Saturday, June 22, 2013

Would you rate Costco’s competitive strategy as pursuing differentiation, cost-leadership, focus, or some combination? Why?

Costco's primary strategy is cost leadership. People go there expecting significant savings on a product, rather than on brand names.
Except for its own brand (Kirkland), Costco isn't in business to sell brand-name items at low cost like Walmart does. You won't consistently find the same brands at a Costco warehouse, but what you do find will be higher quality than most of Walmart's stock and heavily discounted. Costco regularly features non-Kirkland brands, including Gloria Vanderbilt women's clothing and various brands of liquor, wine, and beers.
I'd also argue that Costco has positioned itself as the anti-Walmart. It avoided a lot of the negative press Walmart received in the early 2000s surrounding employee wages and benefits that most full-time minimum-wage employees couldn't afford. Costco has always paid a decent enough wage to its employees, even part-timers. As a result, it benefits from very low employee turnover, which gives the company huge savings on human resources and training expenses.

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