Costco Company

SWOT Analysis: what are your strengths, weaknesses, opportunities, and threats? Competitors: who are your top 2 competitors? What is their SWOT? Pricing Strategy: what will you charge for your products or services (now and later)? Why? Promotion Strategy: How will you generate interest, leads, and conversions? Conclusion Costco Name Institution Abstract Bulk purchasing is among the main factors that favor the survival of large chain stores. It iworth noting that purchasing economies will be gained when big company makes its purchases in bulk and in the process, obtain purchasing discounts. A good example, is when a large food chain such as Walmart decides to buy its groceries or fresh fruit in a big size when conpared to a small food chain or supplier. This is the case of Costco Company, which has managed to encompass bulk purchasing to its target market, making it profitable in the present-day tough global economy. The store has managed to focus its efforts to increase its overall sales, as well as conveniently positioning its outlets in a bid to increase its profit margins. This paper focuses on having a better understanding of Costco’s main clients, why they choose the store, and some of the reasons as to why they are more likely to come back. Introduction Costco Wholesale Corporation (Costco) is one of the largest retailers in the world, only second to Walmart. The Company was founded in 1976 and its worldwide headquarters are based in Washington, the United States. As a membership-only warehouse retailer, Costco's target market and unique selling position are the Company's top strengths. Background Target Market Costco has managed to invest allot of time and money when it comes to gaining a deeper understanding of their target market. Through this information, Costco has proved to be a step ahead in customer satisfactions, being that the knowledge earned is easily converted into ideas that helps if further differentiate itself as a store. The management is able to have a better understanding of the nature of products that they ought to ensure that are readily available for customers to purchase. Minor changes are made in the stores as a strategic way to ensure that the customer experience is always improved. This goes as far as choosing where to open a new outlet, how to arrange the shelves, or even what products to sell at a discounted price. In comparison to target and Walmart, store chains that are known to be Costco’s key competitors, Costco has managed to differentiate itself by attracting higher end clients. Most of Costco’s clientele are said to be from the suburbs, and conveniently have cars to transport their purchases. This chain store focuses on large quantity sales per customer and hence it has also been noted that the latter have characteristically large automobiles that are used to transport the purchases (Berman, 2011). This automobiles range from mini vans to trucks. Costco’s main target group is also noted to be for mature adults. These are people who are said to be attracted by the lower prices at the stores, resulting from the high volume sales. This is linked to the idea that they also have enough room in their residents and hence are able to conveniently store the large sales. This has been known to largely contribute to Costco’s ability to maintain a high turnover rate. Parents to the millennials are also a target group for Costco chain of stores. Apart from their McMansion owning and car loving experience, they also have children who purchaase the products available in the stores. This is a group that takes pride in shopping once in a while, unlike the new generation that is more likely to take a taxi, just to go buy one product from the store. Unique Selling Position For a number of years, Costco has been noted to be outperforming some, if not most of its direct competitors, including Walmart and Target. Judging from the revenue results, Costco has managed to master the art of pushing for sales level, and hence reaching higher profit margins. This is a strategy that is different from the competitors, especially being that come focus on improving their profit margins by reducing costs of operation (Joseph, 2011). Walmart has been noted to focus on its heavy reliance on reducing what the workforce earns and if compared to Costco, this is almost the opposite. The latter has been celebrated for trying to ensure that the workers’ salaries are attractive. This applies to both full time, as well as part time personnel. The unique strategy to focus solely on driving sales has been a key contributor to the firm’s success, owing to the fact that the management have a strong belief that if sales levels are kept at a high level, then every other aspect of the business will follow suit in a positive manner. This has helped the company when it comes to choosing the nature of items to be stocked in their stores. It has also been noted that Costco has developed a stocking system that is also unique to its individual stores. The managers are able to track the high selling products, and hence package them better to make it easier for customers to identify quickly. On the other hand, Costco also notes the products that are slow moving and hence develop better ways to improve on their sales (Staff, 2016). Some of the strategies used including working with the producers to allow for rebranding of these products. Some of the features that make Costco to be unique in its market is based on the fact that the chain store does not advertise. In comparison to numerous businesses, including its competitors, this chain store saves more by banking on return customers, rather than spending millions in advertising. The profit margins are known to be expanded by such cost saving measures. In order to compensate for luck of advertising, the store has managed to develop a system where by customers have access to monthly, and even weekly catalogues that are available in-store, making it easier to identify products that are discounted. The media also show a list of products that can be purchased at better prices if one presents a coupon. Costco is positioned at a place where it can compete with dollar stores, as well as the other bigger chain stores. This is made possible by the limited number of items that it allows on it shelves. The management focuses on a unique balance of value and convenience (Lutz, 2014). In comparison to Walmart and Target that take pride in having everything under one roof, Costco has been able to limit its inventory, but still manage to be in a better position, profit wise. Value to Customers Costco has managed to stay ahead of the game owing to its unique strategy that has also played a key role in differentiating it as a store. The store has managed to master the art of having a better understanding of the people they serve, allowing them to focus on providing specific items in the stores and hence customer satisfaction. For a number of years, Costco has managed to support its position as the store of choice owing to the way it treats its workers. The store has been able to pay its workers better than its competitors, and element that has acted like a source of good imagine for the company. The management at Costco focuses on opening stores in suburban areas, and relatively busy streets, allowing them to better reach the clients (Berman, 2011). Apart from convenient positioning of the stores, Costco also offer value to its clients by competitively pricing its products. The store has been able to achieve this as a result of its strategy to focus on bulk sales, and hence higher sales turnover. With the combination of convenience and value for money, the store still has a viable chance to stay ahead of the game. Conclusion Over the years, one of the developments in the shopping industry is linked to the fact that people are buying in bulk, now, more than ever. Costco is among the stores that have managed to successfully position itself to benefit from this phenomena. Notably, Costco focuses on opening stores in suburban areas, making it convenient for families to stop and shop. It is said that the parents to the new generation are the main occupants of the relatively large homes in the suburban areas. These are people who still take pride in shopping in bulk. This is facilitated by the larger cars that they also own, allowing them to be able to haul their purchases from Costco. The strategy used by Costco to avail fewer products, but in bulk has put it in a better position to bank on high sales volume, allowing it to increase their profit margins. References Berman, B. (2011). Competing in Tough Times : Business Lessons from L.L. Bean, Trader Joe's, Costco, and Other World-Class Retailers. New York: FT Press. Joseph, C. (2011). Competing with Costco and Sam's Club : warehouse club entry and grocery prices. Cambridge: Cambrudge Mass. Lutz, A. (2014). Costco's Simple Strategy For Outperforming Wal-Mart And Target. Business Insider, 1-7. Staff. (2016, 08 31). Costco.com. Retrieved from Company Information: http://www.costco.com/membership-information.html