Costco vs. Wal-Mart Essay

1267 Words Nov 14th, 2012 6 Pages
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Costco vs. Wal-Mart With $401.2 billion revenues, the retailing giant, Wal-Mart, has been ranked as the 2nd place of 2009 Fortune 500 companies. This company is seen as the most successful business in the world today but also viewed as the vital indicator to observe the status of financial crisis recovery. Wal-Mart has won market share during the recession by offering customers lower prices as its successful marketing strategy. Moreover, Wal-Mart is long for expanding its kingdom all over the

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In spite of the financial crisis, Costco’s net income rose 15% and sales in stores open at least a year grew 6%. Costco dominated 50% market share of $70 billion U.S. warehouse club industry.



II. To brief the marketing strategy of these two companies.

A. Internal

Consumers demand low prices which also refers business needs to keep cost as low as they can. The controversial part of the low price is cutting cost to the bone which may cause the low wages for employees. A Business Week report shows the fifth-largest retailer in the U.S., Costco’s average hourly wage is around $15.97 which is much higher than its rival, Wal-Mart, as $11.52 per hour. Also, the mass-retailer Costco has agreements with Teamsters for 16 percent of its employees to assure employees can have better health care, friendlier working environment and better in business. This strategy also can boost employees’ work force then server a better service to their customers. Moreover, many studies confirmed that Costco’s well-compensated employees are more productive and Costco’s labor costs are actually lower than Wal-Mart’s as a percentage of sales. Contrast to Costco, Wal-Mart focus on how to decrease cost. Instead it has a notorious reputation about the poverty wages for their employees. The low road labor strategy of Wal-mart forces their supplier or related companies to depress the wages and benefits of both retail and manufacturing workers in nations or even overseas. This consequence of
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