Comprehensive Marketing Report: Lidl's UK Grocery Retail Strategy

This report provides a comprehensive marketing analysis of Lidl within the UK grocery retail market. It begins with an executive summary and then delves into market research, employing primary and secondary methods to understand consumer preferences. The report utilizes various analytical tools, including SWOT and PESTLE analyses, to evaluate Lidl's strengths, weaknesses, opportunities, and threats, as well as the external macro-environmental factors impacting its operations. Furthermore, it applies Ansoff's Growth Matrix to develop strategic marketing alternatives and employs the Boston Consulting Group (BCG) matrix to assess the strategic position of Lidl's brand portfolio. The report also covers market segmentation and discusses the marketing mix model to develop a robust marketing plan for Lidl, concluding with recommendations for future strategies in the competitive UK grocery sector. The report aims to deepen the understanding of marketing concepts and provides insights into the current situation of the grocery retail sector in the United Kingdom, focusing on how Lidl can increase its customer base.

INTRODUCTION TO
MARKETING

EXECUTIVE SUMMARY
The present report consists of detail information about the market situation of grocery
retail market. The various research methods as well as assessments tools have been used for
gathering the data about business environment. Little research as well as analytical tools which
has been used in present study are Pestle as well as swot analysis etc. In addition to these
competitors' matrix has been used for getting the detail of competitiveness in the industry. The
Boston consultancy matrix has been utilized in present assignment which has supported in
development of the marketing plan for LIDL organization.

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
1. Market Research of UK's Grocery Retail Market...................................................................4
TASK 2..........................................................................................................................................12
3. Market Segmentation............................................................................................................12
TASK 3 .........................................................................................................................................15
3. Marketing Mix model...........................................................................................................15
CONCLUSION AND RECOMMENDATIONS..........................................................................18
REFERENCES..............................................................................................................................20

Illustration Index
Illustration 1: Ansoff's Growth Matrix............................................................................................8
Illustration 2: BGC Matrix.............................................................................................................10
Illustration 3: Demographic breakdown of retail segment............................................................13

INTRODUCTION
Marketing is defined as the set of activities executed with the purpose of accomplishing
financial objectives. It is also considered to be as philosophy which states that an organisation
should concentrate on identifying as well as fulfilling the customer needs. Marketing procedure
includes various activities such as planning, communicating, delivering information about the
goods or services offered by an enterprise. The promotional or marketing procedure have focus
on identifying the customer needs. It emphasizes on delivering high value to customers and
influencing them to buy goods or services offered by company Marketing process includes
gathering the information about an industry. Market research is considered to be as an effective
tool which assist business entity in getting update itself about customers needs and changes in
trends.
The grocery retail in United Kingdom is very big and is considered to be as highly
competitive. It covers the wide market share that is approx. seventy percent of total market.
Grocery market in United kingdom is recognised as most sophisticated globally. It is among the
leading supermarket chain in the world. There has been tremendous growth in grocery retail
market in last few years. Few examples which demonstrate the development in grocery retail
sector are increase in number of retail outlet, online grocery retailing, discounters etc. Grocery
retail sector in United kingdom.
The purpose of report is to develop the understanding about marketing concept. It also
has focus on identifying the current situation of grocery retail sector in united kingdom. Study
also emphasizes on determining which segment “Lidl” Company should serve in order to
increase its customer base.
TASK 1
1. Market Research of UK's Grocery Retail Market
It is a process which is used by the organization to gather information related to their
services and products which is being available to their customers in the target industry. For Lidl
company it is very important to evaluate the preferences and needs of the consumers so that they
can deliver their service according to that. Marketing research can be done by two ways, i.e.
1. Primary Method : In this method, organization gathers information by himself only
using various process, such as, through observation, by conducting surveys, by focus
groups analysis, by taking one-on-one interviews, etc. All these process gives them the

detailed information related to their existing products and services in the market and
ways to improve it (Sarstedt and Mooi, 2014).
2. Secondary Method : In this method, Lidl uses the research data which was done in the
past by some other organization and apply into the organization to analyze the final
outcome. It can be achieved by trade journals specific to the industry, from different
websites, etc.
Market analysis for any organization helps to understand the overall functions of the
company and its current position in the market by analyzing various factors (McQuarrie, 2015).
There are so many methods to perform market analysis, such as,
 SWOT Analysis : This method is very useful to analyze the overall strength ad weakness
of the organization. It also helps to evaluate the opportunities and threats which is
available in the industry. This analysis is useful to understand the internal factors which
can affect them. There are four factors in this analysis, i.e.
1. Strength : The most important strength of Lidl company is their wide range of products
and services they provide to their customers. The pricing policies of this organization is
also very cheap which makes customers to buy more and more products from their shops.
Lidl grocery company has huge amount of stores which is distributed across UK which
helps their customers to easily access them. They have effective operational strategies
(Rothschild, 2014).
2. Weakness : The greatest weakness of Lidl grocery company is that they not enough
capable of competing with their rivals, for example, Tesco or Asda. They are not able to
spread their business outside UK which can gain them so much popularity in this
industry. They are providing their products at very cheap price this can make think their
customers that they are not selling good products to them.
3. Opportunities : There is a huge opportunity for Lidl company to grow in the target
industry and expand their business in UK and can increase their shares in UK grocery
market. They can make their website more informative and attractive for their customers
to shop from. This will help them to increase the customer rate (Bull and et.al., 2016).
4. Threats : To compete with their competitors, it is very important to over come from
every threat they face. Expansion of international market can give them a great threat to
stay in the market. They have to deliver their services which can give competition to their

competitors which are already doing good in the market, such as, Tesco, Asda, Sainburry,
etc. Aldi is surpassing their market share and becomes the top dominant discount grocery
retailer in UK which can be a huge threat to Lidl. To overcome this, they have to come up
with new and effective strategies (SWOT analysis of Lidl, 2018).
 PESTLE Analysis : This method is used to evaluate different factors which can affects
the functionality of Lidl company in so many ways. These are used to understand the
external macro environmental factors (Dcosta and McDonough, 20150. These factors are
explained below,
Political Factor
 The most important political factors which affect the Lidl
company is governmental rules and regulation related to the
national minimum wage and taxation system in UK.
 Another factors which can affect Lidl is the high cost of
living which affects the organization as it is very hard for
people to live with the recession and the credit crunch.
Economic Factors
There are various economic factors which can affect the functioning
of Lidl company in various ways, such as,
 Inflation in te grocery market has reached up to 2.9%, this
will be in favor for Aldi as their customers will find cheaper
products.
Social Factors
In these factors, they have to study their customers social behavior
towards their products and services which can help them deliver the
best service in the market (PESTEL Analysis of Aldi, 2017).
 In current market situation, Lidl is the highest paying
supermarket operating in UK.
 They are planning to provide their services according to
their customers needs and preferences.
Technological Factors In this factor, the company has to update their system according to
the latest technologies which is currently trending in the market.
 They can provide electronic billing station for their
customers which can save a lot of time at the billing station.

 They can introduce an online application to shop for their
customers.
Legal Factors There are so many legal factors which affects the Lidl company.
They have to follow all the legal rules and regulation which are
mandatory for them to apply in their management system to work
properly.
Environmental Factors There are so many environmental factors which has to follow by
Lidl company to become an eco-friendly company.
 Aldi is purchasing their products from the local British
producers and farmers which helps them to give support and
ensure the sustainability of the local areas that they operate
in.
 Ansoff's Growth Matrix : The Ansoff's Growth Matrix is a process which is used to
develop a strategic planning tool that can provides a framework to help the organization
in executions of their services and products in the target industry for future growth in
market. The Ansoff's Growth Matrix has four alternatives of marketing strategies, for
example, market penetration, product development, market development and
diversification, which is explained below,
1. Market Penetration : This strategy is applied into the organization keeping the focus on
increasing their sales of existing products of the organisation’s in the existing market.
This can be achieved by implementing changes in their products and services which can
enhance their chances to increase their productivity. This can also be done by giving
various discounts and offers to their clients to attract them (REZAEI, KHAVARIAN, and
GHAFURZADEH, 2016).
2. Product Development : In this method, Lidl company focuses on to introduce new
products in the existing market. It can be done by modifying the previous product to get a
new and improved products. For example, Lidl company can bring some innovation in
their grocery items which can attract customer to buy their products.

3. Market Development : In this strategy, organization focuses on reaching new markets
with their existing products in the production house. It will help them build a strong
image in the market. It can also help them increase their new customers. For example,
Lidl can expand their stores in different location to reach maximum number of customers.
4. Diversification : This strategy will focus on their new markets with the introduction of
new products. It helps them to experiments with their products and services.
Diversification can be done in two ways, i.e., related or unrelated diversification (Dawes,
2018).
1. Related Diversification: In this method, company operates within a market which they are
familiar with. This will decrease the chance of risk for them.
2. Unrelated Diversification: In this method, company moves into an entirely a new
market for which they have no experience. This is considered a high risk strategy to
implement.
Illustration 1: Ansoff's Growth Matrix
Source :

 The Boston Consultancy Growth Matrix : It is also known as BCG matrix or growth-
share matrix. It is a type of corporate planning tool which is used by the company to
evaluate the strategic position of the business brand portfolio and its potential. Growth-
share matrix is a business tool, which uses relative market share and industry growth rate
factors to evaluate the potential of business brand portfolio and suggest further
investment strategies to the company. There are two dimensions which is used in this
matrix which includes four factors in it (Torquati and et.al., 2018).
1. Relative market share : In this dimensions, company use this to evaluate their business
market share in the industry.
2. Market growth rate : In this method, it concludes that high market growth rate of the
company means that they higher earnings and sometimes profits but it also consumes lots
of cash, which is used as investment to stimulate further growth in the market.
There are 4 factors in this Matrix, such as,
Dogs Cash cows
Dogs have low market share and a low growth
rate and thus it can neither generate nor
consume a large amount of cash for the
company.
Cash cows exhibit a return on assets which is
usually greater than their market growth rate,
this helps to generate more cash than they
consume.
Stars Question marks
Stars generate large amounts of cash for the
company as they have strong relative market
share in the industry. They also consume large
amounts of cash because of their high growth
rate, therefore the cash in each direction
approximately nets out (What Is a BCG
Matrix?, 2017).
Question marks are growing rapidly and thus
consume large amounts of cash, but they have
low market shares, they do not generate much
cash for the company. This results in a large
net cash consumption for Lidl.
For Lidl company it is beneficiary to invest in the star products of the company because it
has high market share as well as high market growth which can help them get great opportunities
from the market.

 Competitor Matrix : This method is used to analyze or evaluate the overall
performances of their competitors which are doing great in the target industry, such as,
TESCO, Sainsbury’s, and Morrison. It is used to critically profile and compare your
company against your known competitors which can help Lidl to improve their services.
It is an analytical tool that helps you establish your company’s competitive advantage in
an easy to use and read format. It helps to analyze the current position of the company
what are the areas in which they need to work on.
Parameter Lidl TESCO Sainburry's Morrison
Illustration 2: BGC Matrix
Source : (Strategic Portfolio Planning Approaches, 2017)

Low Pricing 5 6 4 4
Product Quality 7 7 6 7
Unique Features Yes Yes - -
Operation
Management
No Yes Yes No
Services Good Great Average Good
From the above table, it is clear that Lidl's most effective competitor is TESCO, which
give them a tough competition to stay in top position in market. For this, they have to improve
service function to help customers use your products more effectively. They need develop new
ways to easily customize your products to meet the differing needs of customers.
TASK 2
3. Market Segmentation
Market segmentation is considered as one of the effective approach in which companies
divide consumers into groups on the bases of their characteristics. Segmentation assists
marketers in identifying needs and requirements of specific type of clients. By this way they
become able to design products and services as per the desire of target audience. It aids
companies in creating custom marketing mix for each segment of people (Retail marketing
segmentation, 2017). It is essential for Lidi that to determine appropriate segment that can
support the firm in sustaining in UK for longer duration. Market segmentation is most effective
tool because this helps in raising profit of business. This makes it easy for marketer to make
communication with target audience. By this way right people can get information about goods
and services of business unit at right time. Aldi and Lidi are biggest competitor of each other,
both they are able to generate good revenues in the market. Lidi is planning to give competition
to Tesco and other grocery hypermarkets in UK (Alt and Iversen, 2017). For that it is very
important for the firm that to segment its consumers properly and identify their needs and
requirements. This can support business in gaining competitive advantage and sustaining in the
market for longer duration. There are various kinds of market segmentation strategies that can be
used by Lidi in order to accomplish its objectives. These are described as below:
 Socio- demographic