Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Costco Business Analysis
Marketing strategy of costco
Costco Business Analysis
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Costco Business Analysis
Market Analysis Costco Wholesale Corporation is a large corporation with a total of 721 stores worldwide club operators over the past 15 years. With Growth earnings at an average annual rate of 11% for the next five years, and 12.12% forecasting earnings increase for this year. Close to 6000 quality products from furniture to Food to electronic goods are offered to customers with a membership. Costco’s business strategy is providing high end goods in bulk with low price, the benefit of Costco’s flexible prices is that they can control it to save on budget costs such as packaging, while protecting the promised quality. Costco’s primary target market are large families, upscale customers, and small businesses it offers refunds for all the products
Product: Costco doesn’t have a lot of product options, with usually only a few different types of the same product. But they offer a huge variety of products as they aim to be a one stop shop for everything the consumer needs. They also offer a variety of services such as photo printing services, car rental, and even life insurance.
Costco Wholesale Corporation was an uncommon type of retailers called wholesale clubs. These clubs differentiated themselves from other retailer by requiring annual membership purchase. Especially in case of Costco, their target market is wealthier clientele of small business owners and middle class shoppers. They are now known as a low cost or discount retailer where they sell products in bulk with limited brands and their own brand. The company is competing with stores like Wal-Mart, SAM’s, BJ’s, and Sears.
Costco was founded on September 15th, 1983 by Jeffery Brotman and James Sinegal (Chesley). It became renowned for its warehouse club retail model, pioneered by former competitor Price Club. After a major merger in 1993 with Price Club, Costco expanded to 206 locations, doubling the size of the company (“Costco Wholesale Historical Highlights”). The decision was based on the fact Costco and Price Club shared similar business philosophies, operations, and the looming threat of being taken over by Sam’s Club. Operating as PriceCostco, international expansion began with development of stores in Mexico, the opening of two stores in England, and the licensing of a Price Club in South Korea ("Costco Wholesale Corporation").
Let start with Costco. Costco is Wholesale, Retail Corporation which operates an international chain of membership distribution centers that provides quality, brand name merchandise at noticeably more affordable rates than a conventional wholesale or retail sources. Costco 's warehouses display the largest and great product categories such as groceries, candy, appliances, television and media, automotive supplies, tires, toys, hardware, sporting goods, jewelry, watches, cameras, books, house wares, apparel, health and beauty aids, tobacco, furniture, office supplies and office Their ability to distribute the cut rate from their operating proficiencies in supply chain management and cash flow, permits them to offers items at discounted rate and a lower price than their competitors. For Costco the meaning of being the low-cost provider while also differentiating from the competitors is ambiguous at best. Costco’s CEO, Jim Sinegal, is certain that low priced, and the high value merchandises are exactly what is needed maintain and achieve a staying power in the industry.
Kohl’s also boasts a loyal customer base and strong brand equity. These strengths are critical to offset their weaknesses. Flaws include an imbalance on sales for men’s products and a lacking online presence. (Kohl's Corporation, n.d.) Another way that Kohl’s is actively counterbalancing their negatives is by capitalizing on opportunities. Kohl’s has found that their beauty sections are an immense source of opportunity. As a result, the company is expanding those departments in an effort to capture those sales that would otherwise go elsewhere. (Wahba, 2014) Finally, Kohl’s keeps the knowledge of their threats at the forefront of their decision-making. They understand that their coupon system can be abused and cause profit losses. They also recognize that price wars in their industry can also be very damaging. As a result, they are working towards more secure methods of offering savings and strategically making efforts to remain the leader for price setting. (Wahba,
Costco is into Services Sector. It is part of Industry which deals with Discount &Variety Stores. Costco operates membership warehouses where it offers various types of merchandise like household consumables, Electronics, Automobile, garden etc. to its members. Costco is well diversified and also operates Pharmacies, Gas stations, Travel business etc. Thus it fulfills almost every need of its members. It boasts of 600+ warehouses across 8 countries with earnings in excess of $2 Billion on Sales of $100 Billion. It has 184,000 employees worldwide and more than 1000 suppliers who have to follow a rigid & comprehensive supply chain & quality policy.
As of 2016 there were 2,250 Chipotle restaurants worldwide. (Number of Chipotle Mexican Grill locations worldwide 2007-2016, 2017) Another interesting fact about Chipotle, is that in 1998 McDonald’s started investing in shares of Chipotle and by 2001 they had become the majority shareholder. In total McDonald’s invested over $360 million into Chipotle. (Myers, 2014) Although they have since split ways, the investment McDonald’s made into Chipotle helped to boost the growing power of the new to market concept burrito
Wal-Mart initially began its operations in 1945, when Sam Walton leased a ‘Ben Franklin’ franchise variety store in Newport, Arkansas. After relocating to Rogers, Arkansas in the early 1950s, Sam Walton’s ‘Ben Franklin’ became ‘Walton’s 5 & 10’. By 1962, Walton found himself the chain owner of 11 different Walton’s stores across Arkansas. He then decided to rename the chain ‘Wal-Mart’, after himself. On October 31, 1969, after further expansion across the state, the chain was incorporated as Wal-Mart Stores, Inc. Three years later, Wal-Mart was approved and listed on the New York Stock Exchange (NYSE).
Control systems – Costco has an Enterprise Facility Information management system, each Costco is connected to corporate, the EFIM provides real-time information, management of control systems (like energy), and an inventory management system that allows suppliers to monitor their own stock levels at any Costco. The EFIM reduces costs related to energy consumption, maintenance, and contracted services
This research seeks to reveal the importance of marketing strategies in today’s complex and competitive business world. For this reason, this study will discuss various theories, issues and approaches of the marketing linking them with W.L. Gore & Associates and thereby propose the best options, ideas, strategies and techniques for the improvement of the company. To reach the points, this study will especially collect secondary and qualitative data and information.
In the warehouse segment, Wal-Mart’s Sam’s Club competes harshly with Costco. Costco has fewer warehouses but greater sales and revenues. Costco customers also shop at Costco more frequently than Sam’s Club customers and, on average, spend more each visit as well. Costco’s dominance may be the result of better innovation. Costco offers luxury items and was the first to sell fresh meat and produce, and gasoline. This is important because innovation is a key factor in assessing competitors in an industry.
The third strategy is focused on increasing value for their customers. This strategy has become a key element in helping retailers increase sales. Just in the last few years, Whole Foods has implemented a competitive price match program. Since it has proven successful in increasing sales, Whole Foods has plans to implement other cost savings measures for its customers. They are expecting to decrease their gross margins to those experienced in their stronger years.
Costco has many competitors with the primary two being Sam’s Club, a wholesale business being managed by Walmart, and BJ’s wholesale club. Sam’s Club is offering the same services as Costco. They offer their customers lower prices than traditional stores and like Costco they sell their products in bulk to keep members interested. What makes them a threat to Costco is the cost of becoming a member to shop at their stores. For Costco’s basic membership, known as a Business membership, a price increase had to occur to outweigh price increases from their suppliers. This led to the Costco Business membership annual fee being set at $55. When looking into the case study assembled by Thompson, Peteraf, Gamble, and Strickland (2014) they point out that Sam’s Club is able to offer similar benefits ...
Nguyen, A. (2013, April 12). Costco: From Concept to $1 Billion in Three Years. Costco Wholesales Corp. . Retrieved April 6, 2014, from http://lindaperry.us/aec3033/AdNguyen2.pdf
Recommendations to achieve a sustained competitive advantage: Online, mobile, and store purchase will certainly increase customer traffic with the online and store combinations gives Target Corporation with a best possible low-cost price. A best-cost provider strategy allows Target to position itself and compete with low-cost providers such as Walmart. In addition, it employs a competitive strategy with a designer label along with superior supply chain, increased operational capabilities, and skilled employees. . The strategy of sending coupons are huge for a customer, so increase discount based on their purchase history and use the store brand credit card to attract more customers.