Case Study Analysis of Costco Architecture Evolution

Question: Describe about the Case Study Report for Architecture Evolution at Costco? Answer: Introduction This study focus on the company named as Costco who deals in the retail sector. It mainly targets the high level customers because they are not price conscious as they are ready to pay any amount to gain the best quality possible. Membership coupons are available to the customers who visit regularly and get the additional benefits while shopping of various goods and services (Mari, 2014). The segmented market that is focused by this company is the entire high customers who are generally working households, they do not possess much of time too. Online shopping is the best option for the individuals who are busy in their professional life. Overview of the company Costco Wholesale Corporation is a public company in the retail sector headquartered at United States. The main competitors of Costco Wholesale Corporation are Sams club and also BJs wholesale club. This company has 174000 employees and gets into various policies that help the customers to visit the store once again (Xing, 2013). The services that are rendered by this company are online shopping, Costco travel, connection with Costco, food service as well as business members with Costco. The company mission is to recognize its business activities globally and compete in the global market providing the customer base the products as per their needs and requirements. Primary and secondary target markets The primary target market can be noticed between the age group of 16-35 years. In this primary market, 40 % are studying in colleges so their buying pattern will be different from other age group. This group will be more interested in the purchase of commodities that has the current trends and fashion. So, the company focuses on this customer by providing them vast range of options so that they can select as per their requirements. The secondary target of Costco Wholesale Corporation ranges between the age group of 36 to 50 years that are aged in the sense they have become parents at this time. So this group not only is interested in quality but also they are price sensitive. These customers are mostly not brand loyal as because they gets attracted to any product which are best at low prices. College students can be easily targeted by Costco because they have an edge towards technology and to remain updated with the products and services. Advertisements and promotional activities conducted by Costco can make these college goers interested in the offerings and discounting pattern. With the increase in the E commerce business, anyone who has internet access go for online shopping as because wide range of products are available and it is time saver. We do not have to visit all the offline stores in order to get any product, rather with the help of payment mode; we can either pay by debit card or cash on delivery. By ordering online, the products will be brought to us in our hands without us doing any extra efforts. Costco provides online services to its customer base where they can check on prices and can easily compare with all the other alternatives available. The target customer of Costco is generally different from other discounters that mean small businesses and high income households. The steps in the target market are as follows: Figure: Shopping as per category Target group Costco mainly targets the high income customer because of the unique discount factor that is offered to its customer base. This company makes ways to target the college educated households that is different than any of the other business models. In any case, it has been noticed that low income group fails to shop at Costco because of expensive items present in the shop (Courtemanche Carden, 2014). The company analyzed that high end customers are willing to pay any amount of money looking at the quality as well as that matches up with their status. Basically, this people purchases items that is related to status symbol items (Barnes, 2013). It aims at satisfying the needs and requirements of the high class customers and provide them with positive environment on all the stuff that are required keeping in mind the changing trends and fashion. Several research have found that feedback mostly come from East and west cost of the investment bankers that directly means they are more likely consuming the products and services (Ross, 2015). More emphasis is given to the membership customers who spent a lot of money in getting the membership card that help Costco to know their needs as well as easy to follow up the customers as all the details will be mentioned for future reference (Bauner Wang, 2014). Market position Costcos share has shown an increase of 1.4 percent due to its special dividend policy given to its high customer base (Hutt, Speh, 2012). Another strategy that this company is launching so as to check on the market share, by keeping the price low so that the products can be affordable by all classes of people. The supermarket tries to keep variety of items related to households, fashion, footwear so that large range of customers can avail the services as per their requirements. Membership customers get additional benefits with Costco because they get discounted offers and variety of products that are start from hot dog to diamond rings. So, the customers can visit the store to avail the best of the services at affordable price (Lyon, 2014). The net income of Costco has increased to $547 million from the last year, a benefit on tax is provided in way of special cash dividend up to $1.10 that helped in overall growth of the business enterprise. As far as gasoline is concerned, Costco proves to be the best dealer as compared to its competitors because it offers at low at price. Customers have the facility to get discount coupons for their purchase in the value chain, later they can even redeem the coupons for future purpose that serves as an added advantage (Darroch, 2014). Figure: Market share of Costco and its competitors (Source: Hollensen, 2015). From the above pie chart, it is easier to understand that the market share is dominated by Wal-Mart; the next position is taken by Costco Wholesale Corporation whose share is 17.50%. In the recent past, Costco has increased in the customer base and has make ways to become one of the best in the retail industry. It aims at providing wide range of products so that customers can get all their requirements under one roof. The various membership coupons are beneficial for the customers to shop for their weekly requirements because deduction in the main amount can help them to save a lot of money. Conclusion At the end of the study, it is noticed that Costco mainly targets the high level customers for the sale of its products and services. These customers believe in quality of the products as well as the product that can match up with their status. After Wal-Mart, Costco is the leader in the market share in the supermarket as it provides a range of products to its customer base starting from a stationary to high expensive items like, gold, diamond, platinum, etc. Costco Wholesale Corporation should start targeting even low level customers so as to meet the demands of all class of people. Reference List Barnes, J. M. (2013).Case Study Report: Architecture Evolution at Costco. Tech. Rep. Bauner, C., Wang, E. (2014). Strategic Retailer Reactions to Wholesale Club Market Presence. 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