Ansoff matrix of Lidl Stiftung & Co. KG which is German based discount supermarket headquartered in Neckarsulm, Germany.
Market Penetration
Selling the same product into the same market by using a cost leadership plan to increase market share is called market penetration. With the help of strong sales on 11 august 2019, Lidl has reached a new record of high grocery market share. Although, according to the latest figures, the total sales of the supermarket were flat during the period due to the constant strong summer of 2018 (Lidl, 2019).
The head of retail and consumer insight at kantar “Fraser McKevitt” stated that: “poor weather conditions of the previous year with low price rates have made it difficult for retailers to expand their growth. In 2019, the sales of Lidl has increased by 7.7 percent while the buying behavior of the consumer has increased market share by 5.9 percent due to the low price strategy. Besides this, the opening of new stores has grabbed the attention of around 489000 customers. Furthermore, the low-cost strategy has placed a great impact on the weekly purchasing ratio of the customers with the average basket now spend £19 on grocery shopping every week. Furthermore, Lidl has increased its product lines by 19perceny through the production of alcohol, toiletries, household products, and soft drinks which has expanded 13percent of its sales. It shows that Lidl is brining variety into its existing products and selling at a low price to penetrate the market (Kossowski, 2007).
Market Development
When the managers of the firm plan to expand the sales growth by introducing existing products into fresh markets then the process is called “Market Development”. For instance, Lidl has started expanding its sales growth since 2018, by using an intensive growth strategy of market development in the United States of America. At that time, Lidl was acquiring only 27 best grocery supermarkets but still, that year could be considered as the period of consolidation. The headquarters of the grocery market is located on Bethpage, Long Island with stores in New York, New Jersey, and Connecticut. Recently, Lidl has opened 71stores in the United States and further stores are planned to be open at the beginning of 2020. It has been anticipated that there will be around 25 units at the start of this year. It means approximately a total of 100 stores will be opened at the end of 2020 with 27 best market stores. That would add up to 127 stores in 2020 because 27 best market stores will also be converted into Lidl grocery supermarket (Kossowski, 2007).
Product Development
When the managers of a firm decision to introduce a new product into the existing market to meet the requirement of the existing customer then it is considered as “product development strategy”. For example, Lidl has planned to decrease the ratio of salt in its brand items since 2017. The company is focused on the objective of the Department of Health’s salt target that is a part of the obesity strategy introduced by the government of the UK. The new product development strategy of Lidl is based on a salt reduction plan (Lidl, 2019).
According to the Government’s childhood obesity strategy 2016, there is a target objective of reducing 20percent of sugar from around nine food categories by the end of 2020. Lidl UK is strongly committed to attaining this goal and it will introduce more sugar reduction plans after successful completion of this target.
Diversification
The strategy used by the managers to expand sales growth of the firm by introducing new products and services into fresh markets is called diversification strategy. For example, Lidl supermarket has signed a loan agreement with Nordic Investment Bank (NIB) based in Finland to enter into the market of Lithuania to extend its chain of grocery supermarkets. The loan has been offered by the bank with a maturity of ten years that would be utilized in the expansion of retail networks in Lithuania. All stores will be opened according to the effective energy measures of Lidl. The stores will have automated building controls and heat recovery systems will be installed for ventilation (Makierman, 2017).
The extension of business is related to the growth plan of Lidl in Baltic nations. Food items are a major source of share from Lithuanians household expense so disposable income will be influenced by market diversification. Lidl is a partner of Schwarz Group a Germany based company that is operating Kaufland Grocery retail stores. Currently, it is operating 10,000 stores across Europe and 29 in the United States. In June 2016, the retailers entered into Lithuanian grocery industry and expanded its business with the opening of 35 shops and one warehouse at the end of the year (Makierman, 2017).
References
Kossowski, A. (2007). Strategic Management.
Lidl, international group. (2019). Human Resources.
Mckiernan, E. (2017). Supermarket Trends: Technology, food safety and sustainability are top of mind.