COSTCO Marketing Plan Analysis - Essay Example

The company vision as put forward by its founder, Jim Sinegal, is to “give the customer the best value we can”. His strategic vision is to give customers the best value at the right price. He stressed the importance of treating people right and with respect. It works under the philosophy of “To keep costs down and pass savings to customers” (costco.com).

Costco sells automotive supplies, sporting goods, hardware, apparel, jewelry, toys, electronic goods, and health aids. Away from the usual business activities, COSTO offers technical and non-technical services based on different fortes such as travel operations to financial investments. Other services of COSTCO include COSTCO Photo Center, COSTCO Travel, Food Service, and Shopping. In 2010, the company branched out to publishing and started to publish books and calendars (Success Story, 2015).

Costco does not raise prices because it believes it will be its downfall. To offer lower prices than competitors, it adopted a markup price of only 15 percent which is much lower than department stores. Department stores, according to Bond, and Ronald, 2015, have a markup of 50 percent. Costco keeps its price down because they sell in bulk so the cost of operation is down.

Costco distributes its products through its international warehouse-designed buildings located at various global sites. Costco has 672 warehouses in various regions, the majority of which are in America. Few are located in Asia, such as there are 20 COSTCO warehouse stores in Japan, 11 in South Korea, 10 in Taiwan, and 7 in Australia. It has also opened an internet website to keep abreast with competition, with free shipping and discounts to members. It limits the distribution of its products by carrying limited items. Costco believes that selling fewer items helps to increase sales volume and drives discounts.

COSTCO does not advertise but instead invests more in giving value to its products and services, and in investing in employees’ pay and benefits. The company believes that this strategy will retain employees and motivate customers to keep coming back. Its website serves as a virtual store that displays its products and merchandise for sale.

COSTCO places high value on employees, training, pay, and incentives. Companies put importance on hiring good people, giving them good jobs, and to grow own talent. This means employees working at COSTCO have a feeling of security in their jobs as long as they are performing well.

COSTCO competes with warehouse club operations in the United States, Sam’s Clubs, and BJ’S Wholesale Club. It also competes with regional wholesalers and retailers, supermarkets, department stores, gasoline station retailers, and internet retailers. Well-known competitors are Walmart, Target, Kohls's, and Amazon. It also competes with operators of single merchandise like Home Depot, Office Depot, Best Buy, PetSmart, Traders Joe, and others. However, despite the competition, COSTCO’s net income grew by 17.17% while most of its competitors experienced a drop in sales by -0.57% (CSI Market, 2015).

STRENGTH:
- Company offers varied product mix.
- Strong financial performance.
- Company displayed continued profitable performance for the past several years.
- Loyal employees.
- Value-added services.

WEAKNESSES:
- Sales are reliant on the American market.

OPPORTUNITIES:
- Expansion in new markets.
- Non-store format growth.

THREAT:
- Intense competition.
- Labor laws, regulations, and policy changes of the government.