The Cosco

The Costco

1. In general Costco provides products at 20% or 40% less than the competitors. Simple facilities in the stores make customers to believe that they buy products economically. They have options to make comparison between different international brands and producers. Although customers buy things in large scales, they know that they pay less for each unit. On the other hand, there are some brands that are totally expensive but high quality, purchasers know they can find such brands in Costco and buy them cheaper. Besides they can use parking freely because it is important for this company to provide parking and shopping carts instead of luxurious food serving amenities.
2. Costco have two different key point for making money. First of all, it operates efficiently. It cuts out all of costs like its employees stayed at minimum and reduces overtime working. Or, because it buys products in large quantities, it would have bargaining power and the facilities that have for transferring things from suppliers, are used efficiently. Secondly, it has good relation with its customers. It really listen and monitor the customers’ complains and offerings and also searching for their needs and wants.
3. It seems that Costco always do things in trial and error. This method has been worked until now, but it is better to have marketing plan for all of them and have experimental surveys to protect from future losses. As a matter of fact, they have targeted customers with high level of  consumes like families, yet I think they can have plan for attracting people with low amount of products but they need some services as it is said in the case study, for example, health or auto insurance.
4. I think in this case, customers should be aware of all benefits that are delivered. They really need to have comparison with other companies to make sure that they have had a good deal. Also, billboards and showing off in stores and sending mail for customers may not be sufficient. They should use public mass media to announce and motivate people to know about positive side of buying such services from Costco. As it is said in the text, pricing is the key point for both, Costco and customers. The nature of such services has made it hard to price. They should figure out the pricing templates of other competitors, make it efficient by cutting extra costs. Then think about creative pricing strategy to create competitive advantages.
5. I believe that selling services can target the customers who do not have high rate of usage like singles. They may not need a box of three lettuces but they need health insurance or long distance telephone service. So they would be good targeted market for providing such services, additionally, since they pay for annual membership, they are motivated enough to buy some commodities in large quantities, things that have long lifetime, I mean they can create new market. Additionally, it takes a period of time to convince current customers to use such services. If they are given enough information they will purchase them and suggest the others, too. Also, as it is said in the text, about 90% of their members have their own house and cars and the majority of them are families which results in having high potential for buying such services.  In considering the one year payback for this investment and costs that are not so high, it is better to start it as soon as possible.