Costco Case Strategic Recommendation
Costco Case
Strategic Recommendation
Bringing New Products for Customer Loyalty
The Purpose: In order to counteract against the increase of taxes Costco now pays, we must raise revenues by attracting new customers, and give them a reason to remain loyal. To do this, Costco should introduce a slightly wider variety of products.
Initial Problem: Although the company has exceeded in revenue generation and debt management, we have to deal with the catch-22. We have drastically limited our interest paid by adopting methods to immediately pay off short-term debt, and paying vendors quickly to take advantage of purchase discounts. By doing so, the company now has less debt to write-off to taxes, increasing those costs significantly.
Innovative Solutions: Costco should take on liability increases by purchasing more goods to sell in store. By offering more options, we can address yet another potential arising issue. Even though we stress customer service and strive to meet their demands, the company frequently ignores customer requests for products that the store does not carry. On top of this, Costco offers 4000 products - only half of that of BJ’s Warehouse. As for our 4000, only 25% change on a regular basis. With so many additional products offered at BJ’s Warehouse, potential customers could easily go there instead.
We need to take advantage of an untapped source of loyal customers. Costco has already proven that it keeps its customers through strong service policies and offering products in heavy demand. The company does not need to adopt an entirely new product policy. However, by offering an additional 500-1000 products in the stores, Costco will offer more variety than Sam’s Club, but still have the ability to pander to its customers desires.
Changes to Consider: Offering potentially up to 1000 more products means re-evaluating our floor space and inventory management. We will most likely have to purchase additional space to accommodate. In the
Strategic Recommendation
Bringing New Products for Customer Loyalty
The Purpose: In order to counteract against the increase of taxes Costco now pays, we must raise revenues by attracting new customers, and give them a reason to remain loyal. To do this, Costco should introduce a slightly wider variety of products.
Initial Problem: Although the company has exceeded in revenue generation and debt management, we have to deal with the catch-22. We have drastically limited our interest paid by adopting methods to immediately pay off short-term debt, and paying vendors quickly to take advantage of purchase discounts. By doing so, the company now has less debt to write-off to taxes, increasing those costs significantly.
Innovative Solutions: Costco should take on liability increases by purchasing more goods to sell in store. By offering more options, we can address yet another potential arising issue. Even though we stress customer service and strive to meet their demands, the company frequently ignores customer requests for products that the store does not carry. On top of this, Costco offers 4000 products - only half of that of BJ’s Warehouse. As for our 4000, only 25% change on a regular basis. With so many additional products offered at BJ’s Warehouse, potential customers could easily go there instead.
We need to take advantage of an untapped source of loyal customers. Costco has already proven that it keeps its customers through strong service policies and offering products in heavy demand. The company does not need to adopt an entirely new product policy. However, by offering an additional 500-1000 products in the stores, Costco will offer more variety than Sam’s Club, but still have the ability to pander to its customers desires.
Changes to Consider: Offering potentially up to 1000 more products means re-evaluating our floor space and inventory management. We will most likely have to purchase additional space to accommodate. In the