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4 segmentation based marketing of costco
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Marketing strategies of Costco Wholesale
By: Dilpreet Singh
ID:C0708399
Submitted to- Sisay Abebe Figure 1: (htt)
Introduction
Costco is a wholesale company which provides their members with low and best prices, better quality and it has hundreds of warehouses in the whole world. It deals in various types of products like electronic devices, housing needs, food products etc.
It provides a variety of products but it choose products on the basis of quality, price and brands in order to provide better satisfaction to its customers. Moreover, the reason behind the success of Costco Wholesale is the effective marketing strategies of the Costco Wholesale company. (m.costco.com, n.d.)
Marketing Strategies of Costco Wholesale
Multiple products and brands:
It provides products of different varieties.
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The company has many warehouses and stores in the so many countries such as Canada, USA, United Kingdom, Mexico and many more in the whole world.
Weakness-the weakness of the Costco is slow growth of private labels which means that company has their own level on products and the sale of that products are very less and company earn less profit in their own private product . So, company is now focus on this weakness
Opportunity-Moreover, the company gives also increase the sale of company through the online market. People like to do shopping online on internet these days. So, company increase their online services and created interactive online page so that more people attracted towards the company.
Thread-these days there are so many threats to the company like increasing retail rental rates which increases the expenses of the company and increase in the interest rates in US affect the company and company suffers lot due to these problems.
Promotion: Costco doesn’t have any conventional marketing/ promotion strategies like their competitors as they are not big on advertising. They email and mail their members flyers and product descriptions which help them maintain their customer retention. However, they don’t actively advertise to new customers, primarily relying on their current customers to advertise by word of mouth like Kimberley Peterson, the
American Eagle Outfitters (AEO) differentiates from its competitors because it’s a leading global specialty retailer offering latest trends that are high-quality and affordable. The source of competitive advantage is the quality of their clothes and their environmentally friendly fabrics. American Eagle Outfitters is a high-quality and inexpensive brand of their two competitors Aéropostal and Abercrombie and Fitch. AEO centers in every category of purchaser such as kids, tweens, teens, and adults. American Eagle Outfitters has further stores open globally and their product line is more assorted than its competitors and its name brand and logo is known world-wide.
Threat of substitutions: In Porter’s model he refers to the threat of substitutes that companies face every day. When more substitute products become available to the public, the price elasticity of that product increases because customers now have more options. Once more substitutes begin to enter the market the demand for a certain product will become more elastic. If multiple other companies were to make substitutes that competes with ALDI’s product, then ALDI’s total profit would decrease because the demand for their product would decrease.
Some of the factors that should be considered when forecasting is number of new stores, sales per store, membership growth, operation margin, and international expenses. There are many assumptions made to create forecast income statement, forecast common-size income statement, and forecast abbreviated balance sheet. In addition, the five factors that the protagonist choose to determine the future performance of Costco seems quite appropriate except few. The number of warehouse is too assertive and the membership base is having constant renewal rate which should be considered more carefully with factors like scale economics and new competitions. In my opinion, she should consider more factors when forecasting the growth.
The weakness portion of this analysis gives attentions to things that should change in order to enhance the overall operations of Ulta. Taking a closer look at things that may be hindering the overall sales and potential for further
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.
The company had to be the second largest retailer shop in the US; it has many advantages that come along. The customers well acknowledge the company and its brand have been well established.
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.
At the end of 2012, Costco was a successful business; however there are some issues that they would need to deal with. These issues mainly arise from their previous successful ventures as a warehouse wholesale company. The first issue is that Costco has competitors that can actually be and are a threat to their success. Competition allows a company to improve itself and prove its prowess to its customers. However, when a competitor is able to provide the service at a much reduced cost, problems will arise. As for the second issue, it seems that Costco’s efforts to become an international company are moving slowly. They have not reached a point where their US and Canadian warehouses provide a backbone for their finances. Costco’s third issue is their expenses which include merchandising costs and preopening expenses have been increasing steadily and they need to balance this out to keep a positive net income.
Physically fit and active, well-educated, in the upper to middle class, women who are conscious about their appearance, aged between 16 and 45, residing in North America are the current primary target market of Lululemon.
The brand (and sub brands – Figure 1) currently has about 96,000 employees and there are stores in 44 countries around the world. They’ve recently announced
Revenue growth of Costco during 2008-2012 (22.64%) is almost doubled that of Wal-Mart (11.86%) during the same period. Target had a moderate growth of 11%.
Around the world they have 3,100 stores. Most of the stores are in Germany, United Kingdom, United States, France, Spain, and Sweden. The stores are in every continent.
This essay describes how Costco has undergone evolutionary changes from its inception to present through its value chain model to become a success story. For example, in its distribution system, Costco utilizes the cross-docking technology to help in the conveyance of products in the different locations. This ensures that there are no product delays in the respective markets (Guo, 2016). Accordingly, Costco can attract more customers who prefer the warehousing services provided by the company.
Carrefour's background Carrefour was founded in France in the year 1959 by two families Fournier and Defferoy. Carrefour in other words intersection is interpreted as a junction of two streets crossing each other. The name hence resembles the convenience of shopping at Carrefour. " Two wholesaler families merged/combined to form a company from Normandy, which then was managed by Leonor Duval Lemonnier and Paul Auguste Halley. "(Carrefour,2013).