NFN Jotei, Brian Edwards, Helen Da Fonseca, Hendrick

Rodriguez, Ruma Bhowmik

 Executive Summary
● Costco Wholesale Corporation is a highly viable business.
● Its strategy is membership based with a pay to shop value proposition.
● Since 1983, Costco has risen to the top by offering members low prices.
● They have essential strengths to take advantage of opportunities in the retail
industry.
● Their low prices make it attractive even during times of economic difficulties.
● The company has opportunities to address threats to its long-term viability.
● They could use their website and its network of suppliers to compete against
new membership warehouse club retail companies.
● Expansion in overseas markets could also further boost the company’s success.
 Service Description
● Jim Sinegal and Jeff Brotman first opened
Costco in 1983
● They became a public corporation by 1985 and
by 1993, with their merge with Price Club, they
became the largest wholesale corporation
● Costco, currently, is a membership warehouse
club and a multi-billion dollar global retailer
● Dedicated to bringing members the best price
on quality merchandise
● Costco provides a wide selection of
merchandise with special departments and
exclusive member services
 Marketing Objective
● Costco’s marketing objective focuses on gaining new members more than
selling their products.
● In their policy, Costco states that only members can purchase goods. This
decision moves consumers to join
● Costco also sells their goods consistently low compared to its competitors
like Walmart to justify the membership deals.
● Costco believes that if it focus on gaining more members then it could
keep a loyal customer base and cover its expenses.
 Situation Analysis
● Strengths
○ They offer low prices on goods and/or services in its stores and on its website.
○ Their inventory turnover combined with high sales volume, contributing to higher revenues.
○ The high revenue contributes to high operating efficiency.

● Weaknesses
○ Their main weakness is the membership-only warehouse club retail business model. This
model encourages customers to buy at Costco stores, but also limits the total number of
customers.
○ They have limited array of goods and services. Their competitors like Walmart, may have a
wider array of goods and services.
 Situation Analysis
● Opportunities
○ Enter new markets, such as markets in developing Asian countries.
○ Expand the coverage of its e-commerce websites. Currently, they are offering online services
to the United States, Canada, United Kingdom, Australia, Mexico, Taiwan, South Korea, Japan,
and Spain.
○ Increase the variety of its goods and services to improve Costco stores to a more diverse
population of consumers.

● Threats
○ The entry of new membership warehouse club retail companies threatens Costco’s potential
to succeed in overseas markets.
○ The aggressive marketing of other retail firms also threatens Costco.
 Consumer Behavior Analysis
● Most of costco shoppers generally have a high income estimating 100k
annually.
● The demographics states the ethnics groups that mostly shop at costco
are asians and hispanics.
● Initially they wanted to attract college educated people and business
owners. People who were stable and allowed for consistency in their sales
revenue.
● They extended their memberships to the general public and gained a
certain type of consumers.
● They managed to gain loyalty and do not chase customers who are not a
good fit. They cater to the needs of their consumers.
 Marketing Strategies
● Membership - Working middle class
● Costco offers more promotions in store with less variety than Walmart.
● Marketing Mix 4Ps (Product, Place, Promotion, Pricing) 2017
● Product Mix - Basics, photo printing, life insurance, payroll services.
(diversified)
● Place/Distribution Mix - Warehouses, online, and mobile app (technology)
● Promotional Mix - sales promotion, direct marketing, personal selling,
public relations.
● Pricing - Market-oriented pricing strategy.
 Marketing Mix
● Costco’s product mix has grown considerably since its creation. As it has
grown, Costco has added appliances, electronics, and payroll services to
expand its product mix.
● Costco’s price mix is a revised version of the high-low pricing strategy. It is
known as market-oriented pricing strategy. It consists of selling large
amounts of goods at the lowest prices possible.
● Costco has four promotion tactics. They are sales promotion, direct
marketing, personal selling, and public relations
● Costco place mix includes three locations. This includes Costco
Warehouse stores, Costco online store, and the Costco app.
 Citations
● https://www.investopedia.com/articles/investing/070715/costcos-busines
s-model-smarter-you-think.asp
● https://www.costco.com/about.html

● http://panmore.com/costco-mission-business-model-strategy-swot

● https://www.investopedia.com/articles/insights/061516/whats-average-co
stco-consumer-cost.asp
● http://panmore.com/costco-wholesale-marketing-mix-4ps-analysis