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expanded their sales of 59% over the internet.Target MarketCostco’s primary target market is small businesses. When Costco decides to open a new warehouse in anarea, they have marketing teams that contact local businesses trying to persuade them into purchasing a
business membership. Costco has a variety of customers that shop at their warehouses. A large portion of Costco’s customers are businesses. Startup businesses use Costco to purchase office furniture, supplies, and other products that will help run a business. While many established businesses rely on Costco to maintain their performance through a variety of goods and services. They also use direct mail marketing to attract potential customers that meet their customer profile. Costco also attracts individuals not connected to businesses seeking quality goods and services at discounted prices. Costco gains business from pretty much anyone in the general area of a Costco warehouse. Families large and small are all members of the warehouse club store. Most families tend to be middle to upper class. People will join the warehouse if they believe that the value they receive from Costco’s products and services will cover the $50 dollar membership fee. More than a third of Costco’s 48 million customers have a household income over $75,000 and they average 22 visits a year.The CompetitionThere are thousands of warehouse club locations that exist across the U.S. and Canada, including Costco’s North American warehouses. There seems to be a warehouse club in every major city, if not several club operations. Currently, the leading stores in the category of warehouse membership clubs areWal-Mart’s Sam’s Club, Costco, and BJ’s Wholesale Club. Wal-Mart has become the largest retailer in the world and has expanded further into many other food merchandising formats. Other significant competitors that have emerged into the market are Target and Kohl’s. Low-cost operators selling single category narrow range of merchandise, such as Lowe’s, Home Depot, Staples, Best Buy, and Barnes & Noble, has significant market share in their respective categories. SWOT AnalysisStrengths: Strong brand and scale of operations – Costco is known to be one of the largest chain of stores. They have many warehouses which are located throughout the US, Canada, United Kingdom, Korea, Japan, Taiwan, and Mexico. Having Costco stores located throughout these various countries has allowed them to be capable of leveraging the brand equity which has shown an increase in sales. Efficient store management – Costco’s inventory turnover rate is known to be one of the highest in their industry. Weaknesses: Slow growth of private labels – Costco has their own private label which is known as Kirkland Signature. There are many Kirkland Signature Products that Costco sells at their stores. However, the company has seemed to be slow with the growth of this product. Kirkland Signature has only been able to account for about 17 percent of Costco’s total sales. If Costco is able to gain the interest of customers in purchasing more of their private label products, it will help them become even more successful in their industry.