Target Market and Segmentation

Abstract

I have developed a thorough Segmentation and Target Market for Costco Wholesales as requested. This paper discusses the market segmentation within the industry along with the target market for the company and the selection process for the target market. The paper also includes demographic, psychographic, geographic, behavioral characteristics for the business, and a positioning statement for the company with careful consideration of their brand and strategy.

Segmentation and Target Market Costco Wholesales

Imaging a store with no signs in the aisles, a store that does not bag your purchases, one that never advertises, where you have to pay a fee just to walk in the door. Who buys here? It turns out that over three million fanatics every day, it is called Costco (Quintanilla, 2013).

Based in Issaquah, Washington, Costco Wholesale Corporation sells high volumes of foods and general merchandise at discounted prices through membership warehouses. It is the largest warehouse club operator in the U.S. The Company’s warehouses offer an array of low-priced nationally branded and select private labeled products in a wide range of merchandise categories.

As of April 11, 2013, Costco operates 626 warehouses, comprising 449 warehouses in the United
States and Puerto Rico, 85 in Canada, 33 in Mexico, 23 in the United Kingdom, 15 in Japan, nine in Taiwan, nine in Korea, and three in Australia.

Market Segmentation

Costco Wholesale's geographic segmentation varies in the location of the particular Costco Wholesale warehouse. For example those in the cold areas of the United States during the winter sells shovels, heaters, coats, winter gloves, etc. Whereas those in locations like Puerto Rico will sell fans the whole year because of its tropical weather.

The demographic segmentation for Costco is also vast as well offering products to all age groups and genders. The company primarily target is independent small business owners. It offers a variety of food products as well as a vast range of household and lifestyle products, stationeries, and appliances. The company also sells gasoline to customers at cheap prices.

The company’s products are classified under six broad merchandise categories, namely, 1) Sundries (including candy, snack foods, tobacco, alcoholic, and nonalcoholic beverages), 2) Hardlines (including major appliances, electronics, health, and beauty aids, hardware, office supplies), 3) Food (including dry and institutionally packaged foods), 4) Softlines (including apparel, domestics, jewelry, housewares, media, home furnishings, cameras), 5) Fresh Food (including meat, bakery, deli, and produce) and 6) Ancillary and Other (including gas stations, pharmacy, food court, optical, one-hour photo, hearing aid, and travel) (Zacks Investment Research, 2013).

Costco