Finally a conclusion is drawn with suggestion for the strategic managers of Lidl. Haakon Winger Eide  University of Agder, 2010  Faculty of Economics and Social Sciences, MARKETING ASSIGNMENT With regards to business operation, both companies follow Porter’s cost leadership strategy. “This is to certify that the work I am submitting is my own. The majority of Lidl stores are laid out in a very linear and traditional manner. The Amazon pricing strategy crushes the competition due to the number of adjustments and speed in a single day. Lusch, R. F., Vargo, S. L. & O’Brien, M., 2007. Extend the usability of their website to accept click & collect orders or even delivery. Porter's Generic Strategies Michael Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage. The pictorial presentation of the Porter Model is given below: The company can set a competitive advantage based on cost or differentiation. : The Real Cost of Living in a Low Price, Low Wage World. 1. Provide more information on their website about product details in order to enforce quality. High training standards to ensure employees can scan items fast enough and meet all customer needs. In this model, five forces have been identified which play an important part in shaping the market and industry. Very solid brand name from being one of the cheapest supermarket retailers in the industry. | Mihaela Palca | M00378081 | 1. Porter’s Generic Strategies are the standard basic strategies that a Business can follow, suggested by Michael Porter. 3.1.2 Economic 8 4.1.6 Legal factors 9 A Stakeholder Approach  A Verizon office building in Irvington, New Jersey in 2010. 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? This will help consumers know there is a Lidl nearby. 2. Pricing strategies and models. From utilising the information gathered from the 7 P’s analysis, it becomes quickly apparent as to what strategy Lidl are currently pursuing. Does not quite have the market share of the other big supermarkets in the UK, such as Tesco or Asda. Porter’s Generic Strategies. Private Label Strategy: How to Meet the Store Brand Challenge. Furthermore, Porter’s Generic Strategies will be analysed in order to aid in the understanding of Lidl’s current strategies. 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. Weihrich, H., 1982. 4.1.4 Technology factors 8 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. 2. 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. Cooperate with firms operating in the US or Asia to expand operations. Although the amount of stores that Lidl have in operation is staggering, it is made even more amazing by the fact they only expanded out of Germany 20 years ago (Lidl, 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). An analysis of Lidl’s current marketing strategy will be conducted, with particular emphasis on the 7 P’s of marketing. Poulter, S., 2014. This will then be concluded with a SWOT analysis, with recommendations being drawn up via the utilisation of a TOWS matrix. 3.1.1 Political 8 3.2.4 Bargaining Power of Buyers 10 4. [Online] Available at: http://www.ft.com/fastft/260632/half-of-uk-shoppers-visited-lidl-aldi-over-xmas. Cheap? Porter (1985) presented this strategy as one where a competitive advantage is engineered by minimising costs and lowering prices. Which strategy will be more effective for Lidl is discussed in this part. If the achieved selling price can at least equal (o… Determination of the specific market for SBU Lidl’s history begins in the 1930s, when their first store was created in Germany acting as a grocery wholesaler. London: Kogan Page Limited. Hanoi, November 11st, 2012 Registered Data Controller No: Z1821391. Porter, M. E., 1980. 3. 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. Berlin: Springer Berlin Heidelberg, pp. | Maedh Marsha Zambrano | M00384704 | 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) 2.1 Porter’s Generic Strategies This module was set out by M E Porter in 1985 and is known as Porters generis strategies (Mindtools, 2015). According to Michael Porter, there are four generic strategies. Primary process of Lidl is to purchase and sell as many goods as possible on a low-cost basis. Simon, H., Gathen, A. V. D. & Daus, P. W., 2010. Aldi, which opened its first US store in Iowa in 1976, has stuck with the model, insisting the deposit system is key to its low-price strategy. However, this does not imply that the University answers    for the methods that are used or the conclusions that are drawn. s.l. Lidl, 2015. 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. Competitive Strategy. Number of Pages:13 In-text: (Our History, 2016) ... In-text: (Porter's Generic Strategies, 2016) Your Bibliography: Quickmba.com. 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. 2. 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 presence that showcases the products they have and any deals they may be running. Michael Porter uses 4 strategies that an organisation can choose from. Wal-Mart competitive position and market potential evaluation. Study for free with our range of university lectures! 1. 3. Also, on top of the main competitors, Aldi and Lidl have taken over the grocery market in times of recession. Felsted, A., 2014. 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. 5th ed. 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. 1. International expansion of other global brands would cause more competition. 3.2.2 Threat of Substitutes 10 Employees’ are generally paid a very attractive salary, but have to work incredibly hard whilst on the job. 2.1 Porter’s Generic Strategies 5 In 2013, Amazon had changed prices on about 40 million products in just one day. 5.2 SWOT Table 12 Competing through service: Insights from service-dominant logic. Vizard, S., Rogers, C., Hobbs, T., Roderick, L., Gee, R., Woollen, P., & Joy, S. (2017, February 7). As their products are so cheap consumers can often think that the quality is not good enough. Lidl expansion to crank up pressure on big stores. If Lidl were to engage with a price war with other major grocery retailers then they could force competitor’s prices down. Product (Quality, brand name, service line, warranty, capabilities, facilitating goods, tangible clues, price, personnel, physical environment and process of service delivery): Price (Level, discounts and allowances, payment terms, customers own perceived value, quality/price interaction and differentiation): Place (Location, accessibility, distribution channels and distribution coverage): Promotion (Advertisements, personal selling, sales promotion, publicity, personnel, physical environment, facilitating goods, tangible clues and process of service delivery): People (Personnel training, discretion, commitment, incentives, appearance, interpersonal behaviour, attitudes and customer behaviour/degree of involvement): Process (Policies, procedures, mechanisation, employee discretion, customer involvement, customer direction and flow of activities): Physical (Environment, furnishings, colour, layout, noise level, facilitating goods and tangible clues): Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). 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. Retail Pricing – Higher Profits Through Improved Pricing Processes. 6. Lidl’s projection of sales for 2018 is $1,041 Million, Lidl’s future sales growth prediction is 1,929 Million in 2019, $2,753 Million for 2020. I. He goes on … Principles of Marketing. Supermarkets could increase prices to pay for living wage. III. 2. Brown, G., 2015. The Strategic position of Lidl 5 Introduction of new product ranges that cater to an upper-class demographic. Lidl have a plethora of stores across the UK and Europe. Lidl will often exhibit their brand colours, yellow and blue, throughout their stores or surrounding areas. 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 These three generic strategies are defined along two dimensions: strategic scope and strategic strength.   [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. Lidl have adopted a cost leadership strategy by selling high volumes at low margins and their scope is broad. PART 1 – Project Objectives and Overall Research Approach. 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) Porter’s Generic Strategies Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980). The three recommendations are; In order to stay competitive in the UK grocery industry, and continue to build upon their UK market share, Lidl should utilise the aforementioned strategies. 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 It serves as a useful tool for companies, thereby aiding their evaluations, giving them clarity in direction as well as the ability to strategies with others to make well-informed choices and decisions. Cost Leadership Strategy: To defeat its competitors in a market a firm may provide a low-cost product with minimum acceptable attributes. Customer orientated expansion. The 4Ps are comprised of; product, price, place and promotion (CIM, 2009). 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). A RESEARCH AND ANALYSIS PROJECT FOR THE B.Sc (HONS) IN APPLIED ACCOUNTING 5.2 Weaknesses 11 This would suggest that they are utilising a cost leadership strategy, and are implemented it with incredible effectiveness (Morschett, et al., 2006). Word Count:1688 WAL-MART DEVELOPMENT RECOMMENDATIONS 3. Product development, marketing and consumer acceptance—A review. Table of Contents 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. Marketing strategies and organization structures for service firms. 3. Porter’s generic strategy is given after VRIO analysis Market expansion Strategies are given with the possible opportunities and threats for Lidl. Strategic Business Units (SBUs) identification Consumers may feel that staff do not pay them enough attention as they are very rushed doing their job responsibilities. [Online] Available at: http://property.lidl.co.uk/cps/rde/xchg/lidl_uk/hs.xsl/5187.htm, Lidl, 2015. http://www.lidl.co.uk/en/659.htm. The Strategic position of Lidl 5 2.1 Porter’s Generic Strategies 5 2.2 Bowman’s Strategic Clock 6 3. B. E. M., 2007. Lidl have a reliant focus on selling quality products at the cheapest cost possible. In the Michael Porter’s Generic strategies, three main strategies are used as the base namely, Cost leadership, Differentiation leadership and Focus. 456-467. The information analysed using the model can be used by strategic planners for Lidl to make strategic decisions. This module was set out by M E Porter in 1985 and is known as Porters generis strategies (Mindtools, 2015). 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). Time selection for this SBU's market. If you need assistance with writing your essay, our professional essay writing service is here to help! 4.1.3 Social and cultural factors 7 Get help with your Porter's generic strategies homework. 2.2 Bowman’s Strategic Clock SWOT Analysis 10 From utilising the information gathered from the 7 P’s analysis, it becomes quickly apparent as to what strategy Lidl are currently pursuing. Aldi surpassing their market share and becoming the dominant discount grocery retailer.       Project objectives and research questions 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). One of the key competitive advantages for Lidl is their clever pricing strategies. One of the most efficient ways to analyse these factors is to conduct a marketing strategy analysis, which looks to explore the strategies an organisation utilises in order to grow and expand their market share. Dyson, R. G., 2004. Submission Deadline: 11:00 AM 6th December, 2012. Since then, Lidl has now become one of the largest grocery retailers in Europe, with over 600 stores operating in the UK, and thousands based across Europe (Butler, 2014). Identification and evaluation of the Strategies, Introduction Strategic development and SWOT analysis at the University of Warwick. 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). In the early 1980s, he set out to uncover the ways companies maintain long-term advantages over their competitors. Porter’s generic competitive strategies are useful tools that will likely assist with the management, growth and profitability of your business to create sustainable competitive advantage. Environmental Analysis 5 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. Bowman’s Strategic clock is another useful tool to analyse the Macro-environment that surrounds Lidl. Students | Name | Student Number | 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). Annual Reviews in Control, 34(1), pp. The SWOT acronym stands, Strategic Analysis of ALDI In: Retailing in the 21st Century. & Lugasi, A., 2008. It takes Porters generic, Positive Psychology Areas of Focus in Relation to Interpersonal and Prosocial Behavior. *You can also browse our support articles here >, http://www.birminghampost.co.uk/business/business-news/giant-lidl-distribution-hub-create-8883111, http://www.theguardian.com/business/2014/jun/27/lidl-launches-store-expansion-programme, http://www.ft.com/cms/s/0/2465c426-fd53-11e3-bc93-00144feab7de.html#axzz3giD80B9c, http://www.ft.com/fastft/260632/half-of-uk-shoppers-visited-lidl-aldi-over-xmas, http://property.lidl.co.uk/cps/rde/xchg/lidl_uk/hs.xsl/5187.htm, http://www.dailymail.co.uk/news/article-2539064/Aldi-Lidl-force-big-four-supermarkets-price-war-stop-stampede-customers-discount-chains.html, http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/11736662/Supermarkets-could-increase-prices-to-pay-for-living-wage.html.       Morschett, D., Swoboda, B. Reference this. Competition intensity evaluation We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. 4.2 Key Trends affecting the industry 9 Porter outlines four generic strategies; differentiation, cost leadership, differentiation focus and cost focus (Porter, 1980).. Journal of Retailing and Consumer Services, 13(4), pp. Chicago: American Marketing Association, pp. Assignment Cover Sheet 3. 2. Half of UK shoppers visited Lidl, Aldi over Xmas. STEP 6: Porter’s Five Forces/ Strategic Analysis Of The analysis Of Lidl Case Study: To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. Based on the 7 P’s analysis, a SWOT analysis can be conducted in regards to Lidl. However, depending on the country, they operate in different segments of the supermarket industry, ranging from value to high-end goods (Butler, 2014). 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. Avoid engaging in price wars and competitive with major grocery retailers on a direct basis. I will analyze the benefits and risks of such a merger on the companies involved as well as their employees. Submission Date: 26 January 2014 1. Porter S Generic Strategies. Through this research, he created Porter’s Generic Strategies. Contents :Free Press. Michel Porter identified three generic strategies: • Cost leadership. The Generic Strategies can be used to determine the direction (strategy) of your organisation. Has a huge amount of stores across the whole of the UK and Europe giving Lidl great exposure. : Chartered Institute of Marketing. | Sara-Sofia Broberg | M00373321 | However, in ord… Analysis of the competition faced by Lidl within the UK food retail industry 4 This has been cardinal to Lidl capturing market share, whilst producing considerable profits. 5.1 Strengths 10 3.2.5 Competitive Rivalry within the Industry 10 These products generate over 80% of sales.               4.1.2 Economical factors 6 However, due to the limited applicability of the 4 P’s, three more were added to form the 7P’s, which aims to encompass some service qualities the 4 P’s do not cover (Booms & Bitner, 1981; Lusch, et al., 2007). Utilise extensive network in of operations in other European countries to bring new products to the UK. 5. Utilise the significant amount of exposure across the UK and Europe to construct barriers of entry for other low-cost grocery retailers. WAL-MART OUTLINE Business Many (perhaps all) market segments in the industry are supplied with the emphasis placed on minimising costs. These are shown in figure 1 below. An analysis of the external business environment and how it affects Lidl 7 Has not been able to spread their operations outside of Europe very successfully. Company Registration No: 4964706. Dolgui, A. The TOWS Matrix — A Tool for Situational Analysis, San Francisco: Long Range Planning . Free resources to assist you with your university studies! Giant Lidl distribution hub to create 500 West Midlands jobs. The SWOT analysis will help an organisation measure and understand the internal strengths and weaknesses, and the external opportunities and threats facing the firm. Lidl do not current have any loyalty schemes present in the UK, as they believe their pricing model is enough to incentivise consumers. Question: [Question Number and Title, or Description of Project] This will help Johnson controls complete their move towards a more focused company in building controls (Independent, 2016). CONTENTS PAGE This bibliography was generated on Cite This For Me on Monday, May 23, 2016. 275-287. Harvard professor and world famous business strategist Michael Porter has a simple view to business and how you can generate superior returns from your business – the generic strategies – but you can get stuck in the middle, not one thing or the other.. The first force is Threat of new entrants. COMPETITIVE POSITION AND MARKET POTENTIAL ANALYSIS 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. Strong business structure allows them to sell their products at an incredibly cheap price. Their main competition as a value supermarket is Aldi (Bosshart, 2006). The bargaining power of buyers in the grocery industry is fairly high. Lidl entered the market on the basis of being one of the most value-driven supermarkets in the industry (Dolgui & Proth, 2010). Submitted by: 1168212 :Prentice Hall. [Online] Available at: http://www.ft.com/cms/s/0/2465c426-fd53-11e3-bc93-00144feab7de.html#axzz3giD80B9c, FT, 2015. 3.1.3 Social 8 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! 4. He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus." By the end of that year the number had doubled to 80 million price changes during a single day. 1. Looking for a flexible role? s.l. 5.1 Cost based competitive advantage 2.1 Porter’s Generic Strategies 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). Do you have a 2:1 degree or higher? 1. 3.2.3 Bargaining Power of Suppliers 10 MKT2232 Branding and Integrated Marketing Communications 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. Seminar tutor | Dinesh Nanayakkara | porter's generic strategies lidl. Bosshart, D., 2006. 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. It is apparent that Lidl have relied heavily on the framework of the generic strategy of cost leadership. Date/Year of Module: July 2012 Successfully expanding abroad can provide more funds to invest in the UK. Copyright © 2003 - 2021 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. 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. Johnson controls is thinking of a tax inversion merger with Tyco international to reduce their tax burden. 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. LIDL Integrated Marketing Campaign 4.1 PESTEL Analysis 6 This rapid expansion has made them one of the most dominant and feared competitors in the UK grocery market, with major grocery retailers constantly trying to minimise Lidl’s portion of market share. 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. 2009 ) your Porter porter's generic strategies lidl generic strategies ; differentiation, cost leadership strategy: to defeat its in... Job responsibilities, 2014. http: //www.lidl.co.uk/en/659.htm, may 23, 2016 free with our range of private can... The quality is not good enough sources are clearly acknowledged and, the individual components of SWOT PESTLE. Makes the company 's largest market operating under four banners: Extra, Superstore, Metro and.. Two parts: `` cost focus and cost focus ( Porter, 1980.... In this part strengths and defend against the adverse effects of the competition faced by Lidl within UK. 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