Costco Wholesale Corporation Management Strategies

Introduction

Most people know Wal-Mart as the largest wholesale club in the world. In fact, the name Costco is quite unfamiliar to a considerable number of people. However, this may not be the case, at least according to the latest statistics. The store is considered one of the largest in the United States and ranked an impressive ninth in the world in 2009. This shows how popular and impressive the store is in business. Just to name but a few, it operates over 565 warehouses throughout the world. In addition, it is estimated to have more than 56 million cardholders, an impressive record for its status. Interestingly, Costco ranks higher than Wal-Mart (SAM’s CLUB) in wholesale clubs. Moreover, it serves more than 40 states in the United States alone.

Moreover, the store covers international markets, mainly under its brand name. This is quite remarkable. Among the countries covered, including South Korea, the UK, Mexico, Canada, Puerto Rico, Australia, and Japan, among others. Since such impressive results cannot be achieved overnight, Costco possesses important marketing strategies that have moved them this far. This also shows how strong its marketing strategies are. This paper will explore and identify strategies employed by this company in marketing. It will also seek to provide strategic recommendations for the company’s future growth (New York Times, Inc. 1).

Costco Wholesale Corporation

Costco corporation is considered to be among the best wholesale clubs throughout the United States and the world at large. Its Chief executive officer and founder, Jim Sinegal, has gained popularity through his shrewd means in merchant service. In fact, he is touted to be only second to the famous Sam Walton. The company provides high-quality products at splendidly low cost to customers. Through these strategies that include discounts, among others, the company has moved to its current impressive state.

The wholesale store, which has its headquarters in Washington, was founded in the same state at a place known as Kirkland, even though it later moved to Issaquah. The company was founded by Jeffry Brotman and his friend James Sinegal. They had both dealt with wholesale distributions at earlier stages in their lives. Therefore, they had all the required skills to master the distribution service. For instance, Sinegal had previously worked with Sol price while Brotman, on the other hand, came from a retailing family that had a base in Seattle (Team 1).

Having worked previously for Sol Price, Sinegal made Costco in the model of Price Club. Moreover, the two clubs were the same in size, and their merger in 1993 gave rise to a big enterprise known as PriceCostco, which was later named Costco. Rebranding of the two clubs took place in 1997 after Sol and his son left the merger. The wholesale store currently enjoys a large market share, with competition mainly drawn from BJ’s Club as well as Sam’s club. Interestingly, Costco records a higher volume of sales than Sam’s club does, even though the latter has more warehouses.

In addition, the company employs over 142000 workers, who work on either part-time or full-time basis. Moreover, their pay is much higher than that of other wholesale clubs. Costco’s model of membership allows its members low prices in specific categories of products. They receive products directly from manufacturers in containers and operate seven days a week throughout its distribution centers. Its marketing strategies have been credited with impressive performance (Team 1).

Management Strategies

Strategies are those techniques employed to achieve specific goals or objectives of an organization. Every business aims to achieve its goals, which include sustainability. Sustainability is the most important objective for any business expecting to survive for longer periods. Long-term strategies are, therefore, important in enabling companies to fight off competition from other businesses. Various companies and business empires thrive in these strategies, which are reviewed regularly to effect relevancy in a dynamic world.

Several factors also affect business strategies; these include the category of customers targeted, cost of products, number of competitors, and current state of business, among others. It is quite imperative to note that businesses need strategies that can effectively lift them to a sustainable level. In essence, sustainability is the first step towards the continued survival of businesses. However, to achieve sustainability, businesses must have viable management strategies that can promote competitiveness in the market (Team 1).

Costco’s chief executive Sinegal has developed shrewd means of ensuring they retain their customers as well as capture more of them. This is mainly because of management strategies he has employed to spur further growth. Having worked for Sol Price and gained a wealth of experience in distribution, Mr. Sinegal has managed to revitalize Costco through diverse, far-reaching management and marketing strategies. These strategies range from discounts offered to members and customers, to high pay for its workforce, marketing tools, efficiency, quality products, and affordable prices, among others.

Nonetheless, Costco still faces competition from other wholesale clubs such as Wal-Mart’s Sam Club, among others. Therefore, in spite of their current success, they still need to improve strategic management to achieve sustained competitive edge over other businesses. These may be done by increasing warehouses throughout the world to increase their market share. The company enjoys large sales turnover over others with more warehouses. This only predicts a massive coup they may have on the world market if they increased the number of warehouses (Team 1).

Identification of Strategies

Costco has utilized various management and marketing strategies to ensure their customers are best served and retained. These strategies include discounts offered to members and customers, high pay for its workforce, marketing tools, efficiency, quality products, and affordable prices, among others.

Discount

Most customers prefer to buy from stores where they get a discount on goods bought. This enables them to maximize profits and buy in bulk. The corporation also has a membership plan that offers traders with various incentives on their buys. This has improved their status and attracted more sales. In addition, the strategy has won over many traders in their favor as they continue to flourish.

Quality products at affordable price

Having worked for Sol Price and gained a wealth of experience in distribution, Mr. Sinegal has managed to revitalize his wholesale club through various, far-reaching management and marketing strategies. This has not left out their responsibilities, which are to provide quality products to the customer. In an effort to win over more market share, the company has strategized to provide its customers with quality products at incredibly low prices.

Higher wages for their customers

In an effort to retain staff and improve their working conditions, the company offers its workforce a minimum wage of $17, which is way ahead of other wholesale clubs such as SAM Club. In this regard, the company ensures comfort and satisfaction to their workers, which improves organization and quality produce.

Strategic Recommendations

Costco faces competition from other wholesale clubs such as Wal-Mart’s Sam Club, among others. Therefore, in spite of their current success, they still need to improve strategic management to achieve sustained competitive edge over other businesses. This could be done by increasing the number of warehouses throughout the world. In addition, it would increase its global market share. The company enjoys large sales turnover over others that have more warehouses. This conveys its potential in the globe. The company enjoys a large turnover and should, therefore, intensify its presence all over the world to reap its best (Hoover’s Inc. 1).

Conclusion

Costco corporation is considered among the best wholesale clubs throughout the United States and the world at large. Its Chief executive officer and founder, Jim Sinegal, has gained popularity through his shrewd means in merchant service. The wholesale club utilizes various management and marketing strategies to ensure their customers are best served and retained. These strategies include discounts offered to members and customers, high pay for its workforce, marketing tools, efficiency, quality products, and affordable prices, among others. However, the corporation faces competition from other wholesale clubs such as Wal-Mart’s Sam Club, among others. Therefore, in spite of their current success, they still need to improve strategic management to achieve sustained competitive edge over other businesses. In this regard, it should intensify its presence all over the world to reap its best (Barney and Hesterly 1).

Works Cited

Barney, Jay and Hesterly, William. “Strategic Management and Competitive Advantage (Concepts) (3nd Ed.)”. Pearson Prentice Hall, 2009.

Hoover’s Inc. “Costco Wholesale Corporation”. hoovers.com. 2011. Web.

New York Times, Inc. “Business Day: Costco Wholesale Corporation”. New York Times. 2011. Web.

Team, Trefis. “Discount Strategy Delivers For Costco”. Forbes.com. 2011. Web.