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What Is Costco's Marketing Mix

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Marketing Mix at Costco
1.) Product - Costco offers their customers low prices on selected private and a limited selection of nationally branded products in a wide range of merchandise categories. Costco’s Kirkland Signature private label is known for its quality and value. Costco currently carries more than 330 private label items which make up more than 15% of their sales. Their major products are appliances, books, DVD movies, VHS movies, music, computer and peripherals, electronics and camera, furniture, hardware and outdoor living, health and wellness, jewelry and apparel, and wine and food. Their major services are auto and home insurance, auto financing and refinancing, real estate agent service, mortgage services, life insurance, travel, …show more content…

They have store locations, with warehouses in the United States in Canada, Japan, South Korea, Taiwan, United Kingdom, and in Mexico. Being located on prime real estate sites is not a top priority of Costco. The belief is that their low prices will attract customers rather than the location or elaborate facilities. Costco has had success using an infill strategy when selecting an area to build a warehouse. An infill strategy is the use of land within a built-up area for further construction. Costco is tentative when entering new markets because they rely on word-of-mouth advertising, and they are fearful of the lack of familiarity with the warehouse. Obviously, it would hurt their business if they are not able to reach their target …show more content…

Sales Promotion: Costco limits its marketing and promotional activities to new warehouse openings. They do use direct marketing to existing customers to promote merchandise. The Executive Membership program offers additional benefits to customers. They receive an annual 2% Reward on most Costco purchases, and extra benefits on member services. Costco and American Express have come together to offer even more benefits to small business owners that have a membership with Costco. They are providing businesses the ability to purchase a TrueEarnings(SM) Business Card. The card offers businesses 5% annual rebate for gasoline purchases, 3% cash back for eating out, even takeout or delivery, 2% cash back for traveling on airlines, for hotel stays, car rentals and cruises, including booking through a travel agency; and 1% cash back virtually everywhere else, inside or outside of Costco warehouses. Costco does not accept Mastercard or Visa Credit cards just to be loyal to one

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1. Rivalry among existing competitors The retail industry is extremely competitive. Here in Canada we enjoy large well established retailers such as Hudson Bay, Costco, and Canadian Tire. According to Statistics Canada “Chain stores, defined as operating four or more locations within the same industry group and under the same legal ownership, have been incrementally increasing market share for more than 10 years” .

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Costco's membership approach gives the corporation more purchasing power, allowing it to negotiate better pricing with suppliers, which is then passed on to members. The membership fee encourages customers to purchase at Costco rather than other stores, and membership renewal rates are high. Costco's low prices appeal to price-conscious customers,

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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.

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The American Wholesale industry use aggressive marketing campaigns, against rival sellers, in order to attract and retain buyers. It would be hard for new entrants to enter this market as these three Wholesalers have over 37% share, based on the population, of the market and these Wholesalers have been established for almost 30 years. The wholesalers did not have much competition from product substitution as they were able to sell goods for higher quality for prices much less expensive than supermarkets and other department stores. When it comes to bargaining power, Costco is the leader as it was able to offer low prices. Additional details are included in Figure 1, Porter’s Five Force Model:

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6.1 Marketing Mix Marketing mix is a set of controllable marketing tactics used by business to promote their product and achieve its marketing objectives. (L. Lake, 15 June 2017) Marketing mix is also called the 4Ps which consist of Promotion, Place, Product and Price. (M. J. Baker, 2001, p.54) 6.1.1 Product

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