costco

• 1. A Case Study
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2. Costco Profile
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3. Strategic Vision
Give customers best value at the best price
Mission : To continually provide members with quality goods and services at lowest possible prices
Treat people with right, respect and act ethically
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4. Business Model
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5. 13 July 2010
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6. Low Cost Generic Strategy
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7. Low Cost Strategy
Works best when the competition among rival sellers is vigorous
Products are identical
Most buyers use products in the same way
Buyers incur low cost in shifting from one seller to another
Some years ago, we were selling a hot jeans brand for $29.99, when they were $50 in a department store
-Jim Sinegal
Disadvantages
Aggressive pricing can reduce profitability in the long run
WSJ accused Costco of pleasing customers at the expense of the share holders profits
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8. 4000 items were available on the shop floor compared 40000 in other shops
Limited selection in each product category:
Fast selling models
Sizes
Colours
Products sold in big container, case, carton or multiple pack quantities
Product Selection
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9. Constantly changes 1/4th of its product offering
Irresistible deals on luxury items Entices shoppers
Create a sense of urgency among customers
An item once displayed may not be available next day
Luxury items obtained legally from the gray market or from distressed retailers looking to get rid of excess or slow selling inventory
Treasure-hunt Merchandising
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10. Warehouse Operations
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11. HOW
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12. Growth Strategy
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13. Supplementary Strategy
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14. No excessive advertising or sales campaigns due to good reputation
Promotional activities through direct mail programmes
Word of mouth
Marketing and Advertising
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16. Internal Environment
External Environment
Satisfied employees
Highly paid
Many benefits
Decentralisation of authority
Operations were environment-friendly
Solar powered offices
Timed lighting
Growth opportunities in other developing countries like India, China, Brazil etc
General economic condition
Legislation and regulation
Rival business firms
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Competitors
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Comparison With Competitors
19. Market Positions of Rivals
Higher
SamsClub
Costco
Operating Margin
BJs
Lower
Few
Many
Number of Locations
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20. Current Scenario
Costco is in the maturity stage
3rd largest retailer in the US
55 million members (As of Sept, 2009 )
Net profit $1.28 billion (Aug, 2009)
567 locations (April, 2010)
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Source: http://joshbersin.com/2008/07/31/make-learning-part-of-your-business-strategy/
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