ALDI, Red Bull and Zara

Case details
About the authors

Nirmalya Kumar, Professor of Marketing and Sophie Linguri of London Business School on ALDI, Red Bull and Zara.

Why these companies?

All three cases focus on market driving and strategic innovation. German retailer ALDI is a pioneer in 'hard discounting': a strictly limited, private label product range, no perishables, a no-frills shopping experience and disciplined approach to maintaining low costs. ALDI offered customers high quality at rock bottom prices and has spread throughout Europe, Australia and the US. Its success has led competitors to attempt to copy its low cost formula. How does a market driver like ALDI respond to this competitive threat? Should it now include manufacturer brands in its assortment?

Red Bull used non-traditional marketing - creating an 'anti-brand brand' in the process - to generate a buzz to reach its young target audience, increasingly sceptical about advertising campaigns. How does a company like this keep its cool as it becomes larger and its consumers grow older?

Fashion retailer Zara seemed to be doing everything wrong: it manufactures in Spain, restocks stores by road on a bi-weekly basis, frequently runs out of stock, and does little advertising. Yet its unique and innovative strategy has generated a loyal customer base, which visits stores, on average, seventeen times per year, and it has very few markdowns. But can this concept survive as it enters more markets, some very far from Spain?

Challenges

These cases and teaching notes were primarily written using public sources, making information gathering difficult. As market driving companies, with innovative strategies, they are, understandably, secretive with their financial information. The owners, some of the richest people in the world, shun public attention. However, by collecting numerous diverse sources, we were able to acquire most of the information needed to build the cases and ground them with adequate financial information required to understand the business models.

Teaching objectives

The cases show that even traditional industries can develop and launch new value propositions that differ radically from what is currently offered to consumers. However, such value propositions have to be supported by a value network or business system that is dramatically different from what the traditional industry holds dear. Many sacred cows have to be slaughtered. There are limits to any business model; have these companies reached them? If so, how should they evolve to continue growing, while not losing their competitive advantage, or what made them unique in the first place?

Any advice?

All good cases allow faculty to develop unique teaching plans and make them their 'own'. These three cases are especially suited to core courses on brand management, competitive strategy, international business, innovation, and marketing. ALDI and Zara can be used on courses on retailing, supply chain management, and private labels and Red Bull on courses on advertising and buzz marketing.

Case details

Click on the case titles to view further details and, where available, an inspection copy.

ALDI: The Hard Discount Phenomenon
Daniel Corsten, Nirmalya Kumar, Sophie Linguri, and Akhila Venkitachalam
London Business School
Ref 307-089-1
Also available:
Teaching note

Ref 307-089-8 

Red Bull: The Anti-Brand Brand
Nirmalya Kumar, Sophie Linguri and Nader Tavassoli
London Business School
Ref 505-098-1
Also available:
Teaching note

Ref 505-098-8

Zara: Responsive, High Speed, Affordable Fashion
Nirmalya Kumar and Sophie Linguri
London Business School
Ref 305-308-1
Also available:
Teaching note

Ref 305-308-8

About the authors

Professor Nirmalya Kumar is Professor of Marketing, Director of Centre for Marketing and Co-Director for Aditya V Birla India Centre at London Business School, UK. 
e nkumar@london.edu

Sophie Linguri is Manager of Centre for Marketing and Associate Director, Aditya V Birla India Centre at London Business School, UK. 
e slinguri@london.edu

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