Comparision Between Costco and Sam' Club

Topics: Sam's Club, Costco, Wal-Mart Pages: 5 (1532 words) Published: April 27, 2012
In today’s world, service quality is the most important factor that sets top business apart from other mediocre ones. One question is often being asked in the business world: how to improve service quality? The answer really relies on service market strategies. Service marketing strategy is a process that allows an organization to focus most of its existing resources on the area where the organization can take most advantages to increase sales and achieve a sustainable competitive advantage to the other service providers.

Operational excellence
Companies that are operationally excellent deliver a combination of quality, price, and ease of purchase that no one else in the same market can match. Although these companies are neither product or service innovators, nor extremely expertise in one-to-one relationships with their customers, they execute well by providing customers hassle-free service with guaranteed low price. Operationally excellent companies focus their resources on the major brain-trust at central locations, where standard operating procedures get refined and decisions are made about acquiring and using capital-intensive assets(Treacy& Wiersema, 1997).

Companies overview
Costco Wholesale Corporation (Costco) is an in-store retailer, operating a chain of membership warehouses. The company also offers its products online, through websites such as in the US and in Canada. Categories of the company’s product include sundries, food, soft lines, fresh food and ancillary, and others. In addition, the company operates gasoline stations in the US and Canada. Costco has 566 operational warehouses all over the world. Majority of all these stores locate in North America with 413 in the US and Puerto Rico, 32 in Mexico, 77 in Canada. The rest of them scatter all over the world with 21 in the UK, 9 in Japan, 7 in Korea, 6 in Taiwan and 1 in Australia. Costco is headquartered in Issaquah, Washington, United States. According to Wikipedia, 85% of Costco full-time and part-time employees have health insurance. Hoover’s reports, Costco, with about 14,700 employees, sold an average of 4000 products and in 2010. The company is ranked No. 25 in the Fortune 500("Costco wholesale corporation,n.d.").

Sam's club
Sam's Club, a division of discount merchandiser Wal-Mart Stores, Inc., is one of the nation's leading operators of members-only warehouse stores. The club entered the warehouse club market in the mid-1980s, after Wal-Mart founder Sam Walton studied the success of other similar ventures. The franchise runs more than 600 stores across the United States domestically, as well as oversea such as Mexico, Puerto Rico, Brazil, and China. Sam's Club sells to 47 million customers who pay an annual fee to become members. Members can shop at Sam's sprawling stores, which are typically 110,000 to 130,000 square feet. Each store offers various types of products from fresh groceries to auto supplies, from clothing to pharmaceuticals. The clubs also offer additional services such as mail-order pharmacy, travel club, Internet service, long-distance phone services, car loans, and discount credit card processing. Markup on Sam's Club items is just over the wholesale price, so goods at these stores have great discount compared to other franchises. Since some consolidation in the industry in recent years, Sam's Club and its close competitor, Costco Wholesale Corporation, have led the wholesale market. Sam’s Club is headquartered in Bentonville, Arkansas, and it started business in Oklahoma in 1983(Gale, 2011). According to Wikipedia, 50% of Wal-Mart’s 2.1 million employees have health insurance.

Comparison of Service market strategies
Costco, being a chain of membership warehouses, offers three types of memberships for individuals, Business, and Gold Star and Executive Memberships. All three types of membership provide their customers private labeled and better quality...
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