Marketing management 14ed, Kotler & Keller
Chapter 15: Costco case (p.444)
What is unique about Costco’s channel management process? What components can other retailers borrow or implement?
Costco, the largest warehouse club retailers in the United States, was, first, a unique concept. The main purpose of shopping at establishments like Costco is to get low prices. Costco arrived in the market with a specific channel management that includes:
· Goals: offering a broad range of brand name and private label merchandise at extremely low prices.
· Policies. Costco does not sell anything in its warehouse stores with a margin that is higher than 14%, except for its private label pro ...view middle of the document...
Costco’s markup is only 14% when other retailers’ is 25% to 50%: they could reduce it. Costco is also known for the fact that its employees are compensated well, and 85 percent have health insurance, more than twice the percentage at Target or Walmart. As a result, employee turnover and employee theft are extremely low. By reducing the turnover, other retailers could improve their image to customers.
Where can Costco improve? Should it offer more products or advertise more? Why or why not?
“In 2008, 58 million consumers visited costco.com and nonmembers paid an addition 5 percent fee for any purchase.” Costco could improve its online offer and, by keep offering low prices, could reach the nonmembers customers.
Costco could improve its item selection in order “to continually provide our members with quality goods and services at the lowest possible prices”. For instance, Costco is increasing organic offerings, which is described as a "big business" and "growing fast" with the chain able to show "a better savings on those bigger ticket price point items."...