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Aldi The Dark Horse Discounter

Solution Id Length Case Author Case Publisher
2365 662 Words (3 Pages) Eric Van Den Steen, David Lane Harvard Business School : 714474
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Among the significant positioning strategies, Aldi uses a broad low-cost strategy. The low-cost strategy focuses on producing and acquiring goods for the wide customer base at a lower cost than the competitors. This strategy enables the firm to lower their prices than the rivals and attract price-sensitive consumers, attaining a competitive advantage. Aldi operates on a non-traditional business model, offering a limited assortment of privately labeled household items with little to no services, no shelving, and non-descript locations enabling the company to offer extremely low prices compared to their competitors.

Case Study Questions Answers

The extremely low prices with a limited assortment of basic but often essential household items, efficient employees, simple store structures, and a double guarantee of replacement and refund, if the customer is not satisfied with the products contributes to Aldi's strategy to secure a competitive advantage over other discount grocers like Walmart, Costco, BJs, etc. 

As evident by the case, Aldi succeeds in the adopted positioning strategy by taking extreme measures and employing frugality in the business operations to earn profits while providing good quality products at lower prices to the consumers. The correct actions of Aldi to fit its strategic positioning have enabled it to operate more than 10,000 stores worldwide and grow rapidly in the US and other countries.

The first action that Aldi takes to support its low cost strategy is that it only provides a limited assortment of private labeled basic products. The average store of Aldi holds about 1000 to 1400 SKUs of essential products compared to as many as 45000 SKUs of larger US grocers. The selection of products in its limited assortment is also limited. The store offers only one to two brands or sizes for each product. This selective selection speeds up the shopping process since consumers spend less time choosing products. Although Aldi primarily sells privately labeled brands of low prices, the firm has a strict quality control system to ensure each brand is as good as the well-known leading brands.

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