Costco Wholesale in 2017 Mission, Business Model, and
Strategy
BUS496/Business Policy
10/11/2018
Cayla Ostrowski
Richard Mena
Marcy DeVera
Costco
... [Show More] Wholesale in 2017 Mission, Business Model, and Strategy
Costco’s business strategy is very basic. Offer a limited selection of high quality products
for a fraction of the cost of other retailers. The chief elements of Costco’s strategy are: Pricing -
keep customers coming in by shocking them with low prices and incorporate warehouse sized
products to generate their profit. Some of their profit is also generated through their
membership fees. Product Selection - Costco’s product range covered a broad spectrum from
food to high ticket items, like furniture, jewelry, and tires. The selection in each category was
deliberately limited to fast-selling models, sizes, and colors. Costco has long used the term
“treasure hunt’’ to explain why up to a fifth of its stock is limited-quantity items kept in stores
for as little as a week. Sometimes it’s seasonal items, such as margarita machines in summer.
Often, it’s surprisingly trendy, such as bargain-priced Hunter rain boots. Treasure-Hunt
Merchandising - while Costco’s product line consisted of approximately 3,700 active items, 20
to 25 percent of its products offerings were constantly changing. Costco members quickly
learned that they needed to go ahead and buy treasure-hunt specials that interested them
because the items would very likely not be available on their next shopping trip. Low-Cost
Emphasis - keeping operating costs at a bare minimum is a major element of Costco’s strategy
and a key to its low pricing. The Kirkland brand also takes up a large portion of their inventory,
which are their own products listed at Costco’s value price, so their customers can get the same
or even better quality than the national brand. Part of this means that Costco does not have a
majority supplier or manufacturer so they can strive for bargain deals at low, low costs. For [Show Less]