Costco Marketing Plan
1. Internal Analysis
1.1 Business Scope
1.1.1 Mission Statement
To continually provide members with quality goods and services at the lowest possible prices
1.1.2 Definition & Corporate Objective
Costco operates membership warehouses based on the concept which offers member low prices on a limited selection of nationally branded and selected private–label products in a large range of merchandise categories which produce high sales volumes and rapid inventory turnover.
Combining the turnover with the operating efficiencies achieved via volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities allows Costco to operate profitably at significantly lower gross margin than traditional wholesaler, mass merchandisers, supermarkets, and supercenters.
1.2 Company Performance
• Sales generated $76.3 billion in 2010 (increased 9% from 2009 -69.9 billion)
• Comparable sales in warehouse opened more than a year increased 7%.
• Net earnings of Costco in 2010 achieved $1.3 billion (Refer to Appendix 1)
1.3 Operational Capability
• Adopts a low cost operating model - depots receive container-based shipments from manufacturers and reallocate these goods for shipment to the individual warehouses, in less than twenty-four hours.
• Maximizes freight volume and handles efficiencies, which enable low receiving costs.
• High sales volume and rapid inventory turnover.
• Takes advantage of early payment discounts whenever possible.
• Use of selling space, handling of merchandise and control of inventory allows for economy and efficiency.
• Labour reduced for handling and stocking by storing merchandise on racks and above sales floor.
1.4 Marketing Mix Strategy
1.4.1 Product and Services
• Offers sundries, major appliances, electronic, packaged and fresh food, furniture, apparel and jewelry.
• Operates various ancillary and other services including US online shopping,
1.1 Business Scope
1.1.1 Mission Statement
To continually provide members with quality goods and services at the lowest possible prices
1.1.2 Definition & Corporate Objective
Costco operates membership warehouses based on the concept which offers member low prices on a limited selection of nationally branded and selected private–label products in a large range of merchandise categories which produce high sales volumes and rapid inventory turnover.
Combining the turnover with the operating efficiencies achieved via volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities allows Costco to operate profitably at significantly lower gross margin than traditional wholesaler, mass merchandisers, supermarkets, and supercenters.
1.2 Company Performance
• Sales generated $76.3 billion in 2010 (increased 9% from 2009 -69.9 billion)
• Comparable sales in warehouse opened more than a year increased 7%.
• Net earnings of Costco in 2010 achieved $1.3 billion (Refer to Appendix 1)
1.3 Operational Capability
• Adopts a low cost operating model - depots receive container-based shipments from manufacturers and reallocate these goods for shipment to the individual warehouses, in less than twenty-four hours.
• Maximizes freight volume and handles efficiencies, which enable low receiving costs.
• High sales volume and rapid inventory turnover.
• Takes advantage of early payment discounts whenever possible.
• Use of selling space, handling of merchandise and control of inventory allows for economy and efficiency.
• Labour reduced for handling and stocking by storing merchandise on racks and above sales floor.
1.4 Marketing Mix Strategy
1.4.1 Product and Services
• Offers sundries, major appliances, electronic, packaged and fresh food, furniture, apparel and jewelry.
• Operates various ancillary and other services including US online shopping,
References: 3. Australian Bureau of Statistics - Australian Demographic Statistics (cat. no. 3101.0) 4. Australian Bureau of Statistics - Household Income and Income Distribution, Australia, 2003-04 (cat.no.6523.0), 5. Australian Bureau of Statistics – Australia Social Trends 2011 (CATALOGUE NO. 4102.0) 6. Department of Foreign Affairs and Trade – Legal System in Australia (2008) http://www.dfat.gov.au/facts/legal_system.html 7. Department of Foreign Affairs and Trade – Australia Today http://www.dfat.gov.au/facts/aust_today.html 8. Department of Foreign Affairs and Trade – Democratic Rights and Freedom (2008) http://www.dfat.gov.au/facts/democratic_rights_freedoms.html