COSTCO| Research Development,
Precedent Studies, Marketing Programs & Strategies
Marketplace Research
There is already a lot market
research available for Warehouse Clubs, such as Costco. Some of the useful
information includes analysis on the industry and sales reports form Costco
itself. Other useful information includes studies about their target market. There
are a variety of reports that you can purchase online that are already compiled
marketplace research, or you can choose to do the research yourself.
Market Observation
Costco’s primary market is small businesses, and their
secondary is affluent families. Below are some market observations that are
important for Costco to look at when making marketing decisions.
Small
Business
·
According to the U.S. Small Business
Administration, a small business is generally 500 or less employees (SBA, 2012).
·
As of 2012, the U.S. Census said there was
6,232,434 small business in the U.S. (United States Census Bureau, 2012).
·
That is slightly up from 2002, when there was
6,172,809 small businesses in the U.S. (United States Census Bureau, 2002).
Affluent
Families
·
As of the 2013 U.S. Census, the median U.S.
household income was $51,939 and the mean household income was $72,641(United
States Census Bureau, 2013).
·
In metropolitan areas, the median household
income was $54,042 and mean was $75,476(United States Census Bureau, 2013).
·
This is in comparison to outside metropolitan
areas, where the median was $42,881 and mean was $57,491 (United States Census
Bureau, 2013).
Online Survey
Analysis
I created an online survey through the use of Survey Monkey.
Here is a link to the questions:
Responses:
Precedent Studies
Advertising Strategy:
Costco's advertising strategies have been the same for a long time.
Costco is a membership only store, but is rather affordable to get a membership. When Costco has opened a new warehouse they
will generally only market to local small businesses, for the most part the
rest of their advertising is word-of-mouth (Costco
Wholesale.).
Costco sells most of their products in bulk packaging, which makes it
simple for a small business to either resell a product, or for a large families
to consume the products. Costco also has their own private label, this does
make them different from their competitors. Costco's private brand Kirkland,
had more than 330 products, and makes up more than 15 percent of their sales (Costco Wholesale.).
Precedent Studies:
Costco did not become the 7th largest global retailer by no
surprise, will millions of products, create customer prices, and great valued
products for a fraction of other retailer’s prices. CEO, Jim Sinegal believe
that most of their successes comes from the way their employees are treated (Srikant, P., & Rajakumari, D.). Costco created
a program that is directed towards investing in their employees (Srikant, P., & Rajakumari, D.). The employees
are offered befits to help motivate, and retained employee loyalty.
Marketing Programs
and Marketing Strategies
Advertising
Costco sends out:
· Monthly coupon
mailer
· Magazine “The Costco Connection”.
These publications are filled with information about products,
opportunities and new product lines that will be offered at Costco. They have a great smart phone application, as
well as an awesome online store.
Sales
promotions
Costco runs monthly sales.
The coupons are scanned at the checkout, no need to clip or select any.
If you are a member you get the sale price.
A mailer is sent out monthly as stated before complete with all coupon
offers as well as manufacturers INSTANT rebates. Usually store sale items are also the items
that are chosen for samples and direct marketing for that month.
Consumer
Consumers have an
incentive to introduce or refer new memberships and are rewarded for doing
so! Consumers can also chose to have an
executive membership and earn points on ever y dollar they spend. These points are converted into cash and
mailed directly to the consumer in an annual earnings check. Many members use this check to re-new their
membership. Membership becomes free!
Trade
Costco really has a unique sales
model so by design trade promotions are successful at Costco. It is true that many of Costco’s products are
packaged in bulk. However many of their
treasure items are the same size as those you would find at any store. Bedding, towels, furniture, tools are all
examples of products one does not have to buy in bulk. Costco does buy these items at bulk at a huge
discount. These savings are passed directly
to members. These products are top of the
line quality products. Costco members trust the labels that Costco offers. Costco members also can buy knowing that if
not fully satisfied they can return the product for any reason at almost any
time.
Public relations
Costco is known for their wiliness to take back almost any item at
almost any time no questions asked for a full return. They want you to be satisfied. If there is a recall, Costco lets you know
early and often. The customer service is
second to none.
Personal
Selling & Direct Marketing (Insert Photo)
Costco does an amazing job with personal selling and direct
marketing. Ever visit a Costco at lunch
time? Many customers do. It is a great way to try out new food items
and have a terrific meal while shopping.
Costco always has sales people on the floor selling food; road show
(specialty limited time items), appliances (manufacturer reps), and ready to
speak to you about the product:
· How good the product is for you?
· Why you need it?
· What it is made from?
· Who produces it (locally, regionally, or nationally?)
The personally selling and direct marketing are specific ways to
engage the end user directly and entice them to try the product.
Zoltan Kaszas Stand-Up: Costco Samples
Reference
Costco Wholesale. (2015, August 31). COST 10K 2014. Retrieved April 22,
2015, from http://www.sec.gov/Archives/edgar/data/909832/000090983214000021/cost10k2014.
htm#sA5709D9D8C998CE83EF486675C5F199C
Srikant, P., & Rajakumari, D. (2008, January 1). Costco
Strategy Case study, Human Resource Management Case Studies. Retrieved May 3,
2015, from http://www.ibscdc.org/Case_Studies/HRM/HRM0033C.htm
SBA. (2012, April 30). What is a Small Business? What you
need to know and why. U.S. Small Business Administration. United States
Government. Retrieved from https://www.sba.gov/blogs/what-small-business-what-you-need-know-and-why
United States Census Bureau. (2013). 2013 Household income.
Current Population Survey. Retrieved from http://www.census.gov/hhes/www/cpstables/032014/hhinc/hinc01_000.htm
United States Census Bureau. (2012). Data Tables by
Enterprise Employment Size. Statistics of U.S. Businesses. Retrieved from http://www.census.gov/econ/susb/
United States Census Bureau. (2002). Data Tables by
Enterprise Employment Size. Historical Data Tables by Enterprise Size - 2002.
Retrieved from http://www.census.gov//econ/susb/data/susb2002.html
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