Aldi Case Study Summary

1. Do you think ALDI could pursue its business model without developing strategic alliances with channel members? Discuss. I feel that ALDI would NOT be able to pursue its business model without developing strategic alliances with its channel members. ALDI benefits in numerous ways from strategic alliances with its channel members, such as the Limited Assortment Concept, which brings the product into the store, already on a pallet ready for consumer distribution without the need for a “stocker” to place items on the shelves. Also, its relationship with its suppliers allows for much greater accuracy in predicting quantity needed and when, which saves a lot of money knowing exactly what inventory you need and when. This is in part due to the

In these alliances, both sides win. “By focusing on a streamlined product assortment that remains relatively stable over time, ALDI and its vendors are able to allocate resources efficiently.” ALDI is able to anticipate the demand and is better able to plan and order much further in advance, than its competitors. This results in ALDI being able to sell items at much lower costs. In terms of marketing, ALDI is more focused on relationship marketing with its vendors than with its customers. “ALDI believes that customers will stick with ALDI as long as it is able to provide high-quality goods at the lowest possible prices. Thus, ALDI constantly works at perfecting its supplier-retailer relationships to assure that the quality of products, low prices, and flawless delivery that keep bringing consumers back to ALDI’s stores will continue in the future.” ALDI’s relationship with its bread maker, is another example of ALDI entering into a five year exclusive deal, where ALDI is able to sell cheaper bread and the baker has a guaranteed sale (as long as the quality remains to ALDI’s standards.) Finally in the example of Medion, the full service support vendor, Medion benefits from “ALDI’s huge market power and close contact with its loyal customers (which) provide Medion with a tremendous opportunity to profitably utilize its expertise in marketing management. At the same time, Medion’s efforts free ALDI from having to manage complex product development, marketing, and promotional activities that are not part of its core competency.” It isn’t simply ALDI that is winning in these alliances, the distributors, suppliers, and other channel members also benefit through being locked into a guaranteed deal. This not only allows for both sides being able to better predict supply and demand, but it gives both sides of