INDEX

1. Company Introduction

2. Method Of Approach

3. Competitive Capabilities

4. Analysis Based On
Marketing Strategy

5. Comparison With
‘ Wal-Mart ‘ Case

6. Our Suggestion
1. Company Introduction
01. Company Introduction

Costco Wholesale Corporation ?

U.S.-based large warehouse-type discount store chain

Offers high quality products at a much lower price
Membership System
01. Company Introduction

1983 1993 1997 1999

01. Company Introduction

Number of Stores
782

Membership
98,000,000

Annual sales
$138.4 billion
2. Method Of Approach
02. Method Of Approach

Survey
02. Method Of Approach

Q. Were you satisfied with using Costco?

Not satisfied
(10.7%)

Satisfied
(89.3%)
02. Method Of Approach

Q. What do you think

the advantage of the Costco?

Shopping mood
(7.2%)
A variety of brands
(14.3%)
A cheap price
The large sales (50%)
(28.6%)
02. Method Of Approach

Q. Are you interested in renewing

your Costco membership?

I won’t renew it.

(28.6%)

I will renew.
(71.4%)
02. Method Of Approach

Q. What do you want from Costco?

Satisfied
(10.7%)

Small volume sales Delivery service

(21.3%) introduction
(42.9%)
Free membership system
(25%)
3. Competitive capabilities
03. Competitive capabilities
Membership

Costco restricts sales through this membership system, which gives

consumers a sense of belonging and ownership, resulting in higher
sales.

This membership system also has the effect of increasing economics

by focusing on the
middle class and beyond, excluding lower consumers.
03. Competitive capabilities
Private Brand(PB) Strategy

Costco makes and sells products under its own brand which is ‘Kirkland Signature’.
It was born in 1996 and is Costco's self-developed product brand.

Under the Kirkland Signature, they sell almost everything they need at home, including sweets, drinks, bottled water,
coffee, pizza, household goods, feed, luggage, electronics, clothing, nuts, and detergents. 30% of total sales come from
Kirkland Signature Brands.
03. Competitive capabilities
15% Margin Strategy

It means a company always leaves 15% margin.

The more you sell, the lower the price. It can't be compared
with some department stores that have a 30% or 50% distri-
bution margin.

Selling a lot at an affordable price

makes a lot of money.
03. Competitive capabilities
The way of Cost Reduction
Choice & Concentration
Only a
small number of carefully selected products
that are expected to be good sales and merchandise display and
sales.
By quickly exhausting inventory,
inventory costs can be reduced and
management costs can be reduced.
1Card per 1Country policy
This strategy aims to lower merchant commissions paid
to credit card companies.
Visa card only available in the US and In Korea,
Hyundai Card can only be used from September this
year.
Due to the one-card principle, the rate is extremely low,
with a commission rate of up to 2.5%-> 0.7%.
03. Competitive capabilities
Refund Policy

Unconditional Refund
Regardless of whether the product is defective or not, you can always get a 100% refund.
There is no limit to the refund period, except for computers, cameras, tablets, and laptops, which have a 90-day deadline.
4. Analysis based on
Marketing strategy
04. Analysis based on Marketing strategy

Product

Diversification

A wide variety of products

Offers services,
such as photo printing services,
life insurance, and payroll services
04. Analysis based on Marketing strategy
Place

Warehouse-style stores The Costco mobile app The Costco online store
04. Analysis based on Marketing strategy
Promotion

Sales promotion Direct marketing

 bulk/wholesale discounts emails to members

The Costco Connection
04. Analysis based on Marketing strategy
Promotion

Personal selling Public relations

personnel persuade customers to purchase certain products  boost its corporate and brand image
at the warehouses
04. Analysis based on Marketing strategy
Price

market-oriented pricing strategy

aims to offer the lowest possible prices for bulk/wholesale
purchases

high-low pricing strategy

giving discounts to help customers save money
5. Comparison With
‘ Wal-Mart ’ Case
05. Comparison With ‘ Wal-Mart ’ Case

What is Wal-Mart?

Warehouse-type large discount store

of the United-States

Offers many kinds of items

in low price

No.1 in sales worldwide

05. Comparison With ‘ Wal-Mart ’ Case

What is Wal-Mart?

warehouse-type
large discount store
of the United-States
Why is Costco successful Offers
in Korea
many kinds of items
where Wal-Mart also failed?
in low price

No.1 in sales worldwide

05. Comparison With ‘ Wal-Mart ’Case

High Quality Low Quality

Small kinds of Many kinds

items of items
05. Comparison With ‘ Wal-Mart ’Case

High Quality Low Quality

How can Costco sell
high-quality goods at low
prices?
Small kinds of Many kinds
items of items
05. Comparison With ‘ Wal-Mart ’ Case
Specialization in the Revenue/Cost Model

Product margin
Annual membership fee
Selling & Administrative
expenses
Purchasing Cost

COSTCO remains only 15% of product margin and covers up by annual membership fee
05. Comparison With ‘ Wal-Mart ’ Case

Private brand products & Food court

High-quality goods at a low price

with their exclusive brand.

Incomparably cheap food

makes people come to the store
6. Our Suggestion
06. Our Suggestion
Developing Costco’s Delivery Service System

Provides immediate delivery of the

purchased products such as Quick Service
for a certain fee (4,000KRW Under 50,000)

For the Costco users who don’t have car or

inevitably use their car

Link service with the external delivery

company or develop their own delivery system
06. Our Suggestion
Costco’s Delivery Service System

Free delivery service for Executive members.

Ship in up to 2 days when purchasing food or

daily goods that do not go bad

Delivery on the same day

if fresh food is included.

If the distance is greater than 10km

(radius 10km), additional charges,
membership fee and different amount of
purchase will be treated differently.
06. Our Suggestion
Costco’s Delivery Service System – Expectation Effectiveness

Costco's launch of delivery service could

eliminate some inconveniences.
(ex. carrying heavy products, reducing traffic congestion)

Opportunity to attract people who don't use Costco or using other online
service

Maintain loyal customers (Extension of membership )

The more customers are satisfied , The more profitable they are.
Thank you
QnA