Strategic thinking tools.
Strategic planning is an important organizational activity which outlines priorities, focuses resources and energy, strengthens operations and makes sure that the employees and other stakeholders involved are working towards common goals (Gates, 2010).
It assesses the direction of the organization and adjusts it in response to the changing environment. Strategic planning process begins with an understanding of the wider marketing environment and on-going monitoring of the macro-environmental factors (Gates, 2010).
It involves a number of tools such as SWOT analysis, Porter’s Five Force Model, Balanced Scorecard and Mind Maps that provide an in-depth analysis of the internal and external forces acting on the organization and the competition it faces (Hussein, 2015)
Marketing looks at the needs of the users and the ability of the business to satisfy them. Strategic marketing involves putting together a plan for the optimum use of the resources of the organization and developing strategies to meet the corporate objectives (Blythe et al., 2005).
It efficiently answers the three key questions where to compete, how to compete and when to compete. It facilitates in developing a competitive product mix and selecting the right marketing approach to pursue the target market (Dunn, 2015). It is based on the belief that products go through different phases and thus play different roles in their life cycle.
Generally the BCG (Boston Consulting Group) matrix is used to assess the roles and to determine which product needs investment and which product is a revenue generator (Jain, Haley, Voola, & Wickham, 2011). Factors such as acquisition of larger market share, growing competition from foreign products, deregulation and demographic changes have enhanced the importance of strategic marketing
Link between Strategic Planning and Strategic Marketing
Strategic planning and marketing are both critically needed by the organization for survival and prosperity (Katz, 2002). Explaining the relationship between strategic planning and strategic marketing (Katz, 2002), states that the former deals with allocating organization’s resources as per its financial goals whereas strategic marketing translates those goals into actions to step up the demand for the products and services offered by the organization.
Strategic Planning and Strategic Marketing at Aldi
The competition in Australian retail industry is intense with Woolworths, Coles and Aldi being the key players. Germany based Aldi entered the Australian Retail industry in 2001 and by 2014; it had more than 350 stores with annual sales of $ 5.3 billion and a 10% market share (Yoo, 2016).
The annual worth of Australian grocery sector (including online retail) is worth $ 105 billion while the online grocery is an emerging industry with a growth rate of 15.5% per annum (Yoo, 2016). Aldi has a weak online presence as it started its online service very late (2016).
Before carrying out strategic planning and strategic marketing for Aldi, an analysis of the industry and environment it operates in is necessary.
SWOT Analysis of Aldi
· Strong global presence
· Low prices as compared to its peers
· High quality products
· Simple layout
· Standardized low cost business model
· Low online presence
· weak brand image
· relies on third party for grocery supplies
· little investment in advertising
· weak representation of green practices such as organic foods (Yoo, 2016)
· online market
· new services and technology
· can expand in other parts of Australia
· intense rivalry
· mature market
Porter’s Five Force Model
Porter’s Five Force model reveals the affect of external forces on the working of an organization
Threat of New Entrants: High
Australian retail industry is relatively unexplored and therefore global and local firms are encouraged to enter the market.
Threat of Substitutes: High
Although Aldi offers the most competitive prices but it has a weak online presence due to which the time poor customers switch to its competitors. Customers also tend to move to those substitutes that offer same quality at lower prices.
Intensity of Rivalry: High
Rivalry is high as competitors indulge in price wars.
Bargaining Power of Suppliers: low
With a number of suppliers available, the bargaining power of suppliers is low.
Bargaining Power of Buyers: High
The availability of other options has increased the bargaining power of buyers.
The above analysis of the market shows that Aldi operates in a highly competitive market where the customer loyalty is low. Hence the mission statement of Aldi must be to expand its customer base and at the same time maintain its lead in the Australia retail industry over existing and potential rivals.
The strategic planning of Aldi would be to expand its customer base by adding organic products to its range, offering online services to customers who demand convenience along with quality and price and target middle income group.
To capture the attention of its target market, the organization should come up with practical marketing strategies which when implemented generate stable business flow through different channels with special focus on social media, e-mails, company website and mobile apps.
Blythe, J., Coxhead, H., Laswood, M., Partridge, L., Reed, P., & Simmons, H. (2005). Strategic Marketing. UK: Knowledge Select.
Dunn, K. (2015). Globalization and the Consumer: What the Marketer Needs to Know. Neumann Business Review , 16-30.
Gates, L. (2010). Strategic Planning with Critical Success Factors and Future Scenarios: An Integrated Strategic Planning Framework. USA: Carnegie Mellon University.
Hussein, A. M. (2015). APPLICATION OF STRATEGIC PLANNING TOOLS AND CONCEPTS IN SMES IN NAIROBI CBD. Nairobi: UNITED STATES INTERNATIONAL UNIVERSITY-AFRICA.
Jain, C. S., Haley, G. T., Voola, R., & Wickham, M. (2011). Marketing Planning and Strategy. Australia: Cengage Learning.
Katz, L. (2002). Strategic Marketing in Library and Information Science. New York: Routledge.
Yoo, T. (2016, November 7). Aldi and Woolworths to Amazon: BRING IT ON. Retrieved March 16, 2017, from Business Insider: https://www.businessinsider.com.au/aldi-and-woolworths-to-amazon-bring-it-on-2016-11#AfxhDTaZdHm4vO10.99
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