Costco has developed number of operational excellence that helped to achieve low cost operations. Costco’s operational excellences are efficient management of inventory and distribution, minimum merchandise handling, and bulk purchasing to reduce the price of the products. Also, Costco has the ability to offer leading national brands at low prices by getting great discounts from the manufacturers. In addition, Costco generates high sales volume and quick inventory turnover helps in reducing inventory-handling costs and increases the liquidity of cash. Quick realization of cash helped them to pay off their vendors and receive additional discounts for early settlement.
a. In a highly competitive firm, many buyers and many sellers allow “buyers to expect to find consistently low prices and a wide availability of the good that they want.” Many buyers and many sellers also allows it to where no single firm can influence the market price. Many buyers and many sellers are important because it creates a highly completive market where the price and quantity sold are determined by the conditions of the market rather than by just one firm. b. In a highly competitive firm, similar products allow buyers to find consistently low prices and a wide availability of the good that they want.
ALDI supermarkets, a well-known retailer in business, focused on retaining and gaining customer’s loyalty on those who were already familiar with the ALDI brand. ALDI’s main objective is getting its message across which is offering the best quality products at the lowest price possible. One of ALDI’s marketing strategies is the ‘Like brands’ by which ALDI created high quality products similar to those products of a well-known brand and competitors, but with a lower price. ALDI created blind tastes of these ‘like brands’ where people can taste ALDI’s brands and the national brand to see if they can make a
Business Model: The business model Costco use is MEMBERSHIP-ONLY WAREHOUSE CLUB that allows their members to access wide range of merchandise at a low cost which result in to high sales volume and rapid inventory turnover. Costco allows non-members to purchase but they have to pay 5% fees if they buy from the COSTCO.COM or they have to use cash card or stack coupon for the purchase from the store. (The krazy Coupon Lady, 2014) Business Strategy: Costco’s main business strategy is to provide their customer a quality product at a low cost. To sell the product at a low price, it reduces their cost or tighten their cost mainly through the following ways.
Barriers of Entry – Low The risk of entry from potential competitors is low, due to the barriers of entry. The barriers of entry are high, traceable to the cost of starting the business and what it costs to remain successful. Perdue also has a cost advantage over potential new entrants that is credited to superior production operations. Perdue has control of their inputs required for production, such as labor, materials, equipment, or management
Consumer Reports magazine reports that Costco is the leader and is the preferred retailer in the opinion of the readers based on factors such as product quality, value, friendliness of store and staff, ease of returning items, and overall service. Costco was also considered the value leader by providing the best bang for the buck. Walmart, Sam’s Club, and Target fell below Costco’s ranking in terms of popularity and value for consumers (Keshner, 2010). Psychographic characteristics typically go beyond the external focus and are not as easy to quantify but do identify why consumers buy a particular product or service (All Business,
Customers pay for value, and offering prices, lower than competitors, for the same benefits or creating unique benefits for higher price, creates superior value. A company implementing a strategy for creating value, different from competitor’s strategies, has a competitive advantage.(Barney,1991), thus, giving Amazon, a strong chance against its competitors. Petaraf and Barney (2003), stated that when a company creates greater economic value, it has an advantage over its competitors. Economic value is the difference of the perceived benefits received by the customers from the company’s economic cost. Although there are various ways of gaining competitive advantage without being the best in all aspects, there should be superiority in value creation (Peteraf and Barney, 2003).
In the food wholesale industry, it is easy to imitate your competitor’s products, meaning that your customer service is very important. Because it is so easy to imitate one another in this industry, a company’s reputation with its customers means everything to them. Maintaining long relationships with your customers is important to keep repeated business. One bad experience from a company can ruin your reputation and start a domino effect, leaving your company behind the competition. These companies need to have scale meaning that they sell many products for low profitability on each product to make revenue.
By matching price to demand, hoteliers have a greater opportunity to capture higher profitability business during high demand periods. On the flip side, lower flexible rates during low demand season help generate additional demand that might not have existed before. Although, it is always wise to set a floor price, which should be equal to the lowest “positioning” price that you might be willing to accept for your product. The challenge of having a dynamic structure is that the revenue managers need to be on top of their game to manage demand as it is very easy to lose control of inventory if forecasting is erroneous. Having a revenue management system minimizes these errors; however, the majority of hotels today do not have a revenue management system as it could be expensive or might not have been budgeted.
Its motto is low price every day. Pricing was the vital key factor for Tesco. Low prices were made to order to increase in sales and it was not a strategy but an everyday deal which attracted the customers. Growth strategy - Tesco has made beneficial schemes as the green card and club card these helped the consumers engage and trust the organization. Club card membership scheme has allowed to customers to save while shopping.
By keeping his prices low, Rockefeller strategically lured in customers. “Rockefeller demanded rebates, or discounted rates, from the railroads. He used all these methods to reduce the price of oil to his consumers.” (Source 1 “the New Tycoons- John D. Rockefeller”) Rockefeller did whatever it took to make
Almost everything that is bought is getting cheaper. To reach this goal, companies are setting the lower wages for their workers. So, the companies are getting more profitable and consumers get low-priced products, but that in turn impacts the income of the working middle class. As a result, the typical worker gets less, but the number of so-called 1% people is dramatically rising. It would appropriate to note the term “the law of one price” which is an economic theory describing the situation when identical goods cost the same in different areas and also the exchange rates are accounted.
By focusing on having numerous locations for accessibility and assessing customers’ needs, Wal-Mart has been able to sustain a competitive advantage in the industry. The company leverages its massive size to exert high purchasing power over its suppliers and, therefore, it can obtain significant cost savings and pass them down to consumers with heavily discounted prices. (Britanny Carter) They also offer a large variety of products, including national, local, and private brands, giving extended choices to their customers.
I walked to Costco it's, my favorite supplier I came to a halt when I realized that I didn't pick up a flyer I gripped my cart tightly and sped past aisle seven I finally made it to the food court and it smelt like heaven I glanced at some signs and they informed me about the sales I also checked my phone and my mom said "Pick up four pales" I raced to the checkout to get a good spot in line I was told that my membership expired so I had to pay fine I am officially broke from all the money I had to spend