Costco—low price and high quality.
Oct 10th, 2011 by ziyansun
According to my experience, most people who go shopping in Costco are large families. However, my roommate, who does not have much interest in wholesale store shopping, loves Costco as well. When asked why, she answered, “Costco offers some unique purchases with high quality and I love them”.
Costco, the largest membership warehouse club chain and the third largest retailer in the U.S. with 81 stores in Canada(http://www.infomarketingblog.com/costco-index/), has a very clear target market and position: It targets at large families and business and focuses on selling products at low prices as well as at high volume, meanwhile, maintains a high quality. How can Costco manage this?
I believe that each Costco customer has found that Costco doesn’t offer multiple brands or varieties except when it has a house brand to sell, typically under the Kirkland Signature label which is introduced by Costco in 1995 “in order to indentify categories in which a private label product could provide brand name quality at discounted prices” (Wikipedia, “Costco”). This results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs.
Costco management feels the wholesale price of a product is too high,they will refuse to stock the product. Costco once announced in 2009 that it would stop selling Coca-Cola products due to the soft drink maker refusing to lower its wholesale prices. Costco resumed selling Coca-Cola products on December 14, 2009. Due to the same reason, Costco ended relationship with Apple in December 2010.
One customer strategy Costco has been implementing is that it is only open to members and their guests. All customers in Costco hold membership cards and pay annual fee. Besides, Costco encourage its members to purchase by “email marketing strategy as it send campaigns regularly, which means they stay in the front of their customers’ minds” ( Costco, http://blog.mailermailer.com/2008/09/costco-email-marketing/).
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