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Strategies and recommendations to the Costco wholesale brand
In the following brief we will be carrying out an argumentative essay about the Costco wholesale company. We will be studying Chapter 3 of the Book Fundamentals of Marketing. We will also be using several other articles related to said company, to meet the necessary requirements of this research. Among them is David Orgel’s article, called Costco draws new praises for an ancient game and Costco balances its market strategy. After analyzing the articles we can answer the following questions:
• How wholesale brand, how would you evaluate the Costco wholesale sales strategy, with respect to segmentation, addressing, differentiation and positioning?
• Will the long -term costs triumph or fail? justify your answer.
• What recommendations would you do at Costco to improve your market performance?
Answering these questions we will establish the strategies, the way of operating, its marketing system and we will have clearer the background of said company. Thus knowing their strengths, weaknesses and somehow taking note of their strategies to be a high -performance and recognition wholesale company. We can also decipher if it fails or if it triumphs in a market so congested by many other similar companies and with better available technology.
Costco wholesale company
We will begin by answering the first established question that reads as follows: how would you evaluate the Costco wholesale sales strategy, with respect to segmentation, addressing, differentiation and positioning?
Costco’s strategy was initially selling high quality merchandise at much lower prices than those charged by other markets and retailers in the market at that time. The company only carried articles that could have bargain prices and, therefore, that would mean a substantial cost savings for them and so also for their members. Even they avoided resuriving articles that customers frequently requested unless they could mark the lowest price to remain faithful to their commitment to save their members money. This one said by (Thompson, Gamble, & Peteraf, 2012, P. C-42). We can see that the strategy of this company was always and has been the low prices and the commitment of fidelity to its customers. Now how they manage to keep the prices low? Well simple, they are directly connected to the manufacturers of these products so they do not have to use any other type of distributor, since this is transcribed to savings for them in everything called transportation logistics.
As indicated by Muncada (2015) in a Costco article, it has direct purchase relationships with manufacturers, that is, it does not go through outside distributors that results in additional costs for them as a company and therefore for their consumers. In addition, they have managed to implement a low -cost operational logistics promoting an efficient package in their own processing plants, developing a much more effective and sustainable structure. A competitive advantage that is very difficult to match other companies or similar companies.
In order to analyze the segmentation of this company we would first have to know that said by Kotler & Armstrong in 2012, there is no unique way to segment a market. The market, which is responsible for studying and testing the markets must prove different segmentation variables, alone and in combination, this to determine the best way to visualize the market structure. In this case, segmentation would simply be that the market must be divided into smaller groups, which will become the target market to be reached eventually. We see that in the case of the Costco company that present a demographic segmentation that is none other than “market division into groups according to demographic variables such as age, gender, family size, family life cycle, income, etc. According to Durán (2012), he says that the segmentation of this company is from families of medium high purchasing power, since they are interested in high volume of essential products that is the most primary thing in their environment.
Also in that group we find small businesses, which are always in search of the lowest costs available in the market. If we enter what is the addressing we have to know that one of the main benefits of strategic management is to help companies design all their strategies in a systematic, logical and above all rational way. It is for this reason that the establishment of strategies is of such importance, since it gives them basic supports to act and respond to the different complex environments or conditions. The purpose of the strategic management focuses on exploring and creating new and different opportunities for a future. Analyzing all these aspects I understand that the Costco company has a precise market plan and that it knows where it wants to go.
Will long -term costco triumph or fail? In my opinion Costco will continue its triumphant step for many more years, since their objective and their main interest are very clear is that maintaining their low prices so that their members can remain faithful to them. The general director of the company Jim Senegal, described in this way the company’s approach regarding prices. His words were that they were very good merchants and that they offer the best value. Traditional retailers will think, I am selling an item at $ 10 and I wonder at the same time if I could sell it at $ 10.50 or $ 11. I say, well I am currently selling to $ 9 how could I download it to $ 8? We are in mind that our members do not come to buy here for the beautiful shop windows or Santa Claus or the pianist, we know that they come to buy here because we offer magnificent value.
What recommendations would you do at Costco to improve your market performance?
I in particular would have no recommendation, since I understand that they are doing an excellent work in terms of low prices and consumer treatment looking for their benefit and not that of the company. The only thing I understand that they should add more emphasis would be advertising, both in the common media and in what are social networks, although so far they have not needed. So far their source of advertising are the recommendations of the clients who have had excellent experiences and I understand that it works for them, since that way it was that I found out what it was Costco. What were their services, benefits and their excellent prices compared to competition. The use of email and traditional, in addition to the company’s website, is the direct way that the company uses to promote certain products with its partners.
In conclusion, we can see how this multinational organization has been very successful and has managed to position among the first in the market. We can understand that it remains in constant constant changes, in order to acclimatize to the economic changes that are currently worldwide. So far they have managed to maintain their accessible prices, so their members have continued to grow and bring more customers to experience the same excellent services that they have experienced.
We can see that it is a wholesale company that has maintained excellent sales and customer service strategies, marketing and relationship with its suppliers over time. These achievements are those that have kept them as number one in sales and one of the most stable companies in today’s market. Their initiatives to open more strategically located stores so as not to create competition for themselves with a much higher flow of partners or customers. To which also to offer different types of memberships accessible to all audiences and their variety of products are attractive to all types of people and companies.