
ALDI Real Estate Flyer. (n.d.). Retrieved December 2, 2015, from
https://corporate.aldi.us/fileadmin/fmdam/real_estates/ALDI_Real_Estate_Flyer_9.17.13.pdf
Aldi sees growth & reaches record 7.9% market share. (2014, April 14).
Retrieved December 1, 2015, from https://www.newstalk.com/Aldisees-growth-reaches-record-79-market-share
Average Starting Salary for Class of 2015 Climbs 5.2 Percent. (2015,
November 18). Retrieved December 1, 2015, from
http://naceweb.org/s11182015/starting-salary-class-2015.aspx
Baby Boomer Spending Habits: Here's Whats Really Hurting Their
Retirement. (2012, October 15). Retrieved December 1, 2015,
from
http://www.forbes.com/sites/halahtouryalai/2012/10/15/babyboomer-spending-habits-heres-whats-really-hurting-their-

35

retirement/
Budget Food Review. (n.d.). Retrieved December 2, 2015, from
http://budgetfoodreview.blogspot.com/2014/09/millville-honeynut- crispy-oats-all-box.html
Cheerios-Honey-Nut-Cheerios-Review | SheSpeaks Reviews. (n.d.).
Retrieved December 2, 2015, from
http://www.shespeaks.com/Cheerios-Honey-NutCheerios-Review

Copycats: Going to war with the packaging lookalikes as seen in The

Grocer - Coley
Porter Bell. (2015, May 13). Retrieved December 2,
2015, from https://www.coleyporterbell.com/copycats-going-to-warwith-thepackaging-lookalikes-as-seen-in-the-grocer/
Creating value through the marketing mixAn Aldi case study. (n.d.).
Retrieved December 2, 2015, from
http://businesscasestudies.co.uk/aldi/creating-value-through-themarketing-mix/above-the-line-promotion.html#axzz3t2xeepXm
Entis, L. (2015, July 14). Will the worst bird flu outbreak in US history
finally make
us reconsider factory farming chicken? Retrieved
November 19, 2015, from
http://www.theguardian.com/vitalsigns/2015/jul/14/bird-flu-devastationhighlights-unsustainability-ofcommercial-chicken-farming
Gailewicz, J. (2014, March 29). Meet the Millennials: The consumers to
change the marketing landscape. Retrieved from
http://thenextweb.com/entrepreneur/2014/03/29/meetMillennials-consumers-change-marketing-landscape/
Giorgi, J. (2011, April 11). Bigger Isn't Better: Why Aldi's Business
Model Leads to Happy Customers and Rapid Expansion. Retrieved
December 2, 2015, from
https://www.qualitylogoproducts.com/blog/aldi-business-modelhappycustomers-rapid-expansion/
Green Buildings. (n.d.). Retrieved December 2, 2015, from
https://corporate.aldi.co.uk/en/responsibility/operations/greenbuildings/
Income of Today's Older Adults. (n.d.). Retrieved December 1, 2015,
from http://www.pensionrights.org/publications/statistic/incometodays-older-adults
36

Method of Payment/Coupons. (n.d.). Retrieved December 2, 2015, from

https://www.aldi.us/en/customer-service/faqs/method-ofpayment/
Middle class & living paycheck to paycheck. (2014, April 25). Retrieved
December 1, 2015, from
http://money.cnn.com/2014/04/25/news/economy/middle-classpaycheck/
Our Philosophy. (2015). Retrieved November 17, 2015, from
http://aldiuscareers.com/about-aldi/our-philosophy
Our suppliers. (n.d.). Retrieved December 2, 2015, from
https://aldisuppliers.co.uk/SuppliersAakUK.aspx
Packaging Covenant - ALDI Australia. (n.d.). Retrieved December 2,
2015, from https://www.aldi.com.au/en/about-aldi/aldiinitiatives/packaging- covenant/
Peterson, H. (2015, May 31). These are the major differences between
people who
shop at Whole Foods and Aldi. Retrieved December
2, 2015, from
http://www.businessinsider.com/whole-foodscustomers-vs-aldi-2015-5
Rapacon, S. (2015, October 29). Why working through college is
becoming norm. Retrieved December 1, 2015, from
http://www.cnbc.com/2015/10/29/more-college-students-areworking-while-studying.html
Recycling and waste reduction. (n.d.). Retrieved December 2, 2015,
from
https://corporate.aldi.co.uk/en/responsibility/operations/recycling-andwaste-reduction/
Rosenbloom, B. (2004). Marketing channels: A management view (7th
ed.). Mason,
Ohio: Thomson/South-Western.
Sources of Income for Older Americans, 2012. (n.d.). Retrieved
December 1, 2015, from
http://www.aarp.org/content/dam/aarp/research/public_policy_ins
titute/econ_sec/2013/sources-of-income-for-older-americans2012-fs-AARP-ppi-econ-sec.pdf

37

The ALDI Double Guarantee. (n.d.). Retrieved December 2, 2015, from

https://www.aldi.us/en/customer-service/faqs/aldi-doubleguarantee/
Watts, B. (Ed.). (n.d.). Australian Food and Grocery Council.
Retrieved December 2, 2015, from
https://www.atkearney.com/documents/10192/178350/2020_industry_a
t_
a_crossroads_final.pdf/702b00d1-cdca-4e8f-85d8-7f55dbc26952
What is discount store? (n.d.). Retrieved December 2, 2015, from
http://www.businessdictionary.com/definition/discount-store.html
Williams, K., & Page, R. (n.d.). Marketing to the Generations. Retrieved
December 1, 2015, from
http://www.aabri.com/manuscripts/10575.pdf

38