Lidl’s history begins in the 1930s, when their first store was created in Germany acting as a grocery wholesaler. 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). 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). 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. 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. Whilst many supermarkets are losing their market share, Lidl’s was increased by a stagger 15.1% from 3.1% to 3.5% (FT, 2015). Figure 1 highlights the variation in market share, and how much market share each supermarket currently holds. As previously mentioned, although Lidl have a relatively low market share, they are currently one of the fastest growing retailers in the market. An analysis of Lidl’s current marketing strategy will be conducted, with particular emphasis on the 7 P’s of marketing. Furthermore, Porter’s Generic Strategies will be analysed in order to aid in the understanding of Lidl’s current strategies. This will then be concluded with a SWOT analysis, with recommendations being drawn up via the utilisation of a TOWS matrix.
The five core concepts of marketing are; consumer needs/wants/demands, products and services, value/satisfaction/quality, exchanges/transactions/relationships and markets (Kotler, et al., 2008). 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.
In order to successfully analyse Lidl marketing strategy, a 7 P’s analysis can be conducted, which seeks to analyse some very basic, but significant issues. 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. The 4Ps are comprised of; product, price, place and promotion (CIM, 2009). 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). Product (Quality, brand name, service line, warranty, capabilities, facilitating goods, tangible clues, price, personnel, physical environment and process of service delivery):
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