Costco Executive Summary

In this broadcast I was amazed by how Costco was formed and the little secret things that Costco using to encourage people to buy more. Surprisingly that the employee from Price Club left his job, and open his own company, Costco. I first thought that Amazon would sell more stuff than Costco because their social network system which offers free deliver, good deal, more convenience, and various items are offered. However, Costco alone sells more stuffs than Amazon. I found many interesting about Costco. Costco is a giant store with a tiny selection, for example; there is only three options for plastic zip log. This is a key for Costco that they don’t offer many options due to the fact that they don’t want to spend more money on labor part to

There are many positives that can be drawn from the way that Costco runs and controls its business. Costco’s motto is “To continuously provide our members with quality goods and services at the lowest possible prices” (Thompson, Strickland,

Costco has a simple strategy for being one of the leaders in the wholesales, which is concentrating on driving sales. If the sales of a company are good than everything else will take care of itself. While other companies such as Wal-Mart, Target and BJ’s pour money into marketing; Costco has a no-frills approach and doesn’t advertise. Costco focuses on selling fewer items which increases sale volume and

Costco’s business model is focused on producing high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of national name brands and select private-label products in a wide range variety. Costco is focused in low-cost strategy is concentrated on a narrow buy segment and out competing rivals by having lower costs, therefore being able serve a niche consumers at a lower price. (Gamble, John and Thompson, Arthur (2009).

Costco as a company began operations in 1983 with its headquarters in Issaquah, Washington (Costo 1). It was founded in Washington, United States by James Sinegal and Jeffrey Brotman. Brotman comes from a family that had been involved in retail business before the establishment of Costco. Therefore assuming that his background may have prepared him for running Costco

In order for Costco to stay competitive in the market and ahead of its competitors, it is essential to venture into different products and services. Costco’s main products vary, which include: groceries and frozen products, fresh meats and produce, bakery goods, beverages and liquors, health and beauty products, seasonal goods, office products, appliances and electronics. To increase Costco’s product differentiation over its competitors and increase sales, Costco began to introduce other products; such as pharmacy, gasoline, auto insurance, and a food court. In addition, extends more services to executive card members that include check printing, payroll services, identity protection, free roadside assistance with Costco’s auto insurance, and traveling benefits.

Costco understands the customers and they have fewer items in each category for customers to choose. Sometimes, too much items make customers confused because it is hard for them to make decisions among a lot of brands. At that time, some consumers may give up buying those items and it will be a loss for a company. However, Costco lists less items on the shelves and consumers can make decisions easily. For example, the manager introduced that they sale “HEINZ” tomato ketchup for customers to choose and help them to make decisions.

“Costco continues to prove their “consumer first” business model, through the creation of new and unique business concepts, included Costco Pharmacy (1986) Produce and Bakery (1987), Optical labs (1987), 1-Hour Photo (1989), Hearing Aid Centers

Costco is a billion dollar warehouse club, and a global retailer working in eight countries. Through hard work and great business ethics, Costco is in the top three companies in Washington announced by the Washington CEO Magazine. In 1976, the company opened under Price Club serving only small business owners. Price Club was the first membership warehouse in the world. Jim Sinegal, was the vice president of merchandising, distribution, and marketing in Price Club who helped Price Club being into a successful retailer in worldwide and other retail chains. In addition, in 1983, Costco’s warehouse was created in Seattle with Jeff Brotman who was an executive of an oil company. However, 1993 was a significant time period when Costco and Price Club joined and combined their company into one as PriceCostco with 206 locations of the company and $16 billion in sales.In 1999, the company changed its name from PriceCostco to Costco Wholesale Corporation. Costco’s strategies of low pricing and availability of different products for consumers has made Costco one of the top 25 best companies in United States with weakness that needs to be turned in opportunities for success in the future as well.

In terms of marketing, Costco is not as aggressive as their competitors. They essentially let the product speak for itself which seems to be working, however, as technology advances, Costco may want to

Costco was founded in 1983 by Jim Sinegal and Jeff Brotman who were previous colleagues in California within other membership warehouse stores. “The company’s business model was to generate high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of nationally branded and select private-label products in a wide range of merchandise categories” (Thompson, p. C-35). This analysis will review the “cornerstones of Costco’s strategy; low prices, a limited product line, limited selection and a ‘treasure hunt’ shopping environment” (p. C-35). Furthermore, it will identify if Sinegal’s strategic approach identifies with Thompson’s five competitive strategies and Porter’s five

Costco announced its opening/expansion to the public in March 2013 and was officially opened on the 19th of November 2014. Currently Costco’s cash-and-carry-warehouse shares its location with numerous other retailing giant franchises. While commencing their new expansion into South Australia, the organisation was confronted with the marketing issue of competing against other retailing businesses, in regards to layout, location, physical and mental availability (Tauriello 2013).

With $401.2 billion revenues, the retailing giant, Wal-Mart, has been ranked as the 2nd place of 2009 Fortune 500 companies. This company is seen as the most successful business in the world today but also viewed as the vital indicator to observe the status of financial crisis recovery. Wal-Mart has won market share during the recession by offering customers lower prices as its successful marketing strategy. Moreover, Wal-Mart is long for expanding its kingdom all over the world. In 2005, Taiwan once was one of Wal-mart’s plans to join the overseas expansion, nevertheless, Wal-mart veered round to China at the last minute.

Costco’s pioneering ability to constantly reinvent itself has given it a strong world-wide competitive advantage. In order to maintain its position as one of the most consistent retailers around, Costco always demands the best from its vendors, and ensures productivity and effectiveness by administering all its departments in a competent

1. What is Costco’s business model? Is the company’s business model appealing? Why or why not?