Costco Wholesale in 2012 Essay

Analysis and military ratingSince the inception of Costco in 1983, one of its drawbacks is, they ease up 4,000 selections of merchandise comp ard to their competitors. In addition, customers can only procure merchandises in lot. Consumers who shop at Costco do not have the choice to pick up one superstar item, for instance a can of soup. Although Costco prices are low and the consumers get more for their money, more consumers are squander food because they no longer have the big families. Costco of necessity to look at the demographics and re-evaluate their tune 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 existent 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 incisively what they want however, that is beside the point. Giving consumers the choice to purchase individual merchandise will not only fill in more business just now alike an increase in cash flow, which will also increase profits 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 high society have over 16,000 items. Sams unite have the treasure-hunt items but bleed to be little upscale and carry lower price 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 mouth by their customers. Compared to Sams Club they spent about $50 million annually advertising and direct mail promotions.Furthermore, Costco does not have a Public Relation division, which is not good business practice, even thou gh they have been slightly for years and they are doing well financially. However, there are many opportunities for one of its competitor to come in take away their market share. Costco does not attract people who are below the poverty air 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 needs to remedy the variety of choices by giving the consumer more than 4,000 items to choose from while their competitors are actually giving customers what they want. Costco needs to take into consideration the economy people have lost 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 new and innovative strategies to entice low income and single family line family to their esta blishment they are giving their competitors the upper hand.Costco should also focus on the advertisement because number of its rivals is already doing intense advertisement. In todays global and technological world, many businesses are being strong-growing and are taking advantage of investing heavily on the marketing. Costco cannot continue to use the concept of academic term back and waiting for their customers to spread the word by mouth.Costco needs to move in the direction of the twenty-first 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 pricing which could be biggest threats to the Costco even though Costco keeps comparatively reproached and qualitative product than that of Sams ClubThe Five Forces Model of CompetitionSubstitutes unshakable threatGood substitutes everywherePrice not significan tly higherComparable product features more than variety of featuresLow sack costPotential new entrantsLow threatSmall pot entry candidatesHigh barriers to entryExpanding marketAttractive profitsBuyersWeak bargaining spring around switching costLarge membership baseCostco has the best valueSuppliersWeak bargaining powerMany suppliersLow switching costMany substitutes existLarge quantities are neededCompeting sellers jolting CompetitionCostco is on topQuality is slightly betterBuyer demand is growingBuyers switching cost is lowSWOTStrength WeaknessLow product and services Strong brand Excellent merchandise Exceptional employees 54 million members Economics 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 ThreatRecession- Easier to find bargain luxury-items- Increase d popularity of Costco Expanding foreign markets- Europe- China India Positive moving picture in terms of employees pay and social responsibility Increasing brand awareness Fierce ambitionCostco cannot attract people who are below poverty line due to its membership fees and bulk purchaseHigh competition from Sams Club and BJPolitical problems in other countriesReferencesThomspson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A. (2012). Crafting & Executing dodge (19th ed.). New York, New York McGraw-Hill/Irvin.