Many consumers including myself have grown up shopping at Costco and have a strong consumer brand resonance. Why though? Are the larger than life-size muffins, crowded stores and free samples through the in-store experience enough to retain a consumer over their lifetime? Many consumers would argue yes!
Costco Wholesale Corporation is a membership-only warehouse club that provides a wide-selection of merchandise. In 2014, Costco is the second largest retailer followed closely behind Walmart who holds first place. Costco’s sales model focuses on selling products in high volume at a low price. Costco positions itself in a way that targets families and businesses. Growing up, no Costco trip was complete without a jumbo size Kraft Dinner case to last a lifetime.
Costco is also known to treat their employees extremely well compared to their competitors. Costco offers better pay and benefits to their employees, which reduces cost through employee retention. Furthermore, those happy employees motivate customers to come back.
So the question is, “How is Costco the second largest retailer without marketing outside of the in-store experience?” Word-of-mouth advertisement. I believe one of the key successes to Costco is that many consumers including myself want to feel like they are getting a bargain. Consumers shop at Costco knowing they won’t be able to find a lower price. For example, with barbeque season in full swing, I went to go fill up the propane tank at Costco which cost about $10.00, compared to $25.00 being charged at all the local gas stations. Whenever a bargain is to be found, many consumers will share that positive experience with their friends, family, and co-workers. Word-of-mouth I believe is one of the most powerful tools Costco has leveraged to become the second largest retailer.
– Victoria Bambrick