Assignment: The Costco Craze (10 Points)

Assignment: The Costco Craze (10 points)

1. Costco claims to break all the rules in retailing yet continues to be one of the most successful companies in the supermarket industry. In the context of the four P’s, select four unique Costco tactics identified in the video and explain how each of them help drive Costco’s success in the market (5 points).

Product: Costco doesn’t have a lot of product options, with usually only a few different types of the same product. But they offer a huge variety of products as they aim to be a one stop shop for everything the consumer needs. They also offer a variety of services such as photo printing services, car rental, and even life insurance.

Their low option policy has made them more profitable as

They also have an in-store reasonably priced restaurant to get customers to stay there longer.

Price: All the Costco products have a maximum mark up of 15%, keeping their prices competitive and almost always cheaper than their competitors which usually mark up at 25%. In the video the founder is seen comparing the price of one of their products (a toy truck) to Sam’s Club which was offering it at a lower price, and reconsidering their pricing for it. Their pricing does however force the consumer to buy the product in bulk- making them assume that they are getting the best possible price.

Promotion: Costco doesn’t have any conventional marketing/ promotion strategies like their competitors as they are not big on advertising. They email and mail their members flyers and product descriptions which help them maintain their customer retention. However, they don’t actively advertise to new customers, primarily relying on their current customers to advertise by word of mouth like Kimberley Peterson, the

By doing so, they can continue increasing their membership, as not all the students would cancel their membership once they graduate. Millennials also don’t usually buy items in bulk, either due to lack of space, or to ensure they don’t waste them. Thus, Costco should come up with a subscription policy so that instead of buying a pack of 20 bottles in 1 week, the consumer has the option of buying 5 bottles across a period of 4 weeks. This would ensure that Costco still sells the products in bulk, and make them more appealing for the millennial