Costco Marketing Plan
Marketing Plan
Costco Companies, Inc.
MKT 680
Presented by Jose D. Carmona
May 10, 2012
1. Executive Summary
Costco Wholesale Corporation, which began operations in 1983 in Seattle, originated the membership wholesale club retail concept. By providing low prices on consumables like fresh foods, health and beauty care items, high-quality apparel, electronics, jewelry and other general merchandise, the company pioneered the retail concept that encourages members to visit regularly to achieve savings. In the meantime, the retailer has been successful in encouraging members to spend the savings on impulse big-ticket, discretionary purchases.
Today, Costco operates about 278 membership warehouse stores across 24 US states. Costco has 16 million members that have provided almost $400 million in fees. Costco has a net income of $312 million on sales of $21.5 billion. The company's stores stock 3,900 products on average, ranging from alcoholic beverages to appliances to fresh food. Clients become a member by paying an annual fee to shop at Costco warehouses. This membership format is designed to promote customer loyalty and provide a recurring revenue stream, which in turn helps the company lower retail prices. Costco member renewal rates are strong, and have varied between 85.0% and 88.0% during the past five years.
In response to market request, Costco has developed a portfolio of new services including auto and home insurance, mortgage and real estate services, long distance telephone plans, credit card processing, and check and business forms printing. Costco is offering these new services because it has been possible to achieve the 20% to 40% discounts from the preferred vendors. These new services would only be obtained by signing up for the “Executive” membership for an annual fee of $100. The main objective of having the “Executive” membership is to make it more attractive for existing business and higher-end members to come to the warehouse and buy
Costco Companies, Inc.
MKT 680
Presented by Jose D. Carmona
May 10, 2012
1. Executive Summary
Costco Wholesale Corporation, which began operations in 1983 in Seattle, originated the membership wholesale club retail concept. By providing low prices on consumables like fresh foods, health and beauty care items, high-quality apparel, electronics, jewelry and other general merchandise, the company pioneered the retail concept that encourages members to visit regularly to achieve savings. In the meantime, the retailer has been successful in encouraging members to spend the savings on impulse big-ticket, discretionary purchases.
Today, Costco operates about 278 membership warehouse stores across 24 US states. Costco has 16 million members that have provided almost $400 million in fees. Costco has a net income of $312 million on sales of $21.5 billion. The company's stores stock 3,900 products on average, ranging from alcoholic beverages to appliances to fresh food. Clients become a member by paying an annual fee to shop at Costco warehouses. This membership format is designed to promote customer loyalty and provide a recurring revenue stream, which in turn helps the company lower retail prices. Costco member renewal rates are strong, and have varied between 85.0% and 88.0% during the past five years.
In response to market request, Costco has developed a portfolio of new services including auto and home insurance, mortgage and real estate services, long distance telephone plans, credit card processing, and check and business forms printing. Costco is offering these new services because it has been possible to achieve the 20% to 40% discounts from the preferred vendors. These new services would only be obtained by signing up for the “Executive” membership for an annual fee of $100. The main objective of having the “Executive” membership is to make it more attractive for existing business and higher-end members to come to the warehouse and buy