Costco Wholesale Membership Essay

The strategic objective of Costco is based on the concept of offering members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories while producing high sales volumes and rapid inventory turnover. This rapid inventory turnover, when combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self service warehouse facilities, enables Costco to operate profitably at significantly lower gross margins than traditional wholesalers, discount retailers and supermarkets. (1)

Costco is the best cost provider in the wholesale club category and the strategy is associated with Costco’s capabilities and resources, which includes; a streamlined supply chain, good supplier relationships, purchasing power, high sales volumes, quick inventory turnover, and excellent customer service. The three vital components of the company strategy are low pricing, limited product selection and high-end products acquired in closeouts and liquidations. While Costco strives to beat the competitors pricing, it also delivers exceptional value in its high-end offerings and customer service, giving consumers more for their money. Given its customers are the most affluent of all the warehouse clubs, with average incomes around $75,000 and this strategy works well for Costco. However, these customers are conscious not only about money but also value for the product, this fact is supported by the members who choose for executive

It was in the twentieth century that the world was first introduced to a now well-known household name, Costco. In 1976 that the first Costco was opened, formerly known as Price Club, in San Diego. The philosophy of this company is simply stated, “Keep costs down and pass the savings on to our members.” (Costco.com) It has held onto its philosophy of keeping prices low for almost half a century. Costco is self defined as a “membership warehouse club.” (Costco.com) It provides a wide variety of brand name products in their warehouse-style store, and strives to provide all members with the lowest prices that they can offer. Today, Costco is a well known and loved company by consumers.

Every company and/or organization starts and operates to achieve a single major goal, which is normally included in the company’s mission statement. Setting a goal, however, does not translate into success on its own; it is only the fist step. Understanding market segmentation is the second most important aspect of doing business. “Sellers and advertisers want to be able to determine what the potential market is for their product or service, as well as the best ways to reach potential consumers” (Terrell, 2013). Once a goal is set, an organization first must decide if it wants to operate locally, regionally, nationally, and/or internationally, as the size of the geographic coverage has a large

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 is a recognized and successful retail chain including several locations, glowing feedback, and a wonderful overall reputation. Known by several audiences to be considered a “big-box” store, Costco offers various products in its stores at low, discounted prices, accompanying a membership card. Before and after researching this company, the author of this paper has heard exceptional feedback regarding the company for its initiative to keep prices low, employee morale high, and customer satisfaction to be one of its top priorities. Within this body of work, the author will dissect and discuss some of Costco’s stakeholder perspectives and how some of the perceived initiatives may help aid the company within its

Costco, in conjunction with its subsidiaries, operates membership warehouses where a wide variety of consumer goods are sold wholesale. Both brand name and private-label products are sold across a vast array of merchandise categories, such as snack foods; dry/prepackaged foods; tobacco; alcoholic and nonalcoholic beverages; cleaning supplies: electronics; health and beauty aids; office supplies; deli and produce; and apparel.

Many of Costco’s strengths are held with their low prices, limited selection, and their employees. Costco prefers to hire from within and focused on career longevity and development for their employees. It was company policy to fill at least 86 percent of its higher-level openings buy promotions from within; in actuality, the percentage ran close to 98 percent, which meant that the majority of Costco’s management team members were home grown (Gamble & Thompson Jr., 2009, p. 226). Even with their many strengths, Costco still had some weaknesses. Their warehouses appeared to be very industrial, with concrete floors and merchandise displayed on wooden pallets. Costco also relied heavily on word-of-mouth advertisement, which saved the

Which all in all provides a better atmosphere of customer service towards consumers. This convinces consumers to prefer to shop at Costco, knowing that they will come out satisfied at the end of the day. (USA TODAY)

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

As stated in the introduction, the founder, Sol Price named his store Price Club when it first opened its door in 1976 at a converted airplane hangar on Morena Boulevard in San Diego. Initially, the goal was to have greater buying power by selling to small business, non-profit organization and government. “The Price Club philosophy was simple: Keep overhead to an absolute minimum.” (Fox, M. 2009). However, it was soon realized it wasn’t profitable enough to keep the membership to an exclusive group such as small business and government so the membership was opened to the general public at an annual membership fee of $25. In doing so it became extremely profitable to the point where the employees were paid higher wages with benefits than typical retailers. The company also started expanding throughout the U.S., Canada and Mexico. In 1983 the first Costco brand warehouse location opened in Seattle, WA. Costco became the first company to grow from zero to $3 billion in sales in less than six years. When Costco and Price Club merged in 1993 to become PriceCostco, it had 206 locations generating $16 billion in annual sales. At the end of their fiscal year in 2016, the company’s total sales were $116.1 billion. (Membership. (n.d.). Retrieved February 19, 2017, from https://www.costco.com/membership.html). Costco is one of the most admired

Costco Wholesale has generated a revolution in how people shop: for the first time, many Americans are willing to 'pay' for the privileges of membership to a store so they can buy its products and save money. Like Wal-Mart, Costco prides itself on its low, low prices. However, in stark contrast to Wal-Mart, Costco has also made its exemplary treatment of its employees part of its marketing and sales strategy. It advertises itself as an ethical company, a company where it is a pleasure to work. This use of its HR police as a marketing strategy has proven to be effective, particularly with its target audience. While it caters to a wide and diverse audience in terms of its product diversity, on the whole Costco's target consumer is more affluent and educated than the average consumer at a big box store like Sam's Club. Costco's target audience members are interested

Costco is one of the most profitable retail stores in the United States at the moment. This is in spite of the prevailing tough global economic times and stiff competition from stores such as Wal-Mart and Target. Costco, a members’ wholesale retail store, was founded in 1983 in Washington by Jeffrey Brotman, who serves as the current Chairman of the board of directors and James Sinegal, the current company president. Costco has not been spared by the current global economic conditions. They have affected it in a number of ways that have made the company’s management respond in a manner that is meant to ensure that the business not only survives but grows even stronger. First, Costco has taken strong measures to keep

According to the Food Retail Industry Profile, Costco has an advantageous advertising program such as the Costco connection, a publication for associates, coupon mailers, weekly email blasts from costco.com, and handouts. These are directed towards current members for promoting selected merchandise. Additionally, Costco offers valuable services such as digital photos processing, travel, business delivery, pharmacy, and membership services. One important point to mention is that Costco also manages gasoline stations at many of its U.S. locations which is very convenient for almost all its memberships, and what to say about its price it is more economical than in other places.

With 91 percent renewal rate in 2015, Costco’s value-added services to its members still remain one of its biggest advantages in the retail market. It is because not only Costco offers its members with wide range of high-quality products at low prices, but also it provides one of the best services in the market. In order to keep high value on membership, Costco generally accepts returns of merchandise. On certain electronic items, it has a 90-day return policy and provide technical support services and an extended warranty. In addition, Costco provides consumer services, insurance services and business services to its members. Its members are also qualified for additional discounts from its business partners, such as Avis Rental Car. In 2015, there are 81 million card carrying Costco members in the U.S., translating to 33% of all adult Americans. The number of cardholders and high membership renewal rate strongly demonstrates how successful Costco maintains its customer loyalty, which is the foundation of its business.