Costco Wholesale in 2012 Essay Example for Free

Costco sweeping in 2012 EssayAnalysis and EvaluationSince the inception of Costco in 1983, one of its drawbacks is, they rent 4,000 selections of swop compargond to their competitors. In addition, customers can only purchase merchandises in bulk. Consumers who shop at Costco do not have the cream to pick up one single item, for instance a can of soup. Although Costco worths are low and the consumers pulsate much for their money, more consumers are wasting food because they no longer have the big families. Costco of necessity to look at the demographics and re-evaluate their craft model, as this could be detrimental to the company. In todays society, more families are getting divorce and are becoming single parents.The big families are almost none equalent therefore, most consumers do not need to purchase in bulk. Many consumers want to have choices when it comes to the amount of food they purchase. One may say there are other shopping establishments a consumer may visit to get exactly what they want however, that is beside the point. Giving consumers the choice to purchase individual merchandise will not only bring in more business but also an emergence in cash flow, which will also increase bread for Costco. On the other hand, Costco competitors such as Wal-Mart stocked up 40,000 to 150, 000 items for shoppers to choose from and surface-to-air missiles purchase order have over 16,000 items. surface-to-air missiles Club have the treasure-hunt items but tend to be less upscale and carry lower terms tags than those of Costco. Both Wal-Mart and Sams Club give shoppers more choices than Costco even though Costco offers a cheaper price on their merchandise.Costco spends very little in advertisements and they totally rely on their name and word of communicate by their customers. Compared to Sams Club they spent about $50 million annually advert and direct mail promotions.Furthermore, Costco does not have a Public Relation department, which is not superb business practice, even though they have been around for years and they are doing well financially. However, there are legion(predicate) opportunities for one of its competitor to come in take away their market share. Costco does not attract bulk who are below the poverty parameter they cater to the business consumer and urbanites that have an annual income of $100,000 therefore, people who are impoverish cannot afford the membership fees and bulk purchase. In addition, Costco membership fee is more expensive compared to Sams Club.RecommendationCostco inevitably to improve the variety of choices by giving the consumer more than 4,000 items to choose from eyepatch their competitors are actually giving customers what they want. Costco needs to take into consideration the economy people have confounded their jobs and the recession, as customers are looking for cheaper prices and ways to saving money. Furthermore, if Costco does not come up with revolutionary and in advan ce(p) strategies to entice low income and single household family to their establishment they are giving their competitors the upper hand.Costco should also revolve about on the advertisement because number of its rivals is already doing intense advertisement. In todays global and expert world, many businesses are being aggressive and are taking advantage of investing heavily on the marketing. Costco cannot continue to use the concept of sitting back and waiting for their customers to spread the word by mouth.Costco needs to move in the direction of the 21st century by being more proactive by utilizing technology and a PR department for marketing purposes. It is true that company like Costco are doing good in economic downturn but competitors like Sams club is outperforming Costco in set which could be biggest threats to the Costco even though Costco keeps relatively branded and qualitative product than that of Sams ClubThe Five Forces Model of CompetitionSubstitutesStrong threat Good substitutes everywherePrice not significantly higherComparable product featuresMore variety of features base switching costPotential new entrantsLow threatSmall pool entry candidatesHigh barriers to entryExpanding marketAttractive lettucesBuyersWeak bargaining powerSome switching costLarge membership baseCostco has the surpass valueSuppliersWeak bargaining powerMany suppliersLow switching costMany substitutes existLarge quantities are neededCompeting sellersFierce CompetitionCostco is on topQuality is slightly dieBuyer demand is growingBuyers switching cost is lowSWOTStrength WeaknessLow product and services Strong brand Excellent merchandise Exceptional employees 54 million members political economy of scale Efficiency James Sinegal is 79 Maintain high wages 42% higher than Sams Club Comparatively less attractive store layout for luxury itemsDeclining or inconsistent profit margins Primary focus on business customers rather than individual customers Opportunities ThreatRec ession- Easier to find bargain luxury-items- change magnitude popularity of Costco Expanding foreign markets- Europe- China India Positive image in terms of employees pay and social responsibility change magnitude brand awareness Fierce competitionCostco cannot attract people who are below poverty line due to its membership fees and bulk purchaseHigh competition from Sams Club and BJ governmental problems in other countriesReferencesThomspson, A. A., Peteraf, M. A., Gamble, J. E., Strickland III, A. (2012). Crafting Executing Strategy (19th ed.). New York, New York McGraw-Hill/Irvin.