Marketing Report: Analysis of Lidl in the UK Grocery Market

This report provides an in-depth analysis of Lidl's marketing strategies and its competitive position within the UK grocery market. The report begins with an executive summary outlining the key findings, followed by an introduction to the UK grocery retail market, highlighting its growth and key players. The main body of the report includes a detailed analysis of Lidl, examining its strengths, weaknesses, opportunities, and threats (SWOT analysis) and the political, economic, social, technological, environmental, and legal factors (PESTEL analysis) impacting its operations. The report also utilizes the Boston Consulting Group (BCG) matrix and Ansoff matrix to assess Lidl's market share, growth potential, and strategic planning. The analysis includes market segmentation and the application of the 7Ps marketing mix model, offering recommendations for Lidl to enhance its market performance and competitiveness. The report concludes with a summary of the key insights and references used throughout the analysis.

Introduction to Marketing

EXECUTIVE SUMMARY
In respect to carry the present report, it has been analysis that marketing activities
develop products and services to retail business. In this way, competitors market analysis that
assists to make sure that effectiveness in the business develop in systematic manner at
workplace. Furthermore, current market analysis activities included that helps to promote in
different areas of the world. In order to give recommendations, it has been seen that retail
business need to add innovative and unique features that make systematic work performance at
workplace. Apart from this, all employees requires training and development program through
creativity could be understand and deal with several employees as well.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2..........................................................................................................................................10
Market segmentation.................................................................................................................10
TASK 3..........................................................................................................................................13
Knowledge and information to the 7Ps marketing mix model.................................................13
Recommendations.....................................................................................................................16
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

INTRODUCTION
The study of management for effective exchange of goods and services is termed as
marketing. It is the basic requirement of every business organisation to associate with more
customers. Their needs have to be satisfied for the growth of business. For this, it is essential to
understand the socio-demographical and psychological aspects of regional people. Pricing
strategy and quality parameters are effective enough to beat the competitors. Current position of
the UK grocery retail market has been elaborated in this report while focussing mainly on
German supermarket company “Lidl”.
MAIN BODY
Task 1
Grocery supermarkets offer all kinds of food services to the customers. UK grocery retail
market is expanding at alarming rate because of the rising trends in the consumer price
sensitivity and the entry of other competitors (McDonald and Wilson, 2016). This market is
serving the UK's 27 million households with safe, affordable and the quality food. It is a major
contributor in the UK economy with a sales worth of £179.1bn as estimated in year 2016. The
value of food and drink exports from the UK was £18.4bn out of the total UK export market of
£304.4bn as per the evaluation done in year 2016.
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The above graph depicts the figures of market growth as per the analysis of Kantar World
panel. It can be revealed that there is a growth of 3.7% in the overall grocery market with an
additional sales of £1 billion. Today, the consumers are ready to buy an Easter egg with an
average price rise of 8.6% because of the quality provided by the suppliers. A downfall of 0.2 %
is there in the total market share of Morrisons though company is trying to become popular
among its customers. Sales of Asda has been increased because of the millions of additional
shoppers and robust online channel to serve the customers. Overall market share has been fell
down by 0.4% because of the other competitors. There is 1.7% rise in the sales of the Sainsbury
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Illustration 1: GREAT BRITAIN GROCERY SHARE DATA
Sources: Kantar worldpanel, 2017

because of the establishment of local store, large supermarket chains and the online channel for
the service. Own label sales of Tesco are increased by 6% because of its cheaper, standardized
and the premium products. Share of Ocado has also been doubled with a contribution of 1.3% in
the overall supermarket sales. The sales of Iceland, Aldi and Lidl has also increased by 9.3%,
18.3% and 17.8% respectively. High market share of 6.9% and 5.0% are also among the
achievements of company Aldi and Lidl. From this, it can be concluded that there are
opportunities in front of these companies to stand out in the target market.
Lidl is one of the global discount super chain markets based in Germany. This company
has an approach of zero waste and no frills to pass the advantage of same to consumers. Staff is
also managed and trained to give effective services to the customers. Its cheapest price is one of
the factors to attract more number of customers. It has a vast infrastructure to serve number of
product ranges to the customers (Khang and et.al., 2016). It has earned a revenue of around £4.7
billion from its 630 stores across Britain as estimated in the year 2015. Though company has
tried to manage all these factors, still, there are many factors to be accomplished to beat its major
competitors like Tesco, Sainsbury and Morrisons.
Tesco is also a British multinational grocery company which has around 6553 stores
across various nations. It has earned a revenue of around £55,917 million as estimated in the year
2017. In order to associate with more number of people, various subsidiaries are also by
company, namely, Tesco Bank, Tesco Mobile, etc. This is one of the reasons behind its high
grocery share data of 27.5% as compared to Lidl which has only 5% of contribution in the
grocery share of Britain as analysed in year 2017. Effective online services provided by company
is one of the factor to grab the attention of the customers.
Sainsbury is again one of the renowned super chain markets of UK with 1415 stores
across various nations. It has earned a revenue of around £26.224 billion as estimated in the year
2017. It also has various subsidiaries to set a brand image in front of the customers. For example:
Argos, Habitat, etc. Because of the self-service facility provided by company, it has high grocery
share data of 16.1% as compared to Lidl which has only 5% of contribution in the grocery share
of Britain as analysed in year 2017.
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Morrisons is again among the largest chains of supermarkets in UK. Till now, it has 498
stores only, but because of the quality and the price offered by the company, it is giving
competition to Lidl. This is the reason behind its high grocery share data of 10.1% as compared
to Lidl which has only 5% of contribution in the grocery share of Britain as analysed in year
2017. It has earned a revenue of around £16,317 million as estimated in year 2017. We can say
that Lidl has many competitors. Actions must have to be taken by the managers to beat all these
competitors. Strategies should be made only after analysing the prevailing market conditions.
The above graph shows the percentage growth of total grocery market in the London
from November 2010 to November 2017. The figures of the year 2016 and 2017 revealed that
there is a growth of 3.8% in the grocery market within a year.
The below graph shows the market value (in billion GPB) of the grocery retail in the
United Kingdom from year 2007 to 2017. A continuous rise can be seen from this.
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Illustration 2: PERCENTAGE GROWTH OF LONDON GROCERY MARKET
Sources: (Statistics of grocery retail market, 2017)

Lidl is a global discount supermarket chain with around 10,000 stores across Europe and
USA. It provided employment to about 3, 15,000 people. High quality fresh food and other
edibles products are offered by company. To beat other competitors, it provides the cheapest
online services to customers along with vast range of products like pastries, biscuits, etc. To have
an effective marketing of the products, all factors influencing company must be understood
properly. For this, various analysis have to be carried out.
SWOT analysis of Lidl
It will help to understand the strengths, weaknesses, opportunities and threats of
organisation to make strategies as per the requirement. Strengths: It has a robust business structure which helps company to serve affordable
products to customers which are even cheaper than products served by other competitors.
Private labels help them to maintain exclusive range along with security. It has a large
number of stores across UK and Europe. Effective online services help to associate the
company with a large number of customers.
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Illustration 3: MARKET VALUE OF GROCERY RETAIL MARKET IN UK
Sources: (Statistics of grocery market share, 2018)

 Weaknesses: It does not have a market share of other big supermarket chains like Tesco
to attract more number of customers. It is also not successful to serve in the regions other
than UK and Europe. Dilemmas related to the quality parameters are quite often among
the customers because of the cheaper rates (Kotler, 2015). Opportunities: It has a very high potential to rise in the UK market and to acquire the
major share of the UK grocery market. It can globalization its business to have more
funds to invest in the UK. It can serve more number of customers with the help of online
services.
 Threats: Cheaper price of the company may provoke the other competitors to have a
price war. International expansion done by the other brands is giving high competition.
Since, it is a discount grocery retailer, its market share is continuously showing a
downward trend.
To overcome these problems, it can operate more stores across the UK and other nations.
Innovative products have to be introduced to attract more customers. Strong online presence has
to be accomplished by training the staff appropriately. It has to collaborate with other firms to
increase the revenue. Websites should be updated at regular intervals.
PESTEL analysis of Lidl
 Political factors: It is one of the major factors which is affecting the company. The
company has to comply with the regulations framed by the government for the ease of
working (Babin and Zikmund, 2015). The UK government vitality advance program also
affects the innovation. Structural changes have to be undergone in the company to
operate as per the norms set by the government.
 Economic factors: Buying power of the customers has been affected because of the
recuperation of GDP and rising rate to cope up the loss of recession period. Stable
financial system is one of its strengths.
 Social factors: Today, the concern of the people towards nature has increased. Eco-
friendly products are most liked by the people. The company has to put emphasis on this
to satisfy the needs of the customers according to their religion and culture. The stock
should be maintained according to the same.
 Technological factors: In order to satisfy the customers, delivery should be on time.
Online services have to be made more efficient for the ease of customers. This will help
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them to purchase the products using credit cards. It is very important to gain the
competitive advantage.
 Environmental factors: Waste disposal is the main challenge in front of the company.
Today, recycling is done to mitigate the negative environmental effects. License has to be
obtained by the company for joining new green business techniques.
 Legal factors: In order to function smoothly, the company has to comply with the laws
and regulations made by the government for production and distribution of goods. Tax
law has to be followed to assure the individuals about the adoption of appropriate pricing
policies.
From above analysis, it can be said that according to the needs of the individuals,
company has to stock the products. Government regulations have to be followed by the
company. One can take the help of Boston consulting matrix to analyse the market share and
market growth of an organisation as compared to the other competitors. With the help of this,
growth share matrix the cash generation and cash consumption can be analysed.
Its four categories are described as below:
 Dogs: They are known as a cash trap because of the low market share and growth rate.
The investment done has a little potential for the growth of business.
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Illustration 4: BCG MATRIX
Sources: Strategy matrix, 2015

 Question mark: Because of more investment, rapid growth can be observed. But cash
generation is very low because of the low market share.
 Cash cows: They generate more cash than consumption because of greater returns on
assets than the market growth but their growth rate is low.
 Stars: They have a strong market share which is a reason behind the large cash
generation done by such kinds of organisations. Cash consumption is also higher because
of the high growth rate.
Hence, one should try to become like a star to standout in the target market. Hence, Lidl
can also use such kind of matrix to analyse its position to make the strategies as per the
requirements of the prevailing environment.
Ansoff matrix
It is again a kind of planning tool to make the strategies for future growth. It is also
known as product market expansion grid. Four strategies are shown in the matrix which can be
used for the business growth::
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Illustration 5: ANSOFF MATRIX
Sources: Strategy Matrix, 2016

In market penetration, focus is given on the expansion of the sales of existing products in
the existing market. In the product development stage, new products are being introduced to the
existing market which is much more risky. Existing products are introduced in an entirely new
market in the market development stage. New feature can be added to the products to attract
more customers (Armstrong and et.al., 2015). Diversification is the most important stage of any
business where new products are being introduced in the new market to globalize the business.
To use this tool, one has to analyse the market with the help of PEST or SWOT analysis. Market
segmentation and marketing mix has to be understood properly. Risk management and
contingency plan should be implemented while managing the affairs of the organisation. With
the help of decision making matrix, appropriate decisions have to be taken. In this way, various
tools can be used to analyse the current position of the company to remove the flaws which are
putting negative impact on the company’s growth (Stevenson, Clancy and Smith, 2016).
TASK 2
Market segmentation
Market segmentation is an important consideration that helps to divide the whole market
into smaller parts. In this way, as per the common characteristics goals and objectives completed
which create the highest likelihood for products and services. Defining to the target market
allows communicate in better way with potential candidates. Retail market generally deals with
identifying the human needs (Hofacker, De Ruyter and Donaldson, 2016). It is the typically
involved tasks that create promotion and delivery of goods to ultimate customers. In Lidl,
different aspects are also developed in the market that assists to improve the concept of
segmentation and highlights criteria to gain competitive advantages. In this way, the chosen
company break down their whole market into heterogeneous market to identical characteristics.
Hence, customers enjoy benefits of the segmentation and take important part in the competition.
 Socio-demographic: In order to segment the market by Lidl, socio-demographic element
considered that helps to increase market campaign which needs to assume that all
customers are alike. With the help of this segment, market breaks down in several
categories. Hence, it assists to allow create selling point in the various market segments.
In this way, mainly segment considered by families in all size such as straight couple who
have one child, single mother, parents with several children etc. In this consideration,
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