ASDA (3-D) printing service, which uses scanning equipment

ASDA

Mission Statement: ‘to be Britain’s best-value retailer exceeding customer needs always’

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Asda is the second largest supermarket chain in the UK with a
16.8% of the grocery market. Which is also offering food, drink, clothing and
general merchandise. It also provides a range of financial services, sold both
in the supermarkets and online all over the UK.

The headquarters of Asda Stores Ltd is in Leeds, West
Yorkshire and was founded in 1965 by the supermarket owning Asquith family when
they decided to merge with the Associated Dairies Company of Yorkshire (ASquith + DAiries = ASDA). In the subsequent decades ASDA expanded south and
bought rival chain of superstores Gateways Superstores amongst others.

Wal-Mart bought Asda 26 July 1999 for £6.7 billion which made
it into a subsidiary of the retail giant, it became the 2nd largest in terms of
market share of the supermarket chains and since then ASDA claimed a gain of
one million new customers.

George, its own range of clothing was launched in 1990 in the
superstore estate and replaced the 70s and 80s clothing labels of Asda after
being advertised as a premium quality clothing for fashion and reasonable
prices and in turn great value.

Marketing Mix

In order to
make a tangible comparison of how both the organisations -ASDA and Lidl- operate
I must first evaluate Asda’s marketing mix

Product: Asda stores are one of the most prominent retail chains in the world.  Asda provide and offer are myriad of services
which are equally as unique as they are wide ranging. Though the supermarket
retail business is the main focus, Asda also offers a mobile phone company
based on EE network, along with financial services amongst others. According to
Kotler, (2003) you should happy to all business partners, customers, suppliers
and distributors for earning and long-time business and Asda has been do this
very successfully. Asda provide loyalty schemes to attract the customers and
customers gain benefits on their purchases. Its adaptive websites has a 24hours
online service which solves the customers’ problem online. In 2014 Asda
supermarkets began to offer a technological innovation to their customers by
trialling a three-dimensional (3-D) printing service, which uses scanning
equipment to produce scale models, a new system which had previously confined largely
to business-to-business markets.

Price: For certain retailers pricing has
become the foremost element of the marketing mix and is therefore the key
component of their brand image, Asda is a key example of this, with a low price
strategy as key to sell huge volumes of products, Asda records good growth by
playing the price strategy. ASDA pursues low cost agenda to offer lower prices
for its customers. It is committed to providing customers with outstanding
value for money across its entire range of food, general merchandise and
clothing (McKenna, 2008) .Retailers that charge consistently low prices
throughout the duration of the year, with barely any price promotions practice everyday
low pricing (EDLP). This technique has been used to great success by Asda due
to it being such a large retailer and economies of scales make low prices
feasible. The aim of EDLP is to encourage customer loyalty from price-sensitive
consumers (Goworek and McGoldrick, 2015).

Place:

Bennison et al (1995) claimed that location was
the primus inter pares (first amongst
equals) of the retail marketing mix Asda has got its presence in several
places. Market expansion can be achieved through
attraction of new users to the product or service, identifying new uses for the
product or developing new products and services to stimulate the market. New
users can be found through geographical expansion of the company’s operations-
whether that be domestically or internationally. Asda pursued new customers for
its products in its move south from the Yorkshire home base.

Promotion: ASDA marketing people are always
curious to adopt new and innovative promotional techniques. They are offering
their customers like two for £2, one for £1.99 and similarly many other
techniques. The roll back tags of ASDA are visible to every visitor. The stores
are instructed to display reduced price products in front of store so these can
catch the attention of customers immediately when they enter into store. (ASDA,
2009). There is also a trend towards
retailers like offering their own sub brands to appeal to different market
segments, in Asda’s case their supermarkets offer essential grocery items at
low prices under the ‘smart price’ label, standard products with and the more
expensive products under the ‘Extra special’ label, the logos and packaging for
each of these labels are designed to be compatible with their price levels.

 

5FORCES

COMPETITIVE
RIVALRY: The retail industry in UK is highly competitive as there are so many
players involved which gives a very tough competition to the existing players
and the new entrant’s also. Asda has main competition with Tesco, Morrison, and
Sainsburys each of these are working to differentiate itself from others in
order to become the market leader and capture a large market share. The intensity
of the rivalry between competitors Asda and Sainsburys is extremely important,
Sainsbury’s returned to achieving the second largest market share in 2012 with
35 consecutive quarters of scales growth, overtaking Asda which had taken this
position for several years (Withnall, 2013), despite Sainsbury’s selling
higher-priced products on average than Asda. Sainsburys success in this respect
may have been as a result of its differentiation strategy and stronger brand
image, whereas Asda had adopted a cost leadership strategy, in line with Walmart-
Asda’s parent company. The different marketers of these organizations are
launching new strategies different from others in order to beat the competition.
Each organization in the retail industry differentiates itself from others by
product differentiation, different strategies, lower priced products, different
offers and schemes, attracting promotional activities and satisfying the
customers in the best and most efficient manner so that the customers don’t
switch to the rivals and be brand loyal to the organization only, and this was
evident in this case.

 

THREAT OF
NEW ENTRANTS: The threat of new entrants isn’t as high as it is in other
sectors due to Asda, Tesco, Sainsburys and Morrisons already being established
players in the retail industry, dominating a large share of the market which makes
it difficult for new entrants. To enter the industry a newcomer would likely
need a huge capital investment firstly and also enough knowledge of the market
to survive.

 

POWER OF
BUYERS: Customers are the integral part of every business. Customers or the
buyers in retail industry while purchasing goods from different supermarket
stores use their buying power decision from which supermarket they should buy
goods from, which provide them with the best services and which gives them
maximum satisfaction. Asda provide their customers with low priced products,
good quality, variety of products, good customer services for which the buyer
uses it power in shop from Asda in order to satisfy their needs.

 

POWER OF
SUPPLIERS: Every organization should have a fruitful relationship with the
suppliers in order to survive and beat the competition. The retailer should
have suppliers supporting them in order to have the goods on time and can have
the demand and supply cycle working for the consumers. Asda has more than 500
suppliers working for them which is providing different goods to Asda and then
making it possible to satisfy the customers’ demands at Asda stores. The
supplier has the power whether to provide the goods to the retailer or not and
they can switch to the rivals if an better price is given to them.

 

THREAT OF
SUBSTITUTE PRODUCTS: In the grocery market there are same products offered by
different supermarkets what differentiates one from the other is price,
quality, services and the brand so for a single product there are so many
substitutes available in the market. In the other context we can also look at the
increasing competition from the convenience stores and off license shops which
act as a substitute to Asda if a consumer want to purchase few things give is
also giving a tough completion to them.

 

 

STRATEGIES

 

STRATEGY TWO
PRICE GUARANTEE OFFER

 

In the
retail industry each of the supermarket claims to be the cheapest as a
promotional strategy but now Asda launched the price guarantee offer for its
customers in which Asda will pay back the amount with a pence extra if it fails
to claim the cheapest all around supermarket. Asda employees has teamed up and
launched mysupermarket.co.uk where consumers shopping from Asda can type their
receipt and can easily compare their difference in prices with Tesco, Sainsbury
and Morrison’s and if Asda fails to be the cheapest then consumers will get a
printable voucher and plus a pence and voucher can be redeemed at Asda stores.

 

 

SWOT ASDA

 

SWOT FOR
ASDA

Strengths

 

1. ASDA
after its takeover by world giant Wal-Mart has increased its market share
considerably and at present is just behind Tesco in UK markets.

 

2. Major
employer in UK markets thus it has a major pool of talented and experienced
work force. It has a focused strategy in place for human resource management
and development.

 

3. Well
established brand name with strong social image.

 

4. ASDA’s
strategies of smart price, price guarantee offer and ASDA direct have really
changed the way customers look at them.

 

Weaknesses

1. In
comparisons to its competitors ASDA has low market penetration.

 

2. Lack of
smaller superstores to compete with Tesco express, metro etc.

 

3. Product
recalls which not only affects the business financially but also adversely
affects the brand name.

 

OPPORTUNITIES

1. ASDA can
widen its product range especially non-food retail.

 

2. Expansion
into European markets. With well established management strategies and strong
parent firm like Wal-Mart this is the area where it should focus.

 

THREATS

1. Major
threat to ASDA is from its competitors especially Tesco mainly being the threat
of substitute products available through the competitor stores at lower prices.

 

2. ASDA’s
major market is still in UK, so any slowdown or downturn in UK economy may
affect ASDA very badly.

 

3. Consumer
tastes and shopping trends are continuously changing. It is important for ASDA
to continuously accommodate those changes if they want to keep their
competitive edge.

 

4. Rising
labour cost can also cut into ASDA’s profits.

 

 

 

 

 

 

 

 

 

 

Lidl
Stiftung & Co. KG is a German global discount supermarket chain, based in
Neckarsulm, Germany. Lidl’s history begins in the 1930s, when their first store
was created in Germany acting as a grocery wholesaler. Lidl first opened in the
UK in 1994 and has grown rapidly in the 23 years since, they now have over 650
stores and 10 distribution centres across Great Britain. The fact that Lidl
only expanded out of Germany 23 years ago makes the amount of stores they have
in operation even more astounding. The sheer speed of their expansion has made
Lidl one of the most feared competitors in the market.

Product:

The products
sold in Lidl aren’t dissimilar to the products sold in leading supermarkets
like Asda, however they are sold under different brand names in Lidl stores.

Very solid
brand name from being one of the cheapest supermarket retailers in the
industry. Their main competition as a value supermarket is Aldi (Bosshart,
2006).

Consumers
could have a negative perception of the quality of Lidl’s products as they are
sold for such a cheap price (Siro, et al., 2008).

Price:

The term ‘value’
often associated with low prices, as illustrated by the description of lowe
priced clothing stores such as Lidl as ‘value retainers’. However value is
dependent on other elements of the marketing mix, rather than pricing alone. A
product with a relatively high price can therefore still be considered good
value by a consumer if it serves its purpose well and possesses attributes
which are not present in cheaper products in the same category. As a result of
this consumers do not always perceive the lowest-priced product as being the
best value. Products with expensive prices may be viewed by consumers as
high-quality products, whereas lower prices can be viewed as indicators of poor
quality, but this is not necessarily the case at all.

One of the
key competitive advantages for Lidl is their clever pricing strategies. Lidl
entered the market on the basis of being one of the most value-driven
supermarkets in the industry (Dolgui & Proth, 2010).

 

Place:

Lidl have a
plethora of stores across the UK and Europe. However, depending on the country,
they operate in different segments of the supermarket industry, ranging from
value to high-end goods (Butler, 2014).

·        
They
have a variety of distribution hubs across the UK and Europe to ensure that
stores are maintaining a constant level of stock (Brown, 2015).

·        
As
their business model is to sell as many goods as possible in the shortest
amount of time, ensuring stock levels are maintained is incredibly important.
This means that it is imperative to have stores in reasonably close proximity
to national distribution centres.

Promotion:

 (Advertisements, personal selling, sales
promotion, publicity, personnel, physical environment, facilitating goods,
tangible clues and process of service delivery):

·        
Lidl
do not current have any loyalty schemes present in the UK, as they believe
their pricing model is enough to incentivise consumers.

·        
Lidl
often have in store promotions, but they do not discount their goods as highly
as other retailers due to the low prices that already exist.

·        
People
(Personnel training, discretion, commitment, incentives, appearance,
interpersonal behaviour, attitudes and customer behaviour/degree of
involvement):

 

·        
Employees’
are generally paid a very attractive salary, but have to work incredibly hard
whilst on the job. The amount of items scanned is often used as a performance
measurement indicator (Ruddick, 2015).

·        
High
training standards to ensure employees can scan items fast enough and meet all
customer needs.

·        
Consumers
may feel that staff do not pay them enough attention as they are very rushed
doing their job responsibilities.

SWOT LIDL

 

Strengths
(Simon, et al., 2010; Kumar & Steenkamp, 2007):

 

Strong
business structure allows them to sell their products at an incredibly cheap
price.

Wide range
of private labels gives them exclusivity and security.

Has a huge
amount of stores across the whole of the UK and Europe giving Lidl great
exposure.

Online
presence that showcases the products they have and any deals they may be
running.

Weaknesses
(FT, 2015; Siro, et al., 2008):

 

Does not
quite have the market share of the other big supermarkets in the UK, such as
Tesco or Asda.

Has not been
able to spread their operations outside of Europe very successfully.

As their
products are so cheap consumers can often think that the quality is not good
enough.

Opportunities
(Felsted, 2014):

 

Potential to
expand in the UK and acquire a higher share of the UK grocery market.

Successfully
expanding abroad can provide more funds to invest in the UK.

Expand their
website to actually accept orders and sell products.

Threats
(Poulter, 2014):

 

If Lidl were
to engage with a price war with other major grocery retailers then they could
force competitor’s prices down.

International
expansion of other global brands would cause more competition.

Aldi
surpassing their market share and becoming the dominant discount grocery
retailer.

 

 

 

Customer
segmentation is when a customer base is divided into groups or segments that
are similar in certain ways, e.g. gender age, how they spend their money and
interests. During segmentation it is important to specify the specific wants or
needs of each individual segment. Companies that use customer segmentation
recognise every customer is different and that it would be much more useful to
target specific groups with messages that are relevant specifically to them
their marketing efforts would be better served if they target specific, smaller
groups with messages that those consumers would find relevant and lead them to
buy something, by doing this companies intend on increasing market efficiency.
They also hope to grasp a more detailed understanding of their customer’s
preferences and needs.

The retailer
needs to identify the type of consumers at which it targets its merchandise. This
enables the company to establish the target costomers’ needs and wants and to
offer merchandise at suitable prices and locations to meet these needs needs. Retailers
can adopt a mass marketing approach, aiming at a broad range of customer
categories, or target a smaller niche of customers. The main type of customer
targeted by a retailer is referred to as the ‘core customer’ and they form the
largest proportion, if not most of  the
company’s clientele. They can be specified in market segments by demographic
characteristics such as age group or by aspects of their lifestyle. The
retailer will also probably attract customers in other categories, e.g. those
who are older or younger than the core customer’s age. After identifying the
most suitable market segments to target, retailers can then decide on how they
would like their market position in comparison to competitors, a process known
as Segmentation, Targeting, Positioning (STP)

 Low service strategies have been particularly
successful in some sectors during the economic downturn and recession of the
late 2000’s. In Lidl’s case, they have made significant inroads into Tesco’s
market leadership during the toughest of the economic conditions. While high
service strategies at Sainsbury’s and Waitrose have enhanced their competitive
position, low service and very low strategies at Lidl have also been effective
(Piercy et al.,2010)

 

 The four main methods used to segment markets
are : demographic, geographic, psychographic and behavioural.

Retail
positioning aims to provide competitive advantage by differentiating the
retailer from its competitors through a retail offering that appeals to and is
readily identifiable by its specific target markets ( see target market ). This
process involves identifying potential customers by breaking the consumer
population down into groups by such characteristics as gender, age, income,
geographic location, and lifestyle ( see lifestyles ; market segmentation ).
However, each group must be sufficiently large and within broad categories for
each characteristic so that the retailer targets meaningful customer groups.

Competitive
positioning has been defined in the following terms:

Positioning
is the act of designing the company’s offering and image so that they occupy a
meaningful and distinct competitive position in the target customers’ minds.

(Kotler,
1997)

The essential
principle of competitive positioning is that is is concerned with how customers
in different parts of the market perceive the competing companies ,
products/services or brands.

Each firm
can reduce he competition it faces by positioning its products for sale to
market segments which other firms cannot attract so successfully (Sheaff,
2002).