For the business-level, Trader Joe’s adopted a differentiation focus strategy. According to our textbook with this strategy, Trader Joe’s seeks to differentiate in its target market. They rely on providing better service than broad-based competitors. Specifically, they focus on the special needs of the buyer in other segments (Dess, Page 159). Joe’s differentiates its self from other grocers by providing a unique shopping experience fortified with their private label goods and great service from their crew members.
Their current market situation and competitive strategy highlights aspects that Costco has implemented in the organization to increase sales and
In addition, Costco does a great job in their internal growth process with hiring (Loeb, 2015). Costco’s purchasers do well as they know their store locations and the local demographic’s desires. For instance, in Australia, the Costco there like Vegemite, so they have that there and not in U.S. locations (Loeb, 2015). Costco is smart with their distribution chains as they usually use 65% of local bought and specific products (Loeb, 2015). Globally, Costco has built trust within their brand as customers go to them for quality service, freshness, and a great selection of products.
Market segmentations is the method retailers use to segment, or break down, heterogeneous consumer populations into smaller homogeneous groups based on certain characteristics.(Dunne,Lusch,&Carver.2014. Pg 92). I feel Costco is a very good example of segmentations and what they provide. Costco is often compared to Walmart because they offer most things that the consumer will need or want. Even though Costco provides most of the things they sell in bulk, the consumer is appreciates that a need is being met.
Third is the pricing strategy. It shows how the company set their price on the product or service, what does the pricing based on. Is it based on the expenses, tax or promotion techniques with an aim to make profits. Fourth
We would want to make sure our prices stay relevant with our market, so customers will be less inclined to buy from our competitors. We would take the competitive pricing strategy of pricing lower than
This strategy is applied in industries with one or two prominent companies. Thus, it’s also referred to as “follow the leader.” The main advantage of competition-based pricing is that it’s easy to use, as extensive marketing research and statistical analysis are not required.
Key Trends – Globalisation One of the main opportunities Costco has is more global expansion to specific targeted countries. Although operating in many countries, Costco is heavily dependent on the U.S. and Canadian markets. It still has the opportunity to expand into the Asian and Australian markets where it has a limited presence. Costco has the capability to operate about 100 stores in Taiwan, Korea and Japan combined and about 20 stores in Australia. It currently has 41 stores in Taiwan, Korea and Japan combined and 6 stores in Australia.
Market Segmentation: To be of value market segments must be measurable, substantial, accessible, differentiable, and actionable (Kotler & Keller, 2012). Segmentation of demographics for Costco is vast as the current product offerings include all genders, ethnicities, incomes. age groups, and social classes. When considering demographics, it is important to consider the average or typical characteristics of the target market. As mentioned earlier the target market or focus for this company is supplying the small- to medium-sized business and targets the middle- to high-end consumer with its private label brand Kirkland Signature.
Specifically, Ralph’s (similar stores are Vons and Albertson’s) and Whole Foods (similar stores are Gelson’s and Trader Joes) are two firms that utilize cost leadership and differentiation. On one hand, we have Ralph’s using cost differentiation by providing a broad range of merchandise at a decent price. On the other hand, we have Whole Foods that has implemented a differentiation strategy by marketing their merchandise as healthier (organic). The trade of for both companies is that they are attracting less consumers by just marketing to a specific crowed. For instance, if Whole Foods had lowered their price and still sold premium merchandise, soon Ralph’s would be in trouble.
The pricing strategy or pricing policy is one of the most important managers make for a product as it affects the profitable outcome and competitiveness that a product may make. (Toni, 2017). A business can use a variety of pricing strategies when selling a product or service. The price can be set to maximize profitability for each unit sold or from the market overall. It can also be used to defend an existing market from new entrants, to increase market share within a market or to enter a new market by dropping the price or offering more benefits with the device such as packages.
They keep their prices low and attract huge customers . There are other types of pricing which is totally opposite to this strategy. Market penetration pricing is a strategy wherein the product when introduced in the market is set low following its introduction in the market. Prices in order to increase sales for a new product in some case
4.4 Pricing Strategy For a number of reasons, price is one of the most important aspects of an effective marketing strategy (Gerstein & Friedman, 2015). First, price is the only marketing variable that generates revenue. Second, buyers see price as an attribute of value (Tanner & Raymond, n.d.). Consequently, an organization must carefully assess its internal and external environment to choose the most effective pricing objective, which—in turn—will drive a product’s initial pricing strategy.
6.1.2 Price Price is the value or amount that customer pays to buy a product. For instance, for our Star Lab ice cream shop, we need to consider the cost of production of our ice cream, price of our main competitor and our potential customers demographics in order to succeed this competitive market. (C. Breidert, 2007, p.9) 6.1.2.1 Pricing Strategy Pricing strategy that can be used by our company such as penetration pricing, cost-plus pricing, value based pricing and more. But we think that market penetration pricing is the best pricing strategy to be used by our business.
