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Costco Case Study

Costco is a distinctive retailer that has outperformed its rivals in terms of growth. By the end of 2017, they have developed 746 locations for their companies. The United States, Canada, and other nations have a sizable population of them. Costco has grown steadily by adding new stores in an even distribution each year. Additionally gradually increasing each year are its paid members and staff. Despite the competition and difficulties it has experienced since its founding, it has also continually raised its revenue without seeing even a tiny loss. Costco has increased the minimum salary to $13 and offers complete benefits as well as a retirement plan, demonstrating the profitability of the business. Compared to rival businesses that offer comparable tasks, the corporation pays its employees more. Customers can purchase its goods for less money, and customer pleasure is its main priority. Its high and expanding client base, as well as the value of its dividends, benefit its investors. Many people now prefer working for Costco since it has given its staff a portion of the additional revenue from tax savings.

By separating its revenue into two streams, including product sales, which include the money it makes from the sales of its goods across all of Costco’s channels, the retailer is effective. Additionally, it has broken down its earnings into membership fees, which include revenue from the company, gold star, and executive memberships to its clients worldwide. By generating $918 from sales per square root on average each year, their marketing strategy has been quite effective. Customers have a number of significant competitive advantages, such as economy of scale, and rely more on the earnings from membership fees than they do on the sales of their products. Additionally, it prioritizes revenue from peripheral department sales and services, such as food courts and hearing aid clinics. It sells its products at minimal to no margin and often even at a loss when it concentrates on these profit-generating tactics. It generates the majority of its operating profit by charging its members an annual fee in exchange for the opportunity of shopping at its stores.

The aspect of treasure-hunt merchandise was still another crucial component that was previously highlighted. Basically, this idea is that some things go on sale for a given number of weeks or for a certain amount of time, and then they return to their regular price after that time. This type of marketing is especially prevalent during the holiday season and the two biggest shopping days of the year, Black Friday and Cyber Monday. This kind of marketing allows Costco to take this idea and apply it year-round, giving members discounts and savings all year long on a range of other products.

As of 2022, middle-class to upper-class educated consumers in the management, legal, financial, medical, IT, and governmental sectors make up Costco’s target market. The market for Costco is generally open to people of all genders and races, although it does focus on those who are at least 30 years old and have their own families. Even though it only carries the best things available, Costco always has affordable prices. In addition, the majority of Costco locations are in affluent suburban regions as opposed to the impoverished inner-city neighborhoods where the target consumer is less likely to be located. The typical Costco customer has a self-assured personality and cares about their status and wealth as well as how others see them. By making shopping enjoyable and providing a variety of high-quality products that customers use to express their personality, Costco meets these demands.

Not just in the retail sector but across all industries, Costco has one of the top compensation and benefit packages. In terms of pay and perks for employees, Costco is one of the top businesses pitted against Google. An employee benefits package that includes: medical, mental health, dental, substance abuse, pharmacy, 401(k), vision and hearing aid coverage, financial education, and stock purchase perks contributes to the development of all of that goodwill. Reimbursement accounts that let workers pay for out-of-pocket medical costs, child or elder care costs, and commuting costs before taxes are among the additional perks. Life insurance, disability insurance, long-term care insurance, and accidental death and dismemberment insurance are all available.

In conclusion, many executives think that if a business pays large wages and perks, they cannot maintain competitive costs. That’s not always the case, as demonstrated by Costco. Executives at Costco are aware of the value and impact that strong employees can have on a business. Costco should start offering internet purchasing since so many customers value its practicality. It ought to introduce people to quick and convenient internet buying. By doing this, it will boost sales, which will raise revenue and lead to greater success in the future. By providing a broad assortment of products for its clients like the other retail behemoths, Costco should address the issue of its limited product selection. Making ensuring that the clients have a large selection of things to choose from will be essential. As a result, its consumer base will grow. By concentrating only on a few specific markets in the United States and Canada, it should also concentrate on developing a stronger global footprint. As it will distribute its goods globally, Costco will have access to a wide range of markets. Finally, Costco needs to change its membership-only business model. The model can only be profitable if the members continue to buy its items in large quantities. Over time, however, the members may opt to switch to a competitor, which would reduce the model’s revenues.


Chen, J. (2021). Marketing strategy management of Costco: Analysis and comparison to S-Group.

Huo, H., & Rui, Y. (2021, September). The Assessment of Costco Management Strategy in Chinese Market Based on Supply Chain. In 2021 International Conference on E-Commerce and E-Management (ICECEM) (pp. 451-455). IEEE.

Johnson, E. A. (2021). Costco Wholesale’s Dominance in the Market.


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