Stiff competition is a major concern for Costco and as such the new strategy

Stiff competition is a major concern for costco and

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Stiff competition is a major concern for Costco and as such, the new strategy focuses on low pricing on high-quality services and products to attract new consumers and maintain the existing ones. Besides, Costco buys stock in bulk from its suppliers on discounted prices and thus, minimize expenses. Costco’s management believes that providing goods and services at low prices will increase the sales and profits while maintaining their customer segments. What is more, the Kirkland signature products, a good corporate reputation, and concern for employees have helped Costco to make increase sales, profit margins, and inventory turnover. Costco’s Business Model The business model for Costco focuses on increasing sales volumes and rapid inventory turnover. The company offers private and national label brands at least prices affordable to most consumers. This model is appealing since it incorporates both fast inventory turnovers and low
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COSTCO 4 pricing. The company clears the inventory earlier before the payment is due to the suppliers. It enables the company to establish relations with the manufacturers to the point of receiving discounted supplies ( Thompson, Strickland & Gamble, 2017). For the company to achieve its strategies as laid out in the business model, it should consider having a loyalty rewards program. Costco is striving to get customers by offering valuable items that encourage impulse buying. The company should open new warehouses and try to improve their services to enhance its growth (Nagle & Müller, 2017). Costco must work on establishing a great shopping experience to build a successful brand, for example, low pricing, high-end items, a selection of private-label and national-branded goods, and exceptional customer service. The company has a strategy that emphasis on availing a wide selection of items to its clients at the least possible costs. In comparison to other warehouses and dealers, Costco has around 4,000 products, whereas Wal- Mart, a competitor, offers more than 150,000 items. Sale of brand-named merchandise results to 14 percent while that of Kirkland Signature amounts to 15 percent. Pricing is a significant element in the company’s strategy ( Thompson, Strickland & Gamble, 2017). Discounted costs on large purchases enable the firm to more efficient and make the warehouses easy to operate. SWOT Analysis Strengths Costco’s low pricing strategy is its major strength. This approach attracts more customers by availing high-quality services and items at the least allowable prices. It enables the firm to make more sale volumes in the industry. Additionally, Costco offers private label brands including the Kirkland Signature and various brands of premium services and items, which has increased Costco’s revenue by more than 27 percent ( Thompson, Strickland, & Gamble, 2017).
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