Aldi, a multinational grocery chain, is one of the top supermarket chains across the world and operates under two main groups named Nord and Sud. It presence is across 18 countries including US and UK. Morrisons is the fourth largest grocery retailer in UK and its peers include Tesco, Asda, Aldi, etc. These two supermarket chains are competing against each other in UK markets and have their individual marketing strategies in the region. We will be analyzing the market segmentation for Aldi and Morrisons to get a better analysis of their marketing strategies in the UK market.
The market segmentation explains the relevant factors which tend to classify the target market for a business viz. for the retail grocery business. The market segmentation is a tool that segments the market on the basis of geographical, demographical, psychological and behavioral factors.
• Geographical factor
Aldi- The targeted geographic segment for Aldi’s market is primarily focused on suburban and rural populations. Aldi further designs its product differentiation by offering higher discounts up to 30% and focuses on selling more of private labels.
Morrisons- The targeted geographic segment for Morrisons is generally for the urban population. As they are still in the growth phase and have very limited number of stores across the country, their presence is relatively limited. Morrisons already has a specific image developed with respect to the low prices offered for good quality food products.
• Demographical factor
Aldi- The targeted demographic segment for Aldi’s market is solely focused on middle and lower income groups. The low price strategy is designed to create a budget/cost saving pull.
Morrisons- The core UK’s demographical segment has been totally focused as per Morrisons’ prevailing marketing strategy. However, varying demographics by exploring newer regions and remote country locations may result in better returns.
• Psychological factor
Aldi- Aldi has been targeting the low cost and good quality driven consumer psychology and they have implemented same in the UK markets as well.
Morrisons- As initial product specialization for Morrison was more inclined towards food products; they have excelled in targeting those customers who vouch for good quality food retailing.
• Behavioral factor
Aldi- Aldi’s core marketing strategy has been focused in targeting the low cost and good quality driven consumers and they have designed their entire range of private labels accordingly.
Morrisons- UK customers have always been inclined towards opting for good quality, health oriented, and conventionally chosen and cost-effective food products. Morrisons has channelized its entire product range to meet this basic criterion for food products retailing.
The UK economy has always been a cost-driven economy with higher costs of living and a relatively larger chunk of middle-income levels. Hence, the grocery retail consumers in UK market have always acknowledged products in good quality and with cost effectiveness. Retail chains like Tesco and Aldi have emphasized on customizing their private labels to meet this requirement of this market and have succeeded in sustaining the supermarket industry in the UK.
We have seen that Aldi has continued its global marketing mix strategy of offering low-cost products with specific focus on private labels. Similarly, Morrisons has started with marketing its image as a good-quality and cost-effective food products retailer in the UK market. Although, after comparing both these retailers in terms of their market segmentation, it is evident that Morrison needs to revamp the geographical and demographical factors for augmenting its market share.
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