Costco's Competitive Strategies

Alternative Definition: Brand equity refers to a value premium that a company generates from a product with a recognizable name, when compared to a generic equivalent. Brand equity ' is a phrase used in the marketing industry which describes the value of having a well-known brand name, based on the idea that the owner of a well-known brand name can generate more revenue simply from brand

This strategy requires low costs reflected through low prices because customers expect significant savings when they buy from Costco. Wal-mart also uses cost leadership generic competitive strategy. To distinguish a part from the Wal-mart’s cost leadership strategy, Costco partly employs broad differentiation as its secondary generic strategy. The secondary generic strategy make the business stand out based on value and quality by using Kirkland Signature, which known as house brand (m.koreatimes.co.kr). Costco’s intensive growth strategy is to remain strong despite of the tough competition with Wal-Mart and local players such as E-Mart, Carrefour, and Sam’s Club.

One way to get competitive advantage is through Cost Leadership. This means that one can gain advantage by simply selling a product or a service at a reasonably low price, a price that you can handle. Information System can help a business gain this advantage easily. As Dr-Othman Alsalloum , who Working at King Saud University, stated, “Use information systems to achieve the lowest operational costs and the lowest prices.” Wal-Mart is an example of this competitive advantage; it has lower prices than any other market. The reason behind this is that they use Information Systems to maintain efficiency in their supply chain.

Their desire is to earn profit, but not at the expense of their employees, environment, customers, or the law. This is what makes the company’s business plan desirable. Not only is the company extremely profitable, but the model is built to last. The lack of turnover reduces the company’s expenditure exponentially. When a company treats its employees well, they want to remain at said company.

Using this NPV method, the best project will be the strategic acquisition of Schnapps Brand as suggested by Nigel Humbolt. It is noteworthy to comment that while the capital spending of this project is under the capital spending limits of the company, it also brings diversity in the core business and is promissory in terms of market expansion. With the IRR of 28.7% and projected return of $134 million, accepting this project will provide substantial gain to the revenue figures and confidence of the shareholders. Therefore, on the basis of Equivalent Annuity, the projects will be ranked as follows: 1. Strategic Acquisition 2.

Each of their brands offer a different or unique factor that attracts specific consumers and their needs. Rivalry in the department store business is high because of their current competitors and new ones emerging online. A threat of a new entrants is low due to a high amount of investment required. Because Macy’s is just a store that sells various products, the treat of substitute is high because consumers can get the same products elsewhere. Macy’s two main weaknesses include a slow growth on their return on investment and the high volume of employee

Companies generally allocate a majority of its money towards inventory. Gross Margin Return on Investment (GMROI) is an essential tool that many companies use to analyze its ability to buy and sell inventory in a profitable manner. GMROI is the measure of how many dollars a company has made for each dollar of investment in inventory, allowing you to compare categories and products (Chapter 12 slides). It is calculated by either dividing gross margin by average inventory cost or by multiplying gross margin percent by the sales to stock ratio. Using this calculation allows companies to separate winning and losing products, which is vital to creating a more profitable product mix.

Whereas factual information is known as quantitative data. 5.4 Value of Brand The value of a brand is very important to an organization. Having a well-known brand can enhance and generate more levels? For a business compared to a product with a less-known brand. A strong brand can gain trust and confidence in a product and enables a business to charge a premium price.

This is the comparison of the benefits offered by a company's product to its customers relative to the price it asks customers to pay. To do this, companies can influence the value proposition in one of two ways mainly. This can be done through long term brand building. They can also offer a relatively low cost to enhance value. Ultimately, the key is that customers perceive that the product's merits exceedingly justify its price.

In fact, the online marketing model does not only enable the firm to sell directly to the respective consumer, but also enables the firm to identify the unique needs of the consumers. The direct link between the consumers and the company is critical to continuous growth of the company. Apple Inc. strives to limit the time between ordering for the goods and receipt of the same. Normally, long distribution channels do not only influence the pricing of the products, but also the time when the consumers receive the product. Apple Inc. commands a great power in the market because it has differentiated