Out doing my weekend grocery shopping I decide to pop into the local Aldi store for a change.

If you’re not familiar with the company, Aldi is a supermarket company with a very clear positioning at the no-frills and very low-cost end of the market. It’s a German company, privately owned by a couple of brothers. The brothers are said to be very wealthy, so I guess we can assume the company is successful (although as it’s a private company it’s hard to know the details).

Anyway, as a marketer you are probably aware that competing on price alone is generally not a very good strategy. After all, only one player can be the lowest price and you’re always vulnerable to someone coming in and undercutting you.

However, the strategy can work provided that you are the lowest cost producer in the market and you can sustain that competitive advantage. This is where Aldi seems to excel.

They seem to have managed to strip out every unnecessary cost. The stores are spartan, although clean, well-lit and quite well laid out. Unlike some “budget” stores, it’s quite a pleasant environment. The merchandise is pretty much all “own label” and very inexpensive compared to mainstream branded goods. The product range is limited (again, that helps cut costs).

In short, there are absolutely no frills. And behind the scenes, I’m guessing the company has a ruthlessly lean supply chain. This is probably where the company’s competitive advantage lies and I’m sure they focus continually on maintaining that edge.

One other thing.  If you are aiming at the low-cost position you generally need big volume to make it work (after all, one implication of the strategy is that you’re likely to have low margins).  In pure commodity markets you’re likely to end up with the biggest market share and so the strategy can be very profitable.

So what’s all this got to do with Direct Response Marketing?  Well, as I was looking around in Aldi it was very noticeable how most of their “own label” products are pretty obvious copies of branded goods.  The packaging isn’t quite the same but it’s pretty close.  The product names are similar and the goods themselves look pretty similar.

Now, you can argue about the ethics of this copying (and Aldi have got into trouble in the past when they’ve been too blatant) but it’s a fact of life.  And the lesson for marketers is that in a commodity type market, conventional branding offers little or no defence.

I know I’m probably preaching to the converted here, but for most businesses, Direct Response Marketing is the surest and safest way to success.  Don’t be seduced by the idea of branding, although it has it’s place (see Ben Mack’s excellent book “Think Two Products Ahead” for the right way to combine branding and Direct Response Marketing).

Remember, there’s only room for one “Aldi” in any market!