International Marketing

MKTG301 Case Study Analysis – ALDI: Survival of the German Giant
Case study, ALDI: Survival of the German Giant, discusses the strategies and implications of ALDI’s entry into the Australian grocery industry.   ALDI’s success in the European and US market is extremely notable, with over 5000 stores in operation over the last 50 years. Their strategy to expand globally has been done so in a bid to replace local markets and competitors. ALDI saw Australia as a market which obtained significant opportunity for global expansion beyond the European marketplace. They were aware of the lack of competition offering low prices on quality items, which are locally manufactured, so they plunged into the Australian market with high expectations for success – despite the looming high barriers to entry and the possible inability to gain market share.
When ALDI first entered into the Australian marketplace, they had hoped to achieve 1000 outlets annually. This goal proved to be extremely ambitious, with only 200 stores currently operating throughout the country. Despite this, ALDI’s low-cost business model has resulted in survival in the tough grocery industry. When they entered into the market in 2001, they had a very clear strategic objective: to offer of top quality products at the lowest prices. Ways to keep costs to a minimum included the use of private label brands, locally manufactured and produced goods, limited advertising and marketing, and limited services. It was soon apparent that this strategy, although proving a success at the time, was far too easy for grocery giants to imitate.
Supermarket giants saw ALDIs tactics as a competitive threat and responded accordingly. Sooner rather than later, Coles and Woolworths were hitting back at ALDI, by offering similar prices, an aggressive rollout of quality private label products, pushing advertising on their local produce, and increasing their services with longer trading hours. Together, Woolworths and Coles/Myer had a...