Costco Brand: Membership Policy - Term Paper Example

Costco Membership Policy Costco Membership Policy Costco is a unique brand in that it sells most of the products at wholesale prices. One of the key features about the brand is that it is a reputable brand. The company is arguably the third largest retailer in the United States and is the biggest warehouse club in the World. As such, the marketing plan for such an organization is rather capital and time intensive. Regardless, with the business already established, a variety of products arguably has a key influence in the performance of the business. This paper will review some of the key strategies about the organization that are crucial to market it successfully. SWOT analysis Strengths One of the key strengths about the brand is the fact that the business has been established with one main goals which was to provide membership to most wholesale buyers. The crucial fact about the business is that is business model is unique. As such, the uniqueness in the business model is a key marketing point that the organization needs to center on. Although, there are few other warehouse clubs in the United States and elsewhere across the globe, evidently, Costco was one of the first and still remains one of the leading organizations in the field (Edleson, 2014). As such, uniqueness is a key selling point for the organization. Another major strength is the brand reputation. Currently, Costco is a key destination for shoppers with large families or people seeking to purchase products in bulk. With a superior reputation as is the case with the organization, it is evident that the marketing of the brand would be much easier. Costco is recurrently mentioned in movies and television programs and hence the proposition that most of the people already know about it. As such, the marketing plan needs not to center on introduction of the brand but rather should be emphatic on maintaining a good reputation about the organization. Weaknesses Although the brand being too big is a focal point of strength, it can also serve as a key weakness for the organization. Arguably, marketing a large brand is hectic. Additionally, it is also very pricey. As such, the budget for marketing such an organization is huge. Likewise, marketing an already reputable brand is a little complicated in that wrong marketing strategies would lead into destroying the brand as opposed to improving its reputation. As such, the marketing developed for this organization needs to be considered keenly and assessed. The marketing team needs to be experienced in handling large brands and marketing them effectively (Bowman & Gatignon, 2010). This weakness will cause an increase in the budgetary requirements to undertake such a project. Threats Primarily, the reception of the marketing strategy by the market is going to be difficult. Primarily, it is crucial to understand that Costco wholesale corporation is a member’s only club (Hart, 2014). As such, for the organization to market its products successfully, it has to appeal to current members and draw new members. Regardless, most membership clubs are not open to just anyone. The selection of the wrong demographic to market such products to would lead to the failure of the marketing plan. As such, more time is necessary to search for the appropriate member that the organization seeks to market such a product. Opportunity Being a membership club also presents several opportunities for marketers. Most members are proud of their memberships and would be willing to be easy marketers for free. Regardless, incentivizing the members would have a greater influence on the achievement attained by the marketing program. As such, members can become marketers with the right incentives, be it financial compensation or other shopping benefits, which would make the work to market the brand much easier. As such, using the current membership to look for new members is a key opportunity that such a model presents. Objectives and Issues First year objectives Primarily, the main objective of the marketing plan is to expand the reach of the brand. As such, the key way through which the organization will ensure that is not only survives but rather also grows exponentially is the use of strategies that are increasingly appealing to the new marketers. For instance, creating privileges for members such as giving gifts and other similar attractive offers will be the key focus of the organization. Arguably, the objectives for the first year are to expand our reach within the already established markets. For instance, within the United States, there are hundreds of thousands of members within the country. This is usually the case for several other developed nations penetrated by the organization. Regardless, the population within such established markets is still much greater than the membership. As such, the main objective of the first year will be exhausting the already established markets. Looking for new members within the organization’s best markets will be the primary focus of the first year marketing strategies. The main objectives in relation to the above are: a. Double the number of members within the established markets b. Use members to market our membership policy and attract new members c. Offer gifts and incentives to new and existing members to attract new members within the markets. d. Focus on outdoing the competition by getting their customers to our side through whatever ethical means possible. e. Intensive advertisement on the benefits of membership policies Second Year Objectives After exhausting the current markets, new markets also bring about promise for any marketer. Regardless, marketing an aspect such as the Costco Membership Policy in a new market is a difficult process, since it entails introduction of the brand and might take too much time before it peaks. Regardless, the main objectives for the second year would be to explore the untapped but promising markets. Costco would need to go global and set up shop in some promising and untapped markets. As such, our marketing plans will be limited to areas that Costco chooses to expand to. The main objectives for the second year are as follows: 1. Introduce the concept of Costco to these new markets through a viral promotion strategy in which all aspects will be shared. 2. Give free membership cards to some of the first applicants. 3. Offer sales and gifts to attract customers to the newly established warehouses and require them to sign up for membership with ease. 4. Incentivize new members and use them to market the brand through word of mouth and referrals to increase our membership in these countries. 5. Personal selling: Approach individual retailers and sell them our membership. Issues Some of the common issues that the marketing team is likely to face include the fact that people might not understand how Costco works. As such, educating them about the warehouse club, which are not common in most countries would be a great hindrance to effective market, but one that the marketing team must overcome for it to succeed. As such, the key strategy here is to educate people on the benefits of being a Costco member. Marketing Strategy Using the 4ps strategy or the marketing mix will be crucial. Place, product, promotion and price are key components of the proposed marketing strategy (Belohlavek, 2008). Primarily, in relation to the price, the organization needs to offer free membership cards to attract more customers. Most people are not willing to dip into their pockets to apply for membership. Initially, offering free memberships especially in the untapped markets will be a strategy aimed at drawing more customers into the organization (Lutz, 2013). After the marketing targets have been established, then the organization can resume charging people affordable prices for membership cards. In relation to place, considering aspects such as growth and expansion will be crucial. Although our first year will primarily focus on the already established markets with nearby warehouses, the second year will demand that Costco expands their warehouses to regions where they have not been before. For global marketing of the brand, it is crucial that new warehouses are set up in selected locations throughout the world during the first year, to pave way for the attainment of the second year objectives. Thirdly, in relation to product marketing, Costco products and the extremely low prices for bulk purchases is going to be an important selling point for this strategy (Lutz, 2014). As such, it is crucial that the public understands Costco’s services and the reason why they should subscribe for memberships as compared to purchasing products from their personal wholesalers. Finally, promotion will also be crucial. Advertisements through mass media, as well as marketing through social media in established and new markets will also be crucial. Likewise, incentivizing members to draw in new members will also be crucial for the success of the organization in getting new members. Action Programs 1. Start issuing brochures to all members when they are shopping at Costco. These brochures will contain a list of incentives given to members for bringing in more members to the store. 2. Start a social media membership campaign to request more people to subscribe to Costco Membership free. The free membership should last only 3 months to ensure that people experience the shopping experience at Costco before choosing to be permanent members. 3. Invest in mass media advertisement informing people about the free membership at Costco and explaining the simple steps that people should take to become members. 4. Commence a personal selling strategy targeted on established retailers informing them of the benefits of membership at Costco. Budget Year 1 Social media marketing $1,500,000 Mass Media Marketing $ 8,000,000 Wages and salaries for personal marketers $ 2,000,000 Salaries to marketing agencies $ 3,500,000 Transportation and communication $ 1,800,000 Incentives and Gifts $ 1,500,000 Miscellaneous $ 500,000 Total $18,800,000 Year 2 Social media marketing $3,000,000 Mass Media Marketing $15,000,000 Wages and salaries for personal markets $3,000,000 Payment to marketing agencies $2,500,000 Transportation and communication $ 1,500,000 Gifts and incentives $1,000,000 Total $26,000,000 Controls Primarily, a monitoring system evaluating how the memberships are translating in sales will be maintained. A record of new members purchasing from the warehouses will be established and compared to see if the free memberships has translated in sales growth. Secondly, regional records of increases in membership and sales will be maintained using the necessary software. In cases where membership will not be translating into sales, the budgets will be contained and the funds sent to areas that are much more promising especially in the second year of marketing the products. References Belohlavek, P. (2008). Unicist Marketing Mix. New York: Blue Eagle Group. Bowman, D. & Gatignon, H. (2010). Market Response and Marketing Mix Models: Trends and Research Opportunities. Boston, MA: Now publishing. COSTCO. (2015). Costco wholesale. Retrieved from http://www.costco.com/ COSTCO. (2015). Frequently asked Questions. Retrieved from http://warehouses.costco.co.uk/about/faq/ Edleson, H. (January 16, 2014). 7 Things You Need to Know About Costco. Retrieved from http://money.usnews.com/money/personal-finance/articles/2014/01/16/7-things-you-need-to-know-about-costco Hart, C. (January 18, 2014). Costco Discount Strategy. Retrieved from http://www.forbes.com/sites/greatspeculations/2011/01/13/discount-strategy-delivers-for-costco/ Lutz, A. (October 6, 2014). Costco’s simple strategy for outperforming Wal-Mart and Target. Retrieved from http://business.financialpost.com/business-insider/costcos-simple-strategy-for-outperforming-wal-mart-and-target Lutz, A. (March 7, 2013). Costcos Unorthodox Strategy to Survive the Big Box Apocalypse. Retrieved from http://www.businessinsider.com/costcos-unorthodox-business-strategy-2013-3?op=1 Read More