Costco Membership Fees

Moreover, other market targeted by the company are those premium markets where there is high disposable income having high income level and would like to demand best quality products for self-consumption or for gift purposes.

And the customer are sensitive to the price since those products are using only few times and need to be change all the time.

Costco’s business model is called a subscription business model. This is a business model where customer must pay a subscription price to have access to the product/service. Customers who want to shop at Costco must buy a membership with the promise of lower prices to make up for the initial upfront cost; the current membership cost is $55 in the US. The service that Costco provides is its ability to use economies of scale to bulk buy a large amount of foods at low prices and then to pass these savings onto its customers.

Costco Wholesale Corporation (Costco), with its subsidiaries operates membership warehouses that offer its members low prices on a limited selection of branded and selected private-label products in a range of merchandise categories.

Hi, Michelle! I really love your example about the Costco. I have my membership of Costco. I think my family enjoy the benefits of being a member. After my wife and I got a membership card, we go their every week. The low-priced products and return program really attract many customers. The bulk package might be too much to the individual, but it helps the small business owners. Many small restaurants buy tissues, sodas, and waters from the Costco. And the home owner and small business owners are Costco’s real target customers. The Costco’s private brand also provides the good quality and low-price products to their customers. That makes people enjoy to buy things in there. And in each Costco store, they just have few products in the same category.

Should the government increase the minimum wage? This is an incredibly tough question to answer and after reading several of the suggested articles, I don’t know if there is a correct answer. The pros and cons for both theories are endless but lets identify some of the key factors.

From a financial standpoint, Costco does not make its money by selling products. It makes most of its profit from the yearly membership fees. The annual fees range from $60 for either a Goldstar or Business member to $120 for a Gold Star Executive or Business Executive membership. The various levels of memberships come with their own set of benefits. With Costco’s operating philosophy “Keep costs down and pass the savings on to our members” and the commitment “to offering the best value to our members, with a risk-free 100% satisfaction guarantee on both your membership and merchandise” it is no wonder why Costco has high membership retention. In addition, unlike other wholesale membership warehouses, you do not have to pay a membership fee for the privilege to shop at Costco. Costco does allow non-members who have a Costco gift card to shop in the

Founded in 1976, Costco Wholesale is America’s largest membership club, holding 50% of the market (Evans & Satchu, n.d.). and generating more than $100 billion in revenue in 2013 (Campos, 2013). While the moniker, wholesale, at first implies that this company distributes goods exclusively to retailers, in fact, Costco operates as a value-driven retail warehouse with a simple operating philosophy "Keep costs down and pass the savings on to our members. Our large membership base and tremendous buying power, combined with our never-ending quest for efficiency, result in the best possible prices for our members” (Costco Wholesale, 2016). With this strategy, Costco stands as the third-largest retailer in the United States with over 400 U.S. locations (Evans & Satchu, n.d.). This success can be attributed especially to their pricing strategy. Costco’s pricing strategy is at its core, value based, with auxiliary foci on markdowns, quantity discounts, seasonal discounts, and rebates.

Costco has a target market that it is trying to reach. The target market that it is trying to reach is usually a suburban group that is somewhat older and in the middle class. (knowthis.com) The target consumer is in the middle class because the membership costs about fifty-five dollars a year. Therefore, the member is typically financially stable to afford this yearly cost. Costco also targets businesses by offering a special membership called the business membership. The company appeals to many different people.

There are five major components of job satisfaction, one being monetary benefits (Ghillyer 2010). According to Ghillyer (2012) an employee’s behavior towards their pay may affect their work performance. The issue that arises with employee motivation is that management is unable to satisfy all (Ghillyer 2010). This becomes an even larger problem when employees being joining unions, resigning and being frequently absent (Ghillyer 2010).

Costco’s business model is to generate high-volume sales and rapid inventory turnover by offering low prices on a limited set selection of brands and a few selected privately labeled products. This model does not turn a profit on its own with the company operating slightly below its break-even cost. However, to make up for this Costco charges a membership fee and this is a simple way of padding their profit but also enabling them to provide a customer experience that emphasizes value.

They value companies who pay proper attention to their needs and make it easy to purchase

The bargaining power of customers is high. First of all, the customer size is tremendous globally, which also has an accelerating growth rate in recent years. Customers’ leverage is strengthening as a result of this. Another inevitable factor is that with countless retailors online, there is low switching cost for customers to find other alternative companies that suits their desire to conduct purchases. Moreover, consumers today are more sophisticated. Consumers are less commit to impulsive-buying, yet are more willing to study about product features and evaluate their options before purchasing online. Their purchase pattern can also be hard to learn too.

✓ The membership fee keeps the member motivated to engage in repeat purchases until the first reward at least. This provides with sufficient time to understand customer behavior and design offerings which can help build a relationship.

Organizational culture has been described as shared values and beliefs that underline a company’s identity. A strong culture that encourages employees from the top to the bottom in adaptation and change can increase organizational performance by energizing and motivating employees, shape behaviors, unify personnel in the goals / objectives and align employee’s actions with the priorities of the company (Daft, R., 2013). Creating a constructive culture should be a manager’s top priority because the right culture will propel a company into a top performer in its industry.