Cause And Effect Of Costco

1342 Words 6 Pages
Costco is one of America's largest membership warehouse stores. In fact in 2016 they received 2.35 billion dollars in net income. According to The Motley Fool in 2015 there were up to 44.6 million paid members, but 81.3 million total card holders. We were tasked to learn more about Costco and their customers. Luckily with us being in Consumer Insights we were able to go to Costco over the weekend and get some great observations in. Since it is a membership club most of Costco's customers are in the middle to upper class. In fact according to Clarity.fm 54% of Costco's customer base is considered wealthy, while only 15% of their base is "just getting by." According to CBS News the average Costco customer has a degree, is a homeowner and earns …show more content…
This is staggeringly low compared to Walmart who has around 100,000 different items. Because Costco offers so few items, there is a huge demand from multiple companies that bid to get into that small item base, meaning Costco can negotiate costs down and sell it at a lower price. Another interesting thing that goes on is something that is known as the Costco effect. Costco has two types of products, triggers and treasures. Triggers are everyday needs products and make up around 3,000 items, while the other 1,000 products are treasures and are luxury items that are only there on short term notice. These treasure items are a hook that are aimed to keep on engaging customers, and why you buy stuff you do not really need because it is marked at such a reasonable price. We personally know many people who are loyal Costco customers including Nelson's family. They love Costco for their great food selection especially when it comes to the meat department. When you have a family of four boys like the Reynolds food and meat go very fast, and with Costco's deals being better then both Walmart and Sam's Club, it makes the membership worth the …show more content…
It was really exciting seeing all of these products like candy bars and jelly beans in giant containers as well as running up and down the huge aisles with my brother like we were playing in a warehouse. It was fun to explore and when we got done shopping and drove home, I always got a huge array of snacks and drinks that kept us stocked up for weeks. It also doesn’t hurt that these products are much more affordable when you compare what you are getting for the price you’re paying. These kinds of experiences really back up Costco’s customer loyalty with an annual membership renewal rate according to CBS news at 90.6%.

The objective of our research was to discover what exactly makes Costco an attractive store for consumers, how often they shop there and what they think could be improved about it. To capture this data, we decided to question current Costco customers using a quick survey which asked questions related to the products offered and their overall Costco experience. The conclusions that we were able to make were that customers usually go once or twice a month and are almost always pleased with their Costco experience due to the low prices, high quality products and effective amount of variety offered. When I

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