Costco - Costco Companies Inc. Marketing Plan Situational...

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Costco Companies Inc. Marketing Plan Situational Analysis Costco Companies Inc. began operation in September 1983 in Seattle, Washington. The company was founded by James Sinegal, the current President and CEO of Costco, and Jeffrey Brotman, Chairman of the Board of Directors. In 1993, Costco merged with a Delaware company named The Price Company to form Price-Costco, Inc. Costco's business model and size were very similar to that of Price Club which made it an ideal merger if Costco intend on being a formidable threat in the wholesale retail industry. Price Company was the first to establish the concept of a membership warehouse. Costco is currently one of the top three largest retail stores in the industry. Costco’s business cornerstone is to offer products at very low prices on a limited selection of nationally branded and selected private label products. The products are offered at this low price, but to do it with integrity at every level of the company while valuing the interests of the stakeholders. The product selection is limited to about 4,200 items within a wide variety of categories. This results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. Costco's business model is built upon customer memberships, who join and renew annually. This directly monetizes customer loyalty as unsatisfied members may not renew and represents a real cost to Costco's business. Rapid inventory turnover, high sales volume per warehouse, leveraging an efficient operating structure, reduced handling of merchandise, and making themselves the low cost operator in retail are all key elements that make the company so successful. Its business model is fantastic, all customers want to find great bargains and Costco is setup to keep the customer coming back to find them. Market Analysis Costco has been able to maintain a high customer retention ration for a long time and gradually increased their market share. Although, in recent years, they’ve experienced a dramatic increase in competition from their 3 biggest rivals, Walmart, BJs and Sams club. Listed below are the current marketing status of Costco and suggestions on how to increase their market share Increase Sales Volume- Costco is known as one of the largest retailers in the industry. One Costco warehouse reached more than $100 million in sales, and the average sales per warehouse was $83 million. Costco needs to build on its high sales volume by renegotiating the contracts they currently hold with various suppliers. They ought to capitalize on the success in their inventory turn around since they receive cash for inventory before they had to pay many of its merchandise vendors. These savings can be accumulated and occasionally passed unto their customers through sales promotion and coupons. This will increase their customer retention rate. Remain a low cost Store – A wholesale store like Costco has numerous ways of
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Costco - Costco Companies Inc. Marketing Plan Situational...

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