Customer Preferences and Financial Performance of Lidl: A Case Study

This presentation sheds light on the customer’s preferences with regards to the supermarket chain in terms of price, location, convenience etc. Further, it highlights the extent to which financial performance and position of Lidl is good in comparison to the competitors. By this, the firm would become able to take significant measures for performance improvement and maximization of profitability.

PROBLEMS SOLVING AND DECISION
MARKETING

INTRODUCTION
 In the current times, business units are required to take significant decisions about operations by
evaluating market growth opportunities and competitor’s activities. Manager is assigned with
accountability to make optimum utilization of funds by doing assessment of investment opportunities.
 The present report is based on the case scenario of Lidl which is planning to launch discount
supermarket chain. However, in this regard, high level of competition takes place in UK as there are
several retailers namely Sainsbury, Morrison’s Tesco, ASDA etc are offering products or services at
discounted prices.
 In this, report will shed light on the customer’s preferences with regards to the supermarket chain in
terms of price, location, convenience etc. Further, report will also highlight the extent to which
financial performance and position of Lidl good in comparison to the competitors.
 By this, firm would become able to take significant measures for performance improvement and
maximization of profitability.

Primary data collection
 In order to assess customer’s needs, wants and preferences with regards to discounted
supermarket chain primary data will be gathered by Lidl through the means of survey via
questionnaire.
 Hence, survey will be conducted on 50 customers of Lidl to identify their preferences
pertaining to product, price, place and promotion.
 Through this, Lidl can set appropriate marketing mix and thereby would become able to
gain competitive edge over rivals.

Analysis of primary data set
Theme 2: Age Theme 3: Gender
25-35
years
26-45
years
45-55
years
56 years
and
above
0%
5%
10%
15%
20%
25%
30%
35%
% of responses
% of responses
Male Female
0%
10%
20%
30%
40%
50%
60%
70%
% of responses
% of responses

Contd..
Theme 4: Education Theme 5: Income
Diploma
Graduation
Post-graduation and diploma
No higher studies
0%
10%
20%
30%
40%
50%
60%
% of responses
% of responses
£3000-
5000
£5000-
7000
£7000-
9000
£9000
and
above
0%
5%
10%
15%
20%
25%
30%
35%
40%
% of responses
% of responses

Contd..
Theme 6: Working status Theme 7: Customers spending
Part time Full time Student
0%
10%
20%
30%
40%
50%
60%
% of responses
% of responses
£300-500 £500-700 £700-900 £900 and
above
0%
5%
10%
15%
20%
25%
30%
35%
40%
% of responses
% of responses

Contd..
Theme 8: Customers do shopping from
Lidl’s store more frequently
Theme 9: Both the modes are preferred by
the customers for shopping purpose
Often Weekly Twice in
a week
Monthly
0%
5%
10%
15%
20%
25%
30%
35%
% of responses
% of responses
Visiting of physical
store
Online mode
0%
10%
20%
30%
40%
50%
60%
% of responses
% of responses

Contd..
Theme 10: Price and quality factor comes
under priority when customers do
shopping
Theme 11: Customers agreed that location
factor influences customer’s purchasing
decision?
Price
Quality of products
Availability of brand or varieties
0%
20%
40%
60%
% of responses
% of responses
Agree
Strongly agree
Neutral
Disagree
Strongly disagree
0%
5%
10%
15%
20%
25%
30%
35%
% of responses
% of responses

Contd..
Theme 12: Discounting offers influences
shopping decisions of customer
significantly
Theme 13: Tesco and Lidl click in
customers mind first when they go for
groceries
Tesco
Lidl
Asda
Sainsbury
Morrison’s
0%
5%
10%
15%
20%
25%
30%
35%
% of responses
% of responses
Agree
Strongly agree
Neutral
Disagree
Strongly disagree
0%
10%
20%
30%
40%
50%
60%
% of responses
% of responses

Contd..
Theme 14: Lidl products or services offer
high value for money to the customers Particulars Responses % of
responses
Agree 12 24%
Strongly agree 17 34%
Neutral 13 26%
Disagree 4 8%
Strongly
disagree
4 8%
Total 50 100%
Agree
Strongly agree
Neutral
Disagree
Strongly disagree
0%
5%
10%
15%
20%
25%
30%
35%
40%
% of responses
% of responses

Collection of secondary data
 With the motive to evaluate position and performance of Lidl in against to the other leading
companies of UK retail industry data has been gathered from annual reports.
 In this context, evaluation of gross, operating and net profit margin has been done. Through this, Lidl
can assess the extent to which it is performing better over the competitors in monetary terms.
Sales revenue Gross profit margin: GP / net sales * 100
Year/
companie
s
Lidl Tesco Sainsbur
y
Morrison
’s
2017 418.6 55,917 26,224 16,317
2018 474.5 57,491 28,456 17,262
2019 63,911 29,007 17,735
Year/
companie
s
Lidl Tesco Sainsbur
y
Morrison
’s
2017 5.2% 6.2% 3.7%
2018 5.8% 6.6% 3.7%
2019 6.5% 6.9% 3.4%

Contd..
Operating profit margin: OP / net sales * 100 Net profit ratio: NP / net sales * 100
Year/
companie
s
Lidl Tesco Sainsbury Morrison’
s
2017 2.1% 2.4% 2.7%
2018 2.7% 1.8% 2.5%
2019 3.2% 1.1% 2.2%
Year/
companie
s
Lidl Tesco Sainsbury Morrison’
s
2017 -0.07% 1.37% 1.87%
2018 2.10%% 1.02% 1.80%
2019 2.07% 0.69% 1.38%
Year/
companie
s
Lidl Tesco Sainsbury Morrison’
s
2017 5.2% 27.8% 15.8% 10.4%
2018 5.5% 27.4% 15.5% 10.4%
2019 5.9% 27% 15.4% 10.1%
Market share

Analysis of secondary data
 The sales revenue for the company refers to the income received through selling the goods or
providing services to the customers. From the data collected, it can be said that the in terms of
revenue Tesco is leading in the market, followed by Sainsbury and then Morrison. Lidl is far behind
these companies. On looking at the sales revenue trend of these three companies it can be said that
the Tesco is growing at the faster rate of 14.2%, Sainsbury is growing at 10.6% and Morrison’s at
8.6% taking 2017 as the base. On analysing the revenue of these big giants in comparison to the Lidl
it can also be said that the Lidl is facing a very tough competition and is not near these organizations
in terms of revenue.
 The gross profit margin refers to the gross profit as a percentage of sales. It measures the
performance of the company’s sales and production. The gross profit margin of Tesco has shown an
increasing trend as it has increased from 5.2% in 2017 to 6.5% in 2018. Even the gross margin of
Sainsbury has increased from 6.2% to 6.9% in 2019 but at a slow pace and Morrison has shown a
decline in its gross profit margin as it has reduced to 3.4% in 2019. The increasing ratio indicates that
the organizations are moving towards getter growth and also indicates that the cost of production is
less in comparison to the revenue which has led to the higher gross profit. Tesco and Sainsbury both
are growing at the higher rate which shows their higher performance levels. While Morrisons is
shown a drop in ratio which may be because of increase on cost of sales.

Conclusion and recommendations
 By summing up this report, it can be concluded that customers lay high level of emphasis on
discounts and quality of products.
 It can be inferred from survey evaluation that Lidl customers are giving more preference to their
convenience, wide variety and discounted offerings.
 Thus, business unit should keep in mind all such aspects while developing strategic and policy
framework. Hence, Lidl is advised to include more varieties and brand within store.
 This in turn helps in attracting both existing as well as potential customer base and thereby
contributes in organizational growth.
 Along with this, it has been articulated that financial position of Tesco is good over the rival firms.
Moreover, in terms of discounted offering, Tesco secured leading position and thereby enhanced
customer base to a great extent.
 Thus, for increasing customer base and maximizing both productivity as well as profitability Lidl
should focus on developing competent discounting strategy.
 Further, for increasing sales company should focus on activities pertaining to sales promotion. In
addition to this, by exerting control on expenses Lidl can improve profits and meanwhile improves
financial position.

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