MGTP102: Costco's Marketing Principles, Strategy & Australia Entry

This presentation examines Costco's marketing principles and strategies, particularly in the context of its Australian market entry. It discusses Costco's target customers, focusing on the middle class and small businesses, and highlights the company's core competence in offering high-quality goods at low prices. The presentation analyzes Costco's competitive strategy, rating it as medium in differentiation but strong in cost leadership due to its efficient productivity and quality assurance. It also touches on Costco's value delivery through high-quality goods and efficient cost management. The analysis includes comparisons with other retail shops in Australia, such as Big W, Kmart, and Target, assessing product variety, quality, and pricing. The presentation concludes that Costco's focus on quality and customer satisfaction contributes to its global market position. Desklib provides access to this presentation and other valuable study resources.

Costco and its marketing
principles

Response to Question 1
• Costco opened its shop in
Australia in 2009. I had the chance
to visit the store once and I found
that they have variety of items
starting from the groceries to
electronics and designer clothing to
cleaning supplies under one
roof(Costco.com, 2019).
• I bought the grocery items at
Costco which gave me a brief idea
and experience about the pricing of
the retail shop as I had prior
experience of shopping at other
retail shops in Australia.

 What I experienced is that, Big W and Kmart store are almost similar is
varieties and stock of goods , however, they are much cheaper than the
other retail shops like Target. While Costco has similar pricing with
higher quality products.

• If Costco is compared to the other three retail shops, it is found that
Costco has good deal both in comparison to Big W and Kmart store.
Costco has decent variety and high quality products unlike Target which
is mostly criticized due to its poor quality of products.

 While selecting the low-priced store, the most important thing that bothers
me as individual consumer is the varieties of products available and the
quality assured at a lower price. If one retail shop offers more variety and
quality product at a lower price, there is a tendency to buy that product
instantly.

 Costco’s target market is the middle class customers and small
businesses. Its focus is to ensure low price high quality goods which
are pocket-friendly. Australia has more than 66% of the population as
the middle class who constitute the largest part. Hence, the company
focuses upon this largest population (Kanjanapradit et al, 2017).
Response to question 2: Costco’s target
customers:

 It is low priced so it is within the affordable limit of the middle class
population.

 The core competence of the company is the limited number of goods in
large variety in higher volumes(Mao 2017). It’s core focus is on the
pricing strategy. The company has an elaborate understanding of the
marketing strategy of other retailing companies hence it keeps its pricing
low than the other companies(Lasserre 2017).
Source: (Seeking Alpha, 2019)

 The company delivers value by bringing the high quality goods in the
market. this helps them to reduce the storage cost and reduce the
handling and transportation cost.

Response to question no: 3
 Costco’s competitive strategy can be rated as “ medium” than other
retail companies within the context of Australia in terms of its pursuing
differentiation. The company has better marketing strategy than others
because unlike the Target and Big W, it focuses more quality than more
variety and ranges.

 In terms of cost leadership, the company definitely has a competitive
edge because it has lower cost than other retail shops(Kanjanapradit et
al, 2017). Lastly, the focus of the company is its productivity and
quality assurance that is the part of their strategic management. Its
employee satisfaction is higher and its focus is to serve the customers
better. This justifies the position that Costco enjoys in the global
market.

References
Costco.com (2019). About | Costco. [online] Costco.com. Available
at: https://www.costco.com/about.html [Accessed 5 Jan. 2019].
Kanjanapradit, N., Benos, A. and Angelidis, T., 2017. Costco
Superstore.
Lasserre, P., 2017. Global strategic management. Macmillan
International Higher Education.
Mao, K.H., 2017. The Analysis of Business Strategy and Talent
Development for Large Discount Stores (The Case of COSTCO
Taiwan).
Seeking Alpha (2019). Costco Could Be 'All Weather,' But I Need A
Better Entry Point. [online] Seeking Alpha. Available at:
https://seekingalpha.com/article/4196144-costco-all-weather-
need-better-entry-point [Accessed 5 Jan. 2019].