Costco Marketing Plan

1 January 2017

Definition & Corporate Objective Costco operates membership warehouses based on the concept which offers member low prices on a limited selection of nationally branded and selected private–label products in a large range of merchandise categories which produce high sales volumes and rapid inventory turnover.

Combining the turnover with the operating efficiencies achieved via volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities allows Costco to operate profitably at significantly lower gross margin than traditional wholesaler, mass merchandisers, supermarkets, and supercenters.

Using a low cost operating model, the rapid inventory turnover rate enables Costco to offer competitive prices from bulk purchasing. 3. 2 Weaknesses Limited product choices poses as a competitive disadvantage to some consumers who prefer a seamless shopping experience. This will adversely impact the average spend of Costco consumers. 3. 3 Opportunities Due to the recent global recession, price sensitivity is the main concern for consumers. This has led to an upward trend in bulk purchasing and private label products, which in turns save on average grocery expenditure per household.

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In keeping overall costs low for Costco to sustain in the competitive environment, employment of junior staff on casual and part-time basis is recommended. This in turn will keep wages and salaries lower than the average retailers in general. ?Types of goods demanded: Due to increasing education of young mothers and the growing concern for health, to cater to this uprising new segment, Costco should focus on providing organic goods. 5. Statement of Key Problems and Opportunities Based on the SWOT analysis as shown above, Costco as an established brand is identified as a key strength for the company.

Unfortunately, as Costco is originated from USA, upon entering the Australian market, it is an unknown brand to most consumers. This could be a potential weakness for Costco, however, after analysing the supermarket industry in Australia, it is reflected that Australian consumers are more price-sensitive rather than brand-sensitive. Given the trends in the supermarket industry i. e. increasing demand for bulk purchasing due to economies of scale, it has altered consumer’s behaviour to be less loyal to a brand and more reactive to changes in prices.

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