QUESTION
Name
of Student:
Student lD:
To be
Ji
ed by Lecturct
Guidelines:
Williams
College
Strategic Marketing
Management
Coursei tdexcer B lt( level / llrol.jm:
lJnit:7
QCF
Level:
7
Credit Value: 10
it R: ReJened P: Pdss
Leadershio.
in
Strategic Management
and
Strategic
Marketing Management
Teacher:
George Reginald
Anokye
Date of lssue:
Date
of submission: TBD
To be signed
by Student
lnternally Ve.ified: Yes
lnternal Verifier:
c.N Vedula
Date:
TBD
I declare that
all the work
produced
as a response
to this assignment
is all my own
work. I
understand the college
policy
on
plagiarism.
Student
signature showing understanding
of
plagiarism
notice
zl Feedbdck: Please
put
comments depending
upon
gftde,
fot
exdmple if R-
oppropriote
whdt
cdn be imprcved dnd if P
–
you
could
1
give
Williams college
Strategic Marketing Management
|
Chcle os
Student
Guidelines
1. You should write this assignment in
report style. Essential
parts
are
o
Title
page
.
Table of contents
.lntroduction
.
Main body
of the report clearly identifying the separate tasks
.
Conctusion and recommendation
.
Reference and bibliography
.
Appendices only if relevant and necessary
2. Complete
your
report in not less
than
3000 words with
a
10% Ievel
of tolerance.
Show
your
word count at the front
page
of the report. Word count excludes title
page,
table of contents,
reference
page,
appendices and charts or
graphs
included
in the
body.
3. Report should be word
processed
and
grammatically
correct. Pages should be
numbered. Use
Arial, font 12
and
]-Lline
ipacing. Show
titles and use bullet
points
for a better structure and
presentation.
4. List of references citing sources in Harvard referencing style is a must. Reference
may include bibliography showing
your
wider
study relevant to this module.
5. You will
pass
the assignment
only iJ
you
provide
the
relevant information
required in the learning outcome.
6. Deadline of assignment
submission isr TBD
7. You must collect cover
page
from
your
tutor and attach with
your
assignment
before submission. You must fill all the required fields on cover
page
like Student
Name, Programme,
Module fitle, Date, Plagiarism
Statement and Signature.
2
Williams college
Strategic Marketing Management
AIM OF THE
UNIT
This unit
provides
the learner with
the understanding
and skills to support active
engagement in the process
ofstrategic marketing management:
!
The
principles
ofstrategic
marketing managenent
> Tools used
to develop a stategic marketing
sttategy
> Strategic
l]tarketillg techniques
> Changes
i11 the marketing environment
At the successful
conclusion ofthe module students
will be prepared
to write an
assignment and
case study analysis within
organizational settings.
Students must achieve
the following
leaming outcomes.
Learning
Outcomes
Knowledge and Understanding
>
Understand the
principles
ofstrategic marketing
managenent
>
Understand the tools used to develop
a strategic marketing
strategy
>
Be able to use strategic marketing Techniques
> Be able
to respond to changes in
the marketing environment
Skills
By the end ofthe
module students should have developed
ski11s
in:
a) Communication and literacy:
through writing students
will develop effective
writing skills for variety ofpuryoses.
They will develop
skills in the use of
appropriate words, showing
commas, full stops
and clearer understanding
of
sentences,
b)
Problem
solving: through.the
idelltification
ofmodels; formulating
an
appropriate
strategy to answer this question;
and evaluating
the appropriate
tools
used in problem
solving.
c) Independent
leaming and working:
through completing
a sustained self-
djrected piece
that necessitates self-reliance, planning,
flexibility,
managing
information,
self-criticism, refl ection
and resilience.
3
Williams college
Strategic Marketing
Management
d) Information and communications technology: appropriate softwale such as
Microsoft word for assignment submission and PowerPoint for
presentations.
Assessment
Assignment One
Presentation
Select
your
own organisation
you
are familiar with. Research about the organisation and
produce
a
presentation
on the following:
> Marketing objectives ofthe organization
> Define the market
your
selected business operates
> Analyse
your
selected business using S.W.O.T
> Identify how
your
selected business would use S.W.O.T analysis to respond to the
changes in the marketing environment
Presentation not more than 1000 words
Assignnent Two
Scenario
LIDL Supermarket originates ftom Gemany and has been operating in the United
Kingdom for some
years
now. LIDL UK has decided to open anew storc in Lewisham in
South East London. As a Marketing Manager for LIDL UK,
you
have been tasked to
develop a Marketing Plan for the
proposed
new supermarket.
Write
a report to the Board
of
Directors
of
LIDL UK, about a strategic marketing
plan
for the new store, explaining
how the
plan
should be developed and managed
Assignment should not be less than 2500 words
Hand in report: TBD
Presentation date: TBD
For help
on
referencing please see: httD://ist.qlos.ac.uUreferencinq/harvard/
4
Williams College
Strategic
Marketing Management
Course Schedule
Week Date Action Reouired
1 23/02/12
Discuss the
ro
e of strategic
marketing
in an organisation
2
08/03/72
ESSENTIAI.
TEXT
Kotler, Philip, G. Armstrong,
V.
Wong, J. Saunders
(2007),
Principles of
l\.4arketing, London: Prentice Hall
(sth
Edition).
Kotler, P. & Keller, K.L.
(2006)
Marketing Management.
12th edn. New Jersey:
Pearson.
Blythe, J.
(2003)
l\4arketing Strategy McGraw Hill
Jobber, D.
(2001) –
Principles and Practice of Marketing
(3rd
edition). McGraw-
Hi .
lvlcDonald, M.H.B.
(2002)
– Nlarketing Plans; How To Prepare
Them, How To
Use Them 5th
edn.
Buiterworth Heinemann.
Ogba, LE and Coates, N.F
(2006)
l\4arketing Management Pearson Education,
Essex
ExDlain the
Drocesses
invo ved in strateoic marketino
Evaluate the links between strategic raarketing and corporate
stratecv
3
rs/03/72
Assess the
value
of anodels used ln strategic marketing
4 28/03/72
5 12/04/12
6
79
/04/72
7 26/04h2
8 03/0s/72
g
Discuss the llnks between strategic
positioning
and marketing
tactics
marketinqAnalyse the merits of relationship
strateoic marketinc strateov
Doyle, P. & Stern, P
(2006)
Marketing
Management
and Strategy.4th Edn.
5
Williams college
Strategic Marketing Management
ln a
qiven
Use appropriate
marketing
techniques to ascertain
growth
oDDortunities in a market
Plan how to use marketing strateqy
options ln a market
Create appropriate strategic nrarketing objectives for a
market,
Report on the irnpact of changes in the
external environment
on a marketino stratecv
Lol0s/72 Presentation
10 t7/0s/12
Conduct an internal analysis to identify
current strengths and
weaknesses in a rnarketing strategy
Propose strategic marketing responses to key emerging
themes in a marketino strateqv
11 3r/osh2 Submission of assisnment
7
Essex. FT Prentice
Hall
Riezebos, R.
(2003).
Brand Management: A theoretical and
practicalapproach.
Essex. FT Prentice Hall
Piercy, N.F.
(2009)
Market-Led Strategic Change 4th Edn. ButteMorth
Heinemann
Wilson, R.M.S. & Gilligan, C
(2005)
Shategic
Marketing
Management,
Planning,
lmplementation & Control 3rd
Edn, Butterwoith Heinemann
www.bized.co.uk
Williams College
Strategic Marketing Management
SOLUTION
Introduction
LIDL Supermarket is a discount supermarket based out of Germany. It has more than 10000 stores across 23 countries in Europe. It is privately owned and controlled by Schwarz Gruppe run by Schwarz family. Schwarz Gruppe also owns the store chains Handelshof and hypermarket Kaufland. Any LIDL store typically stock less than 1000 fast moving SKU (Stock keeping units) and its offerings include several categories of food and non-food departments.
LIDL has been operating in Germany from 1930. In 1977, the company started its focus towards discount stores, supermarkets and cash & carry wholesale markets. LIDL opened its first store in United Kingdom in 1994. From than it has grown and owns around 580 stores across UK as of today. Despite the large number of stores, it owns only around 2.5% market share of the retail grocery store market of United Kingdom. LIDL UK has decided to start a new store in Lewisham in South East London. This move is fueled with the desire of the company to increase its customer base. A strategic marketing plan helps the management to understand various facets of the marketing and provides recommendations for the successful implementation of strategy.
This report outlines the strategic marketing plan for opening a new store in United Kingdom. First the marketing objective of the LIDL behind opening new store is understood. Later detailed analysis of discounted retail store market and competitors is presented. Situational analysis of LIDL is done with the academic model of SWOT analysis to arrive at with marketing strategies. And finally marketing tactics and recommendations are outlined based on company’s strategic competences, marketing environment, competitor analysis and situational analysis, which can guide the management to the tasks that are necessary to perform for achieving the success of the store.
Marketing Objectives of LIDL
LIDL is a successful chain of grocery stores, expanding strongly throughout Europe and beyond its borders (www.lidl.co.uk). LIDL has a vision of offering its customers top quality products at lowest possible price.
LIDL UK has the main marketing objective to become strong in the industry and capture the maximum market share possible. It has current 580 stores across United Kingdom. There is huge potential available in discount retail supermarket industry as LIDL holds only 2.5% of total retail grocery market. LIDL plans to expand its chain by opening up new stores and penetrating into new customer bases. In lieu of the same, LIDL is going to open a new store in South East London.
Retail Grocery Store Market in United Kingdom
United Kingdom’s retail grocery market was dominated by mainstream superstores like Tesco and Asda. In 1990’s German discount retail stores ALDI and LIDL entered UK market. Initially they were considered to be selling poor foods to poor people. ALDI did not opt for advertising but depended on word of mouth marketing. As the world faced monetary recession, consumers started looking towards controlling everyday expenses. In such times, consumers seek out lowest possible prices and therefore often opt to visit discount retail grocery supermarkets. With its operational efficiency and low cost model, LIDL was successful in attracting customers from all social strata of United Kingdom. With the newfound confidence, LIDL started advertising on print media and television in UK.
Established mainstream superstores generally have 32 to 40 percent margin on the products. Such a margin provides discount stores a way to offer consumers products on discounted prices and still make a profit. Here operational efficiency and low cost models also play important roles in managing profits. LIDL does not employ huge staffs for its stores and it operates with the stores that are very small in size compared to other stores, efficiently utilizing the floor space. Besides, LIDL does not stack up various different lines of the product on the shelves. It takes one exceptionally good valued product and stacks it up in huge quantities.
LIDL has huge opportunity in the form of available potential market as it holds mere 2.5% market share in United Kingdom. With the arrival of credit crunch, rising food prices and allegations on supermarkets about unjustified price increase, consumers are increasingly opting for discount grocery stores such as LIDL and ALDI (http://www.telegraph.co.uk). The focus of consumers is shifting from status to value. Such changes are welcome by retail stores as LIDL.
There is a concern about the future of discount stores in UK. Some analyst fear that changes in consumer mentality is temporary. With the economic advancement, consumers will return to the branded products and high-end superstore chains that follow traditional approach. As per Terry Tyrrell, people will fall back on their traditional loyalties once the good times are back.
Competition in UK retail market
The proposed store will be a part of United Kingdom retail grocery store market. Tesco is leading this market with 30% market share. Asda, Sainsbury’s and Morrisons are the followers with 16.3%, 16% and 12% respectively (June 2011).
LIDL has established itself as discount retail supermarket; therefore the proposed store will face competition from the similar players in the market. For all purposes, its existing competitors should be considered ALDI and Iceland. Besides, a new supermarket chain UGO operated by Haidanes has been started recently.
ALDI is also a discount supermarket chain based out of Germany. ALDI started its operations in UK in 1989. It has already opened 420 stores and plans to open one new store every week. With 3.5% market, ALDI owns higher market share than LIDL and it has plans for expanding its presence in UK. For the same purpose, ALDI is recruiting management staff from UK universities. Since mid 2005, ALDI also started advertising through print media and television in United Kingdom.
Iceland is another competitor of LIDL with 1.8% market share. But Iceland does not operate as discount retail store. It thrives on its product diversification strategy.
SWOT Analysis
Situational Analysis is an important part of the strategic marketing plan. I have used SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) for this purpose. In this analysis, strength and weaknesses indicates to the details, internal to the company. Opportunities direct to the new avenues and frontiers that can be explored by the company. Threats relate to the competition, regulatory issues, government guidelines etc that can jeopardize the very existence of the firm. A brief account of SWOT analysis is provided below.
Strengths:
LIDL started its operations in UK in downtown areas where poor people lived. Such move gave the notion of “poor food for poor people” to the discount retail stores. But with the advance of time, LIDL has proved that it provides quality product with lowest possible prices. People from all social status now use the services of LIDL.
The main strength of the supermarket chain lies in its operational efficiency and low expenses model, which allows the company to provide products with low prices and still make profits. To generate profits even with low price quality products, the company takes help of various strategies such as using smaller stores, employing fewer staffs and simplistic shelf design.
The products offered at LIDL are restricted to a limited rage of variety/ lines to ensure lowest possible operating costs. Limiting the range of product lines provides LIDL with immense buying power. Besides LIDL sells the same product across Europe, thereby benefitting from economies of scale. Combining these two effects, LIDL is able to offer lowest possible prices to the consumers.
LIDL is privately owned. Its Chief Executive Officer, Dieter Schwartz built LIDL on his father’s wholesale fruit business. As the management needs not to report to any shareholders, the company can exercise any reforms without any hassle.
Weaknesses:
LIDL does not enjoy the brand image among consumers. It is still considered a place for low price products, not quality products. Such an image may harm if consumers were to decide to opt for quality products due to economic revival.
LIDL has been criticized for mistreatment of its employees by various trade unions. It was accused of spying on its employees in 2008, including recording various personal details of its employees. Such incidents spread negative outlook among the consumers about the brand image of the firm.
Opportunities:
Grocery retail stores have focused on improving customer service levels in past 20 years in United Kingdom. Such trends provide consumers with enticing shopping environment but also resulted in higher prices and higher profit margins for retailers. Thereby a gap is produced in the market for consumers believing in “value for money” shopping. This gap is to be filled with discount stores such as LIDL and ALDI that consciously seek to merge quality shopping with low prices and limited product lines.
LIDL also provides online offerings that are growing in popularity. For example it provides details of latest deals and online recipes by a celebrity chef. But these services can be developed further to enhance customer base. Besides, LIDL does not have online retail service in United Kingdom, which can be considered as future opportunity.
LIDL caters to only 2.5% of the retail market in United Kingdom. There is a vast potential available for LIDL to tap from.
Mainstream players do not consider LIDLa threat (Asda and Tesco). Such image helps the company to grow without any fierce competition from the established stores. This opportunity is beneficial to flying low under the radar until it is ready to take up the competitors, head on.
Threats:
LIDL faces the fierce competition from ALDI, also a German discount store that holds higher market share than LIDL. Both the chains thrive on their operational efficiency and low price products. Besides, another competitor Iceland is also expanding its operations in United Kingdom.
The entry barrier in discount retail supermarket is low. There are various players in the market. Besides, the established stores (Asda, Tesco etc) may also start selling low cost products to sustain their falling market shares.
According to some analysts, consumers have moved to discount retail stores like ALDI and LIDL only because of credit crunch. Once the economy is back on track, consumers will move back to their traditional lifestyle involving mainstream supermarkets like Asda and Tesco. It is a big threat for LIDL. To counter this threat, LIDL need to maintain an image within its consumers’ perception where LIDL does not only provide low cost products but also products with quality.
Marketing Strategy
LIDL UK operates as discount retail store. Its strategies are inline with the objective of providing quality product to the customers for lowest possible prices. A big part is played by operations strategy in controlling costs. Marketing strategies for LIDL stores revolves around 4P’s of marketing: Product, Price, Promotion and Place. A brief account of them is given below.
Product
LIDL follows cost leadership strategy. It provides products with lowest possible price. To provide low cost products with profits, it utilizes operational efficiency.
LIDL has a marketing strategy for not selling cigarettes, stationary, lottery tickets or single item confectionary goods. LIDL stores also do not provide services/ facilities such as butchery, dry cleaning, café etc because these do not fit with its retail concept. All customers of LIDL use these facilities in nearby area. This indicates that LIDL store complements the retail and service providers in the surrounding area.
LIDL stores showcase its own label products or products from less familiar brands. Such products provide quality equivalent to branded products with lower prices. Among other brands, it own Silvercrest brand, under which the company manufactures electronics products such as satellite and Freeview receiver.
Most of the products at LIDL are displayed in the original boxes and packages in which they were delivered from the suppliers. Such a strategy helps maintaining high productivity. This saves repackaging costs and human efforts in opening and repacking.
LIDL stores devote 20% of the store’s sales area to the sale of non food items such as computers or gardening products. These items add variety to the offer and sold only for a limited period. LIDL uses flyers and leaflets to promote the sale of such items.
In late 2009, LIDL UK started a DVD rental service (LIDL Movies). This service was started to compete with Tesco DVD rental, UK’s cheapest DVD rental service provided by Tesco. LIDL UK also launched an online photo service. (www.lidl-photos.co.uk)
Price
LIDL promises to provide products with lowest prices possible. It pitches sales by a punch line “Why pay more than you have to?”. To provide such pricing, LIDL has opted for no frills approach in its retail grocery stores.
LIDL operated a pan European bulk purchasing policy that enables it to sell the same item across Europe. Such strategy provides benefits of economies of scale and helps keeping the prices low.
Promotion
LIDL has employed a celebrity chef who develops online recipes with its products. This strategic move is taken to emphasize the quality of products being sold at LIDL stores.
LIDL employs product comparison advertising where it puts up details of prices of similar products available in various retail stores.
LIDL advertises its various offerings and deals though its website but it does not operate in online retail service industry.
LIDL uses special weekly offers to increase sales of its non-food items.
LIDL advertises extensively and plans to promote its offerings with advertisements during public events. LIDL has utilized similar strategy in UK to spread customer awareness during 2010 (http://www.marketingmagazine.co.uk). Such promotions are an excellent way to market its own labeled products and to encourage potential buyers for trying LIDL. Besides, such promotions help the company to spread awareness about its low cost products among the potential customers.
Place (or Distribution)
LIDL started its operations in United Kingdom by opening stores in downtown area. It started with focus on providing low price products to poor people.
LIDL emphasizes on providing lower price to the customers rather providing a special shopping experience to the customers. Its stores are usually much smaller than the established stores of Tesco, Asda etc.
LIDL has eight regional distribution centers in United Kingdom. Products are packaged in LIDL’s own brand at these distribution centers after being procured from throughout the Europe and UK.
LIDL does not play any music in its stores as compared to other grocery store chains.
All LIDL stores follow a generic plan to display items in shelves. This helps in providing familiarity to the customers and makes replenishment simple for the employees.
Marketing Tactics and Recommendations
LIDL follows cost leadership strategy where it markets good quality products at a lower cost than its competitors. These low cost should be marked in such a way that firm is able to generate profits. It faces strong competition from ALDI that also uses similar marketing strategy. LIDL can utilize various marketing tactics to enhance customer experience or to attract customers to its services. Based upon the analysis of competitors, market and company environment, the following recommendations are suggested to achieve its objectives.
• LIDL should continue with its existing model, as it is able to provide the quality products to its customersat lower prices. Such tactic is beneficial against rival supermarkets that follow traditional approach (Tesco, Asda, Morrisons etc).
• LIDL has low penetration as evident by its low market share. Opening up new stores is the best course for expanding business in UK. Its competitor ALDI is following similar strategy as ALDI plans to open a new store every week to increase the customer base in United Kingdom.
• LIDL should practice operational efficiency without attracting negative attention from media. It should avoid any issue that may corrupt its image among consumers. In 2008, its image tarnished due to reports of unethical behavior of the management towards the employees.
• LIDL should increase its online offering to attract more customers. Besides, it may also start and online retailing service in United Kingdom. These steps will help the company in broadening its customer base and in increasing direct sales.
• LIDL should play music in its stores because it is not highly expensive and music affect consumers’ response in a positive manner (Baker, 1992). According to Fulberg (2003), customers can be motivated and encouraged to make purchases by using certain type of music or scents.
• The firm can open some store in up-market area to increase its penetration in high status strata of society. This move will also help the company in countering the image of “poor food for poor people” associated with discount retail stores.
Conclusion
LIDL, a discount retail grocery store chain from Germany, has been successful in creating an image for itself among customers in United Kingdom. The company boasts of providing quality products with lowest possible costs. This was possible due to operational efficiency and low cost strategy model adopted by the LIDL stores. LIDL has huge opportunity to expand its customer base in UK retail store market as it currently holds only 2.5% market share. With its strengths, LIDL can achieve the feat despite facing the fierce competition from other discount store such as ALDI and established mainstream stores such as Tesco and Asda. Opening up a new store in South East London is appropriate move in the direction of expanding its reach and penetrating the potential customer base. This report encompasses various marketing strategy details about the company. After careful consideration of the environment of the firm and situational analysis, recommendations are suggested to be implemented through marketing strategy/ tactics.
Reference List:
Burt Steve and Sparks Leigh. (2003). Competitive Analysis of the Retail Sector in UK. Scotland: Institute of Retail Studies.
Connolly Kate. (2008). German Supermarket Chain LIDL accused of snooping on Staff. The Guardian [online]. Available at: <http://www.guardian.co.uk/world/2008/mar/27/germany.supermarkets> [Accessed on 3 May 2012]
Kotler Philip and Keller Kevin. (2008). Marketing Management 13th ed. NJ: Prentice Hall.
Fifield Paul. (2007).Marketing Strategy 3rd ed. UK: Butterworth-Heinemann.
Marcella Donna. (2012). Small Business Marketing: Develop a Strategic Marketing Plan [online]. Available at: <http://www.startupnation.com/business-articles/1263/1/strategic-marketing-plan.asp> [Accessed on 3 May 2012]
Morris Matthew and Bray Madlen. (2008). LIDL UK: Retail Assessment. Bristol: GVA Grimley Ltd.
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