Exclusivity to members: As we all know, Costco are the membership system. This system allows exclusivity to members, and exclude other shoppers. It restricts the shoppers shop easily. Even there are more than 81.3 million cardholders, not everyone has the cards. For example, there are many tour groups come to California, especially Chinese tour groups.
The first level of membership is business, which is any business or store with a retail sales license that is qualified for business membership, allowing these customers to shop for resale, personal, or business use. The next level is a gold-star member that allows the member to shop online and in warehouses and includes two free membership cards. The last level is the executive member, who offers many benefits and perks. With executive membership, members receive a 2% annual reward, receive up to $1,000 on Costco travel purchases, shop online and in the warehouse, and receive two additional membership cards. As members of an executive club, you can purchase additional services such as auto insurance, homeowner insurance, long-distance phone services, mortgage services, and discounted business services such as health insurance and merchant credit card
Costco Wholesale Corporation strives to grow and expand through their competitive retail and pricing strategies in their market. As a retail firm, Costco depends on cusumer purchasing capacities (Gregory 2015). Costco offers a limited number of items that are afforadable quality services and goods to their consumers and believes it aids to their continued growing and expanding success. Costco is driven by cost leadership for their retailer store because they would rather maintain the lowest prices possible which enable customers to return. Costco largely relies on their pricing and retail strategy to continue sales and organization success.
The type of products that Costco sell are groceries, apparel, electronics, auto and tires, computers and printers, office products, TV’s, toys, appliances, handbags, furniture, outdoor furniture, jewelry, electronics, health products, floral, and household and lawn items. They also offer different services, which includes, Photo Center, Pharmacy, Optical, Gasoline, and Home and Life services • Place: Costco warehouse stores is typically where they sell their products at. Also, Costco distributes its products on their online website, and on their mobile app, as well • Promotion: Costco warehouse is a membership only club, so it offers instant savings on some of their products on-line, and in-store. Also, Costco offers its customer free samples, it has caused an increase of sales within their company.
Meaning that Costco purchases straight from the manufacturer and then has the merchandise transported to a cross-dock warehouse that will then truck to the stores. In addition Costco believes in paying its employees a higher wage because that equals happier employees who take their work seriously. Higher wages also mean that Costco will employ a higher quality employee from the preexisting pool of candidates that retail chains compete
As of 2023, Costco has 850 total warehouses with 158 of them being outside of the United States and Canada (Costco, 2023). Costco is able to scale partially because of their hiring and product selection, but also because they slowly build up their store counts in the same countries over the years by capitalizing and adjusting to each countries cultures and catering to it. For instance, Costco entered Japan in the 1990’s and they currently have 31 stores their which is the most outside of North America (Costco, 2023). This is due to their growth strategy (Parnell, 2014).
3.0 Concepts 3.1 Resources and Capabilities In order to achieve and sustain competitive advantage, a business needs both resources and capabilities. Resources are assets that are owned or employed by an organization. The organization utilizes and uses these assets to carry out their business operations. Resources can be grouped either tangible assets or intangible assets.
Costo understands that in order to have a successful business model, a barely sufficient or adequate offer of products is necessary. In fact, Costco carries around 3,700 items in its store,
Costco is dealing with high quality and brand-name merchandise as Whirlpool, Sony, Mont Blanc. Costco has an unconditional guarantee with full refund and Costco offers the best lowest possible price. Costco has a special strategy to offer lowest price as No sales people, No fancy building, Warehousing, Purchase in bulk, Minimized restocking and Membership cards. Costco has multitude of services as Pharmacy, Optical and Eye care, Tire Service Center and
Costco’s business model is centered around offering a smaller range of products at incredibly low prices which attracts the consumer. In order to supplement this lowered profit margin, they require their shoppers, both businesses and individuals, to purchase annual memberships. The membership fee accounts for a majority of the company’s profit. Furthermore, Costco operates its under a wholesale warehouse style which eliminates the need for excess handling and workers in the store. The stores are stocked to carry certain big ticket, ‘limited time offer’ goods so that customers feel the need to take advantage of the deal because it may not be there when they next return.
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.
Currently, Costco and similar retailers are not active in the market of Cyprus. In order to determine if a warehouse retailer would be successful in such a market, several analyses should be conducted. The geopolitics, economics, and sociocultural aspects of the market of prospect should be examined. Qualities of the competing market and the company’s target market should be compared. A retailer’s success in a market is influenced by economic conditions, the characteristics of the population, and market trends.
Costco Wholesale was founded in 1983, in Seattle, Washington by Jim Sinegal and entrepreneur, Jeff Brotman – now chairman of Costco’s board of directors. Costco is a leading brand among the wholesale retail industry. Not only is the brand amongst the three leading retailers in the United States, but it is also the leading membership-based warehouse chain in the world. Costco operates membership-based warehouses where a wide variety of consumer goods are sold wholesale. These product categories include a broad spectrum of goods such as, snack foods, dry and packaged foods, frozen food items, deli and produce goods, dairy products, cleaning supplies, paper products, electronics, health and beauty aids, office supplies and appliances.
Costco Wholesale Corporation Costco Wholesale Corporation is an American multinational corporation that focuses on selling top quality national ad regional brands at substantially lower prices, often at very high volume. Its’ wide selection of merchandise includes groceries, candies, alcoholic and non-alcoholic beverages, cleaning supplies, appliances, electronics, health and beauty aids, hardware, automotive supplies, furniture and apparel. In addition, the company also provides optical laboratories, special food packaging, meat processing and jewelry distribution services. Costco comes under the retail industry and as of 2015, it has become the world second biggest retailer after Walmart. Other competitors include, Target, Kroger, Amazon.com
What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage? The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation.
