Malincho Case Study Analysis Format

Problem Statement

How can LIDL maintain its position and market share in the supermarket sector? What are the risks of entering in markets beyond Europe?

Analysis
SWOT Analysis
Strengths:
Low prices good quality relationship
Good marketing communications
Good staff-customer relationship
Wide target segment, people of all ages and backgrounds

Weaknesses:
Understanding of legal framework in each country it operates
Opportunities:
Existing countries where Lidl can expand
Due to the recession all customers look for one thing: low price.
This is Lidl first value.
Threats:
High competition like Tesco, Aldi and ASDA
Consumers are not loyal to bran but to prices so there is small cost of switching brand Recession has affected drastically retailers in this sector

Adaptation or Standardization
Standardization means when a brand develops standardized products marketed worldwide with a standardized marketing mix, normally called mass marketing. Whilst adaptation means customizing the products in a way that satisfies better the market and minimizes costs. Lidl’s priority is to satisfy customers as the switching cost to competitors is low, therefore it has to consider the different tastes country has. Packaging needs to be changed in every country as it has to be translated into the language country Lidl operates in.

Also tastes can vary in different countries, for example water with gas. Some countries hardly don’t drink water with gas whilst others 70% of the population drink it, therefore Lidl should be aware of customers’ needs in order to provide with each of their necessities. Products normally are quite standard and you can find similarities in supermarkets but it needs to consider the cultures and traditions that influence a country.

Strategic Alternatives
Extension, Adaptation and Creation

In order for Lidl to continue its expansion strategy and try operate in foreign markets outside Europe it should firstly investigate the market. Position all the firms in the same segment and search if the position of Lidl has already been taken. It should after identify customers’ needs and tastes in order to orientate and afford all products they most consume. Furthermore, the company needs to translate all the packaging into different languages, like Chinese if it decides to enter China and be alert of all meanings in case means something different in another language.

Recommendation

Lidl have shown success in its work and has maintain a good position in the market, so the recommendation will be to continue as it has been doing. Although, it should constantly keep an eye on its competitors as it is operating in a dynamic market, where prices can change so fast as customers. Therefore it should be alert on what competitors are offering and how can they do it better. It should also work on the cultural values in each country and if any sort of adaptation is needed to satisfy customers, not all have same tastes. In order to continue growing Lidl needs to expand and if it wishes to expand to other markets beyond Europe it should closely analyse the market and see whether the position is already occupied by another company and if their products are tailored for the customers in the countries.

The case story Island Shades describes a great example of how to present an effective goal with the proper steps. Terry’s goal was very detailed on her present and future goals. She set up her objective creating the idea of selling good quality eyewear to consumers. She also has identified her options of affordable inventory to purchase. Terry’s key performance areas are focused on the location of her store and the brand of upscale products to provide consumers in that location. So I believe her goal is realistic because she has researched on her products quality, the customer demand for the product in the area and considered the income range that would afford the products. Not only is Terry’s goal realistic but it will help her be successful in her business. Terry’s idea for her eyewear business will be successful because of her effective planning and well thought forecast on her financial objectives.

Terry estimated her investment on the product should be 75,000 to 95,000 in inventory to begin with considering off peak times when customers are likely to buy. This scenario indicates a great way to contingency planning because Terry has thought about possible problems such as seasonal peak and valleys she might run into. She has prepared this issue by finding an alternative way to still sell her products even with off peak times by creating a website for customers from all over to purchase. She has also prepared herself to dedicate more time working longer hours at the store to be available to potential customers.

Nevertheless, Terry has some excellent solutions to her planning although she has some aspects of her business goal I find might need some modifications. The lease term of three to five years that Terry has agreed in my view, is too long of a contract for a new business owner. She should have agreed to a lease for a shorter period of time such as one to two years which would be a reasonable contract. I think she might feel trapped if it does not work for her in that location and she will be obligated to stay for the term. Also I believe size of the store 2,400 square foot was too big for her product size. She needs to consider the product she will have eyewear and to not make the customers overwhelmed of hunting for the products. I think she could have rented a smaller store in the same area with the possibility of a cheaper price.

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