Costco's Business Analysis
Costco
When we think of Costco, three things come into the mind; low price, membership and bulk quantity. Based on these three elements, Costco’s has built its business strategy in realization with its goals. Kotler (2012) states “Goals indicate what a business unit wants to achieve; strategy is a game plan for getting there. Every business must design a strategy for achieving its goals,” (p.50). The unique thing about Costco’s channel management process is derived from the same business strategy, where in, it sells membership which to the customers which alone generates a major portion of its profit. And Costco is estimated to have over 40 million members which have multiplied by folds when compare to the previous decade memberships.
Even with its stock keeping strategy, Costco saves on its inventory, since Costco maintains only around 4000 SKU’s (when compare to around 40,000 SKUs by other retailers) thereby reducing the cost associated with handling of the products which ultimately helps it to keep the prices low. According to Kotler (2012) “Companies are reducing their inventory costs by treating inventory items differently, positioning them according to risk and opportunity. They distinguish between bottleneck items (high risk, low opportunity), critical items (high risk, high opportunity), commodities (low risk, …show more content…
From its past strategic decision of making its sales staff from commission-based to salaried staff in order to create more customer friendly atmosphere. To the current Customer-Centricity strategy by extensive research and analysis. And last but not the least, its ingenuity to cater a different segment of customers such as customer coming from Europe. Kotler (2012) states “...a corporate branding strategy can lead to greater intangible value for the firm” (p. 261). All those intangible value that Best Buy is adding to its customer centricity is turning into tangible
When we think of Costco, three things come into the mind; low price, membership and bulk quantity. Based on these three elements, Costco’s has built its business strategy in realization with its goals. Kotler (2012) states “Goals indicate what a business unit wants to achieve; strategy is a game plan for getting there. Every business must design a strategy for achieving its goals,” (p.50). The unique thing about Costco’s channel management process is derived from the same business strategy, where in, it sells membership which to the customers which alone generates a major portion of its profit. And Costco is estimated to have over 40 million members which have multiplied by folds when compare to the previous decade memberships.
Even with its stock keeping strategy, Costco saves on its inventory, since Costco maintains only around 4000 SKU’s (when compare to around 40,000 SKUs by other retailers) thereby reducing the cost associated with handling of the products which ultimately helps it to keep the prices low. According to Kotler (2012) “Companies are reducing their inventory costs by treating inventory items differently, positioning them according to risk and opportunity. They distinguish between bottleneck items (high risk, low opportunity), critical items (high risk, high opportunity), commodities (low risk, …show more content…
From its past strategic decision of making its sales staff from commission-based to salaried staff in order to create more customer friendly atmosphere. To the current Customer-Centricity strategy by extensive research and analysis. And last but not the least, its ingenuity to cater a different segment of customers such as customer coming from Europe. Kotler (2012) states “...a corporate branding strategy can lead to greater intangible value for the firm” (p. 261). All those intangible value that Best Buy is adding to its customer centricity is turning into tangible