Costco’s business model- to retain prices low, which will then increase sales measurements to lower lost profits via marketing membership. Customer must pay a membership subscription fee in order to gain entry to their low-cost goods accessible only in Costco retail, limited offers preserve Costco customers.
Costco’s strategy- offering low-cost to its consumers. This strategy involves maintaining the lowest prices possible which is known as Cost leadership strategy. Costco’s strategy correspondingly requires membership subscriptions to create a low cost of operation in their position. The use of this strategy is primarily to gain an advantage over competitors; keeping operating costs and overhead low, supplying items that sell rapidly, and charging low prices that kept customers coming back to shop. Generic strategy of cost leadership is essential to strengthen Costco’s business model.
The chief elements of Costco’s strategy were ultralow prices, a limited selection of nationally branded and private-label products, a “treasure hunt” shopping environment, strong emphasis on low operating costs, and ongoing expansion of its geographic network of store locations. (Costco Case)
Yes, Costco have a winning strategy. Costco’s attracts it’s consumer by keeping the price low and selling goods in bulk. The idea is to keep generating large sales volumes. Keeping operating costs extremely low was a chief element of Costco’s strategy, which is an important key to its small pricing. Sales at Costco’s existing warehouses grew by an average of 10 percent chiefly because members shopped Costco warehouses an average of 4 percent more often and spent about 5 percent more per visit. (Costco Case)