Costco Marketing Plan

3741 Words Oct 14th, 2012 15 Pages
Marketing Plan
Costco Companies, Inc.
MKT 680
Presented by Jose D. Carmona
May 10, 2012

1. Executive Summary
Costco Wholesale Corporation, which began operations in 1983 in Seattle, originated the membership wholesale club retail concept. By providing low prices on consumables like fresh foods, health and beauty care items, high-quality apparel, electronics, jewelry and other general merchandise, the company pioneered the retail concept that encourages members to visit regularly to achieve savings. In the meantime, the retailer has been successful in encouraging members to spend the savings on impulse big-ticket, discretionary purchases.
Today, Costco operates about 278 membership warehouse stores across 24 US states. Costco has 16
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Normally, business owners would not only spend significant money on their businesses, but they would also spend a lot on themselves if you provide them with quality and value.
Costco will increase its revenue by 15% in the next five years upgrading to the “Executive” membership existing business and qualified members. The increase in revenue provided by the upgrade is almost 100% profit, and will help to provide a strong incentive to clients to save enough through their benefits and purchases to offset the cost of membership. Given that this is a low-margin business, membership fees can account for about 50-55% of operating profits. Over the past years, the sales mix has shifted towards services and away from department store related hard lines and soft lines. While all categories have shown strong growth over the past decade, the services/other category have been the standout. During the next five years, industry revenue is estimated to increase at an average annual rate of 5.2% to $531.5 billion. Growth will occur most likely because of improving disposable incomes, consumer sentiment and business sentiment, all of which act as key drivers for the retail sector. (See Table 1.)
Table 1. Industry Expected Growth

3. Competitor Analysis
There are over 1,178 warehouse club locations across the U.S. and Canada, including Costco’s US warehouses. Unfortunately for the industry, expansion through small-size stores by the industry’s major players is expected to
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