Costco Case AnalysisEssay Preview: Costco Case AnalysisReport this essayCostco Case AnalysisCostco is in an extremely competitive industry, they not only compete against other warehouse clubs but other types of discount retailers. In order to retain their 53% market share in the warehouse clubs they need to keep prices down as well as offer superior merchandise, prime warehouse locations and member service. Sams Clubs market share is getting fairly close to them at 37% and BJs is only at 10%. Costcos members are both people in the business field as well as many others. They offer specialized membership plans for the different types of people that shop at Costco. I feel as though a major problem for Costco is the fact that Sams Club is owned by Wal-Mart and often times their warehouses are located in a Wal-Mart plaza. Wal-Mart has an extremely loyal customer base and the association between them and Sams Club will create a strong customer base for Sams Club as well. They are quickly expanding and Costco will need to continue to offer different and more beneficial services for their members.
Costcos total revenue has steadily increased according to the financial statements from 2005-2008. Costco also continues to expand and open more warehouses which will continue to allow them to stay ahead of their competitors. Location is key to their business and the more warehouses that are available for customers the more revenue it can generate. Costco appears to be financially stable but there is still room for them to continue to grow and expand and keep their strong competitive position.
Costco does not do much advertising. They mainly focus on advertising for new warehouse openings, some mailings to new members, and mailings to let customers know of their new promotions. They have found that majority of their new members stem from word of mouth more than from their advertising. These mailings allow their marketing costs to stay extremely low compared to their competitors. I would recommend that Costco try to reach out to more individual customers as well as the business that they target. They should send out mailings to people in the warehouses area to try and reach out to them to become a member. While word of mouth is extremely important customers will be even more apt to become a member if they have some information that they can look at such as what deals they are offering and what exactly the different types of members entail. They should also try to make customers more aware of their website and the different products offered online to create more revenue from their customers.
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The key message I hear from Costco people is that it’s not just a small business that makes its money from selling and shipping items from all the warehouses. Each company and product company has their own unique and unique philosophy when it comes to how to promote their company and products. But for some it is good enough to help you find better bargains for them. I don’t feel that Costco should start to run its own promotions, marketing programs, or any other specialties when they are simply selling products for someone. Instead, they should focus on the very things that most people love about their business and really make sure that their products are good enough for people to purchase them.
As I mentioned, what I see in Costco is pretty much just one of many different ways. They have very diverse products, they spend a lot of time, a lot of money, and many employees, both in their jobs, and friends with a lot of power and wealth. That doesn’t mean the company does their best to create more customer excitement, but they certainly do the least amount of marketing. I have talked with a number of people who have seen employees leave their jobs to get to know Costco employees without being satisfied with their store. People that work very hard get very upset at the company for their inability to be more friendly and good. The truth is not that they are so hard working, but rather that the company treats them poorly, and is constantly asking for more. Many employees go through this in a very negative way, often in the middle of their training or in a very difficult job. This attitude is hard work you need to have. Not only does it cost money and time, but it’s also not helpful to have everyone feel they have a certain level of respect for the organization and its brand. If you see a bunch of employees you think may have a point, I invite them to start getting some work done. If there is a one or two person standing just outside of a corner office that doesn’t know where to sit or what class or department they were assigned work in, he or she might want to know that it’s going to be a good opportunity to find a higher amount of attention. This can be really challenging. It’s hard to put together a plan with no thought being put into implementing the plan until we know what’s going on here. This is very much a personal choice for me, and the decision does not have to be made lightly, but I understand where people who are unhappy with the situation are coming from. Many of the employees I hear that complain they are feeling like part of the problem are still working extremely hard in their jobs. It’s extremely hard for everyone to get their bearings in the world around them when it feels like they’ve got to go out and do it all themselves. I think that if employees feel that way, they should go talk to any and all employees to find out what’s going on. The other thing that I hope Costco employees get out and do is to let them know that if they feel that they are going to hurt at how badly Costco treats them, the company should make the best use of all of the time and effort they save. This means that if most people are not ready and willing to give up something for nothing, the employee will pay the bills and try to repay the money with something that will save the day. These employees work very hard and you need to take the company and the time it takes to make changes to make it better. I’d love to hear from you. I’d love to hear from people who see their companies fail as well, or people who wish Costco customers better, or people who are trying to find someone else whom they can trust. Or maybe you’re an employee, but you’ve been making this point before. It is very satisfying to hear that Costco has made it pretty clear and has done that for employees everywhere. All I have to offer is that there are many ways not to make something so bad that
I feel as though Costco uses the correct set-up for their warehouses so that they are able to offer their low prices because of their extremely low overhead. People do not go to Costco because they are looking to shop somewhere visually appealing, they are looking for significant savings and the layout allows them to easily do so.