Costco Case Study Solution

A) Defining Problem

Problem statement

Main Problem: Retail Marketing Strategy

The main problem that face by OrganicKidz is the decision that the founder of Jane Walter need to make whether to accept or reject their new client.

Issue 1: how to gain big customer without affects other?

A warehouse club, Costco plan to make a large volume of purchase to OrganicKidz. It brings a potential to OrganicKidz to vault their sales to a higher level. But it cause disadvantage and some uncertainty issue. A sale to Costco would draw negative reaction from her existing customer. Costco is a warehouse clubs. It tended to stock and sell merchandise in bulk. Their targets were the small business owners who would resell products in stores. They worked on gross

This is because if organicKidz accept the offer, it could would draw negative reaction from her existing customer. There is also an uncertainty face by organicKidz. Although the sales volume can be a dramatically increase in short term if the offer accepted, but it may can be only a one-time deal. There is not a good way to offend others customer by increase short term sales. Moreover, if organicKidz couldn’t produce the quantity of the next quantity demand by Costco, it may cause Costco switch to other brands. OrganicKidz will have to suffer a double lose instead of making a gain. Therefore, reject the offer that made by Costco can be a good way to avoid uncertain and also remain a good relationship with existing customer.

Alternative 2: Accept the offer that made by Costco and fix the selling price for Costco

It is hard for an organization to reject an offer that brings lots of profit. The main problem is if accept the offer, offend the current customer. This is because the selling price of the bottle from Costco is low and it brings much negative effect to the existing customer. The selling price that set by Costco will destroy and influence the market price of the bottle. A good way to overcome this problem is set a minimum selling price which the price is for Costco to their customer. This is a good way for organicKidz increase their sales but also no offend to their current

OrganicKidz need to ensure all the department be ready to confront the quantity demand of Costco, for example just like what the case had mention that the inventory of each stock keeping unit (SKU) probably couldn’t hold large quantity of the products. These uncertainty problem need to be solve completely. There is also a must to increase the input such as machinery and equipment or direct labour if OrganicKidz couldn’t produce the amount that requested by Costco. Input such as direct material will be increase too to produce such a large amount. Therefore, OrganicKidz can request their raw material supplier reduce the price by increase the purchasing volume. Quantity Control Department is also very important element. All the product need to be check and make sure the quality of the product is perfect. Therefore, the QC department must be enhance. The manager of QC department has a big responsibility to make sure the quality of product. In addition, OrganicKidz also need to make sure there is sufficient capital to purchase the raw material before they make their initial business to