Student ID: 216205341
Aldi is out to attack their major competition, Coles and Woolworths, to reinforce their position as a low-cost supermarket alternative for Australian shoppers. They are utilising television commercials (TVC’s) to reinforce this message and to target a new market segment of non-users. These TVC’s are part Aldi’s aggressive expansion strategy to increase market share in Australia.
Aldi, a German owned global supermarket chain is one of the world largest privately owned companies. With over 10,000 stores in 18 countries Aldi is renowned as an established low-cost supermarket. Aldi identified a gap in the Australian market when discount grocery chain Franklins went out of business, opening their first store in 2001. “Consumers have different buying habits depending on where they reside” (Belch, Belch, 2004).
“Consumers have different buying habits depending on where they reside”.
When Aldi entered the grocery market back in 2001 it was a duopoly by the top two companies, Coles and Woolworths. Prior to Aldi’s introduction, Australia was the only western society to have the top two grocery companies hold above 48% market share. Between Coles and Woolworths they owned 80% of the market. Fast-forward 15 years, Aldi has successfully clawed 11% of the market share from the duopoly (Pash, 2015), with a future goal of 25% market share. They own the space of low price products and reiterate this message in their TVC campaigns.
“The Supermarket Switch Challenge” is Aldi’s recent TVC aimed at attempting to convert non-users (Aldi Australia, 2016). In the TVC, loyal Aldi shoppers take a ‘non-believer’ friend to shop at Aldi, to see what it is like and report back. Overall the ‘non-believers’ were impressed by the range and were pleasantly surprised by how much money they saved. The TVC is broadcast at prime time and utilises guerrilla tactics, by cleverly aired during cooking TV shows such as Masterchef, which are sponsored by their competitor Coles.
The campaign is launched at an opportune time as Aldi rolls out an aggressive expansion plan across Australia. This includes locations in WA and SA who have yet to experience the Aldi phenomena. The roll out is a large investment with Aldi ready to spend over $700 million for all the new locations (Hibbit, 2016). With this geographic expansion Aldi is making itself more accessible to a new segment of customers who have previously been unable to shop at the supermarket chain.
Coles and Woolworths both launched campaigns to win back customers in the low-cost segment. Woolworths with their “cheap, cheap” motto and Coles preferring the “down, down” price campaign. Both campaigns were unsuccessful at changing customer perception that their brand was cheaper than Aldi.
Aldi is also now integrating psychological segmentation into its campaign. Low price usually represents low quality however this is another perception Aldi are attempting to tackle with their Swap and Save adverts. Aldi have also targeted this mentality by branding their products similarly to their more expansive counter parts. These adverts show the average price of a product you would pay at a competitor store and show you the comparable Aldi product at a lower price. They are aiming this at Aldi non-users to swap and try Aldi’s product for cheaper. The new ad is helping to convert the perception of the high quality segment, hoping these customers will try Aldi’s brand product to prove it is of the same quality at a lower price. By the look of their market share growth it seems to be working.
Every weakness the major competitors call out about Aldi, Aldi admit as a truth. (Urquhart, 2004) They can do this as they have targeted the right customer. Aldi admit to stocking a limited range of SKU’s, this is how they can maintain their low prices. Aldi customers understand this and do not seem to be deterred. Aldi have even recently expanded their product line up to include items like Vegemite, Cadbury’s Chocolates and Tim Tams to cater to a more brand sensitive customer. Proving you can do a full grocery shop at Aldi, as claimed in the Supermarket Switch advert.
The shifting of Aldi’s positioning from ‘budget’ to ‘low-cost quality’ should make the duopoly, Coles and Woolworths, sit-up and pay attention.
- Belch and Belch, 2004, Advertising and Promotion: an integrated marketing communications perspective
- Pash, 2015, Business Insider, http://www.businessinsider.com.au/aldi-is-intensifuing-its-supermarket-attack-against-woolworths-and-coles-2015-9
- Hibbit, 2016, Retailer News, http://c-store.com.au/2016/02/03/aldi-sets-up-shop-in-south-australia/
- Aldi Australia, 2016, Supermarket Switch Challenge, https://www.aldi.com.au/en/shopping-at-aldi/supermarket-switch-challenge/
- Urquhart, 2004, Marketing Focus, http://www.marketingfocus.net.au/ALDIUNDERATTACK.htm