Lidl do not current have any loyalty schemes present in the UK, as they believe their pricing model is enough to incentivise consumers. 4.2 Key Trends affecting the industry 9 4.1.4 Technology factors 8 I. 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). Functional food. Michel Porter identified three generic strategies: • Cost leadership. Porter S Generic Strategies. This bibliography was generated on Cite This For Me on Monday, May 23, 2016. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. III. VAT Registration No: 842417633. Strong business structure allows them to sell their products at an incredibly cheap price. This will help consumers know there is a Lidl nearby. 4.1.2 Economical factors 6 The amount of items scanned is often used as a performance measurement indicator (Ruddick, 2015). 1. Lidl have a reliant focus on selling quality products at the cheapest cost possible. : The Real Cost of Living in a Low Price, Low Wage World. Submitted by: 1168212 Project objectives and research questions How Lidl adds value, With the introduction of a deluxe range (Lidl, 2014) they have seen a shift in their strategic position and as they move more towards selling higher/premium quality goods so have they been able to increase their market share within the UK (Potter, 2014) 5th ed. Diagram 2: Porters generic strategies www.tutor2u.net This has benefited Lidl especially during the recession (Gloger, 2012) as consumers were turning to the discount stores to reduce the expense of grocery bills. This Master’s Thesis is carried out as a part of the education at the University of Agder and is therefore approved as a part of this education. Lidl will often exhibit their brand colours, yellow and blue, throughout their stores or surrounding areas. : Chartered Institute of Marketing. COMPETITIVE POSITION AND MARKET POTENTIAL ANALYSIS Introduction of new product ranges that cater to an upper-class demographic. All external references and sources are clearly acknowledged and, The Strategic Evaluation of Lidl’s within the UK Market. Submission Date: 26 January 2014 5.2 Weaknesses 11 Date Sent: 6th December, 2012 Brown, G., 2015. Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). By the end of that year the number had doubled to 80 million price changes during a single day. 4.1.3 Social and cultural factors 7 An analysis of the external business environment and how it affects Lidl 7 Submission Deadline: 11:00 AM 6th December, 2012. Lidl, 2015. [Online] Available at: http://www.theguardian.com/business/2014/jun/27/lidl-launches-store-expansion-programme. Porter’s Generic Strategies. 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. The strategies proposed depend on: The Competitive Advantage of the company. Siro, I., Kapolna, E., Kapolna, B. Avoid engaging in price wars and competitive with major grocery retailers on a direct basis. SWOT analysis is a method or ‘framework’ used for business analysis. s.l. 4. Story 2 London: Kogan Page Limited. 2.1 Porter’s Generic Strategies 5 Reference this. Increased revenue could then be funnelled into UK development. However, in order to maintain their current rate of growth and expansion, Lidl may have to diversify from their current strategies in order to stay competitive and innovative within the UK grocery market. In this model, five forces have been identified which play an important part in shaping the market and industry. The SWOT acronym stands, Strategic Analysis of ALDI Company Registration No: 4964706. The SWOT analysis will help an organisation measure and understand the internal strengths and weaknesses, and the external opportunities and threats facing the firm. Each of these is an example of a Generic Strategy, as coined by Porter. 631-640. 3.2.5 Competitive Rivalry within the Industry 10 This means that it is imperative to have stores in reasonably close proximity to national distribution centres. Being able to identify these elements will help an organisation to formulate and develop strategies which may build on the strengths, negate the weaknesses, exploit the opportunities or counter the threats (Dyson, 2004). This will then be concluded with a SWOT analysis, with recommendations being drawn up via the utilisation of a TOWS matrix. One of the key competitive advantages for Lidl is their clever pricing strategies. Module Title: Accounting and Financial Management Berlin: Springer Berlin Heidelberg, pp. 3.2.2 Threat of Substitutes 10 The 4Ps are comprised of; product, price, place and promotion (CIM, 2009). MKT2232 Branding and Integrated Marketing Communications Analysis of the competition faced by Lidl within the UK food retail industry 4 2. 2. s.l. II. These are the sources and citations used to research Lidl Strategy. Registered Data Controller No: Z1821391. Type: Lidl’s history begins in the 1930s, when their first store was created in Germany acting as a grocery wholesaler. However, depending on the country, they operate in different segments of the supermarket industry, ranging from value to high-end goods (Butler, 2014). Generic strategy These products generate over 80% of sales. A Porter’s Five Forces analysis of Verizon Communications, Inc. determines competitive rivalry as the highest-intensity force on the business, including wireless telecommunications services, based on the external factors in the information and communications technology and services industry. Their main competition as a value supermarket is Aldi (Bosshart, 2006). Introduction 3 The first force is Threat of new entrants. The products that are sold the most are the private labeled products like eggs, meat, milk, fresh fruits and vegetables, and the baked goods. Based on the TOWS matrix, and the analysis of Lidl’s current market strategies, three recommendations can be laid that would help Lidl acquire a greater share of the UK grocery market. Lusch, R. F., Vargo, S. L. & O’Brien, M., 2007. [Online] Available at: http://www.dailymail.co.uk/news/article-2539064/Aldi-Lidl-force-big-four-supermarkets-price-war-stop-stampede-customers-discount-chains.html, Ruddick, G., 2015. In: Marketing of Services. 1. Disclaimer: This is an example of a student written essay.Click here for sample essays written by our professional writers. :Free Press. The five core concepts of marketing are; consumer needs/wants/demands, products and services, value/satisfaction/quality, exchanges/transactions/relationships and markets (Kotler, et al., 2008). He believes that a company must choose a clear course in order to be able to beat the competition. 3.1.2 Economic 8 5.1 Strengths 10 1. The government is considering a levy on sugar as part of a national strategy to tackle childhood obesity. Environmental Analysis 5 Private Label Strategy: How to Meet the Store Brand Challenge. No plagiarism, guaranteed! The Strategic position of Lidl 5 High training standards to ensure employees can scan items fast enough and meet all customer needs. We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. & Lugasi, A., 2008. Annual Reviews in Control, 34(1), pp. Develop and implement upper-class branded products in order to target a new demographic and compete with the major supermarket retailers on a more even environment. [Online] Available at: http://www.lidl.co.uk/en/659.htm. 1. A firm’s success in strategy rests upon how it positions itself in respect to its environment. Strengths (Simon, et al., 2010; Kumar & Steenkamp, 2007): Weaknesses (FT, 2015; Siro, et al., 2008): Together with the SWOT analysis, a TOWS matrix can be utilised in order to develop strategies and recommendations for Lidl to acquire a greater market share of the UK grocery industry (Weihrich, 1982). In: Retailing in the 21st Century. In the Michael Porter’s Generic strategies, three main strategies are used as the base namely, Cost leadership, Differentiation leadership and Focus. Question: [Question Number and Title, or Description of Project] Porters Fiver Competitive forces are some of the most essential tools that Lidl has to use in ensuring that it achieves competitive advantage in the retail sector. 4.1 PESTEL Analysis 6 5.1 Cost based competitive advantage 5.2 SWOT Table 12 Haakon Winger Eide The company needs to identify some of the most desirable strategies and use them towards achieving the best part of the market share. During 2008 they recorded a growth sales of over 25% (Keynote, 2010). 3.1.4 Technological 8 Hanoi, November 11st, 2012 I will analyze the benefits and risks of such a merger on the companies involved as well as their employees. Students | Name | Student Number | An explanation of research approach. International expansion of other global brands would cause more competition. porter's generic strategies lidl. An analysis of Lidl’s current marketing strategy will be conducted, with particular emphasis on the 7 P’s of marketing. He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus." Tesco sells approximately 40,000 food products in its superstores, as well as clothing and, The Warwick MBA An analysis of the external business environment and how it affects Lidl 7 3.1 PEST Analysis 7 3.1.1 Political 8 3.1.2 Economic 8 3.1.3 Social 8 3.1.4 Technological 8 3.2 Porter’s Five forces Model 9 3 Aldi surpassing their market share and becoming the dominant discount grocery retailer. Word Count:1688 Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. | Sara-Sofia Broberg | M00373321 | [Online] Available at: http://www.ft.com/cms/s/0/2465c426-fd53-11e3-bc93-00144feab7de.html#axzz3giD80B9c, FT, 2015. WAL-MART DEVELOPMENT RECOMMENDATIONS Do you have a 2:1 degree or higher? These initial strategies as described by Porter were: Cost Leadership (cheap, no expenses), Differentiation (unique or premium products) and Focus (a specialised service or market). Dyson, R. G., 2004. Michael Porter uses 4 strategies that an organisation can choose from. As society shifts toward a healthier lifestyle, what is perceived as important by the buyer could be rewarded with premium prices (IfM, 2015) and Lidl could adapt its position to be more in line with a differentiation strategy? 3.1.1 Political 8 As previously mentioned, although Lidl have a relatively low market share, they are currently one of the fastest growing retailers in the market. Lidl entered the market on the basis of being one of the most value-driven supermarkets in the industry (Dolgui & Proth, 2010). However, as Lidl aim to improve the quality of the products they offer and introduce strategies to improve their shopping experience such as bakeries (Foottit, 2014), healthy tills and a unique nutritional labelling system (Lidl, 2015), this may change over the years to come. However, if Lidl pursue the adoption of other strategies, they must ensure that their current consumer base is not alienated, or they could end up losing market share. A Verizon office building in Madison, New Jersey, U.S.A. in 2010. & Proth, J. M., 2010. Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). As well as operating in the UK, it has stores in the rest of Europe and Asia. From utilising the information gathered from the 7 P’s analysis, it becomes quickly apparent as to what strategy Lidl are currently pursuing. A Verizon office building in Irvington, New Jersey in 2010. Furthermore, Porter’s Generic Strategies will be analysed in order to aid in the understanding of Lidl’s current strategies. 2. Construct firm barriers of entry to deter other organisations from entering the UK grocery market and potentially encroaching on Lidl’s market share. 2016. 6. Lidl expansion to crank up pressure on big stores. The pictorial presentation of the Porter Model is given below: The company can set a competitive advantage based on cost or differentiation. Has not been able to spread their operations outside of Europe very successfully. Furthermore, Lidl should continue to open more stores in the UK in order to expand their presence and accessibility, which will allow their operations to have similar exposure to the other major supermarket retailers. It is apparent that Lidl have relied heavily on the framework of the generic strategy of cost leadership. Morschett, D., Swoboda, B. Middlesex University , BA Marketing Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com. Time | Monday | 1pm to 2pm | Vizard, S., Rogers, C., Hobbs, T., Roderick, L., Gee, R., Woollen, P., & Joy, S. (2017, February 7). Utilise the significant amount of exposure across the UK and Europe to construct barriers of entry for other low-cost grocery retailers. Has a huge amount of stores across the whole of the UK and Europe giving Lidl great exposure. 3, SWOT and PESTLE analysis. Determination of the specific market for SBU He goes on … Introduction 2 101-110. Module Code: IB8010 However, in ord… This will help Johnson controls complete their move towards a more focused company in building controls (Independent, 2016). Michael Porter has argued that a firms strengths ultimately fall into one of two headings: cost advantage and differentiation. 3.2.3 Bargaining Power of Suppliers 10 Michael Porter identified three generic strategies (cost leadership, differentiation, and focus) that can be implemented at the business unit level to create a competitive advantage. 2.1 Porter’s Generic Strategies Dolgui, A. It takes Porters generic, Positive Psychology Areas of Focus in Relation to Interpersonal and Prosocial Behavior. This has been cardinal to Lidl capturing market share, whilst producing considerable profits. PART 1 – Project Objectives and Overall Research Approach. Journal of Retailing, 83(1), pp. Competitive scope In the early 1980s, Michael Porter researched the ways that successful companies maintain long-term advantages over their competitors. Market Identification of Aldi 4 Supervisor Andreas Falkenberg Assignment Cover Sheet In order to successfully analyse Lidl marketing strategy, a 7 P’s analysis can be conducted, which seeks to analyse some very basic, but significant issues. 3.2.4 Bargaining Power of Buyers 10 Employees’ are generally paid a very attractive salary, but have to work incredibly hard whilst on the job. They are referred to as generic as they can be applied to products, services across all industries, and in organisations of a variety of sizes. Story 1 Brief Background on Aldi 3 Wide range of private labels gives them exclusivity and security. Consumers are not very involved in any of the processes or procedures of Lidl, and would have little power over their business operations. LIDL Integrated Marketing Campaign Cooperate with firms operating in the US or Asia to expand operations. Later he divided the focus strategy in t two sub categories namely Cost focus and Differentiation Focus. However, this does not imply that the University answers for the methods that are used or the conclusions that are drawn. According to Michael Porter, there are four generic strategies. Poulter, S., 2014. Number of Pages:13 3. The Lidl can apply Porter's generic strategies model to explore how competitive advantage can be created. Study for free with our range of university lectures! The information analysed using the model can be used by strategic planners for Lidl to make strategic decisions. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! Strategic development and SWOT analysis at the University of Warwick. Situational Analysis, Why did Lidl Fail in Norway? Verizon Communications, Inc., the parent company of Verizon Wireless, has a generic strategy (Porter’s model) and intensive growth strategies that emphasize quality as a competitive advantage in the telecommunications industry. The reason of how ALDI does it is supported by the generic strategic implemented by ALDI. As they offer goods at an incredibly cheap price, consumers may believe that the goods they sell are poor quality, however this is generally not the case (Siro, et al., 2008). Our History 2016. Supermarkets could increase prices to pay for living wage. Half of UK shoppers visited Lidl, Aldi over Xmas. Felsted, A., 2014. In-text: (Our History, 2016) ... In-text: (Porter's Generic Strategies, 2016) Your Bibliography: Quickmba.com. Porter’s Generic Strategies are the standard basic strategies that a Business can follow, suggested by Michael Porter. With regards to business operation, both companies follow Porter’s cost leadership strategy. 4.1.6 Legal factors 9 If the achieved selling price can at least equal (o… Furthermore, this could result in them following a combination of generic strategies, as the introducing of upper-class brands, in combination with their current business structure, would suggest a differentiation strategy is in place. Product development, marketing and consumer acceptance—A review. The TOWS Matrix — A Tool for Situational Analysis, San Francisco: Long Range Planning . 1. European Journal of Operational Research, Volume 152, pp. Porter's generic strategies describe how a company pursues competitive advantage across its chosen market scope. 2.2 Bowman’s Strategic Clock 6 CIM, 2009. A RESEARCH AND ANALYSIS PROJECT FOR THE B.Sc (HONS) IN APPLIED ACCOUNTING Although Lidl’s market share in the UK is still relatively small, with them acquiring 3.5% at the beginning of 2015, they are one of the fastest growing grocery retailers. Lidl will often exhibit their brand colours, yellow and blue, throughout their stores or surrounding areas. Why is cost leadership potentially so important? Famous author Micheal Porter in 1985, in his book Competitive Strategy: creating and sustaining superior performance, discussed three types of generic strategies which can be applied across industries. Module leader: Moustafa Battor Introduction… Michael Porter is a professor at Harward Business School. Through this research, he created Porter’s Generic Strategies. [Online] Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11736662/Supermarkets-could-increase-prices-to-pay-for-living-wage.html. Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). 2. Although developed over 20 years ago, these strategies play a very significant part in any digital marketing campaign today. These ideas were introduced in the book Competitive Strategy by Michael Porter.. [Online] Available at: http://www.birminghampost.co.uk/business/business-news/giant-lidl-distribution-hub-create-8883111, Butler, S., 2014. http://www.theguardian.com/business/2014/jun/27/lidl-launches-store-expansion-programme. 47-51. It also provides online services through its subsidiary, Tesco.com. 2. International strategy Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980).. Journal of Retailing and Consumer Services, 13(4), pp. Booms, B. H. & Bitner, M. J., 1981. B. E. M., 2007. Free resources to assist you with your university studies! Figure 1 highlights the variation in market share, and how much market share each supermarket currently holds. Online presence that showcases the products they have and any deals they may be running. This would suggest that they are utilising a cost leadership strategy, and are implemented it with incredible effectiveness (Morschett, et al., 2006). Kumar, N. & Steenkamp, J. 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). Simon, H., Gathen, A. V. D. & Daus, P. W., 2010. Which strategy will be more effective for Lidl is discussed in this part. Bowman’s Strategic clock is another useful tool to analyse the Macro-environment that surrounds Lidl. Marketing and the 7Ps, s.l. The UK is the company 's largest market operating under four banners: Extra, Superstore, Metro and Express. 5. 1. 20th Aug 2018 Originally, the 7 P’s was only comprised of 4 P’s which aimed to address certain issues that would allow a firm to have a more developed understanding of their internal operations. 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. Whilst many supermarkets are losing their market share, Lidl’s was increased by a stagger 15.1% from 3.1% to 3.5% (FT, 2015). 4.1.5 Environmental Factors 8 The Strategic position of Lidl 5 2.1 Porter’s Generic Strategies 5 2.2 Bowman’s Strategic Clock 6 3. Potential to expand in the UK and acquire a higher share of the UK grocery market. These are shown in figure 1 below. Competition intensity evaluation However, Paul Polman, Unilever’s, AN EVALUATION OF THE BUSINESS AND FINANCIAL PERFORMANCE OF WM MORRISON SUPERMARKETS PLC BETWEEN 31ST JANUARY 2005 AND 3RD FEBRUARY 2008 275-287. Upon entering a foreign market, they set up regional distribution centres (RDCs) to service a … Tesco is one of the largest food retailers in the world, operating around 2,318 stores and employing over 326,000 people. Lidl’s business strategy includes a standardized supply chain which allows it to efficiently operate its business in different countries and also provides an economies of scale. However , Tesco likewise incorporates the differentiation technique (Baroto ainsi que al., 2012), hence chasing a crossbreed strategy merging the two, whilst Lidl only follows the no-frills cost leadership approach (Geppert ain al., 2015). Aldi and Lidl to force ‘big four’ supermarkets into price war to stop stampede of customers to discount chains. 2. Expand their website to actually accept orders and sell products. Marketing strategies and organization structures for service firms. PART 2 – Information Gathering and Accounting/ Business techniques, These figures show that Tesco’s market leader position is being threatened and intensity of competitive rivalry is high. Provide more information on their website about product details in order to enforce quality. The Keys To Successful Competitive Strategy 2. 2. 3.1 PEST Analysis 7 Consumers may feel that staff do not pay them enough attention as they are very rushed doing their job responsibilities. Lidl have a plethora of stores across the UK and Europe. Kotler, P., Armstrong, G. & Saunders, J., 2008. The Generic Strategies can be used to determine the direction (strategy) of your organisation. This would suggest that they are utilising a cost leadership strategy, and are implemented it with incredible effectiveness (Morschett, et al., 2006). Tesco’s famous loyalty club card can still be named, Tesco Retail Business Analysis Table of Contents The Porter’s Five Forces model can be used to analyse the industry in which Lidl operates, in terms of attractiveness through inherent profit potential. Yes, We Can Help! All work is written to order. These three generic strategies are defined along two dimensions: strategic scope and strategic strength. Date/Year of Module: July 2012 In other words, it is a way of analysing a business, its resources and environment (Riley 2014). & Schramm-Klein, H., 2006. An introduction to Porter’s Generic Strategies Michael Porter, an economic researcher, examined the competitive behaviors that comprise successful businesses. From utilising the information gathered from the 7 P’s analysis, it becomes quickly apparent as to what strategy Lidl are currently pursuing.
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