Costco Wholesale‘s business model always fascinates me – rock bottom prices and unparalleled quality!
How is that possible?
A: Shrewd marketing and raw supplier power coupled with its supply chain prowess.
Incredible marketing lessons, though, surprisingly, at no marketing expense:
1. Costco uses the same manufacturer that your favorite brand does, but gets 1% better quality (on any of their chosen metrics). So, you always get better or on par quality as your favorite brand, pocketing you all the marketing dollars it takes to create and sustain a brand.
2. It only has one brand, Kirkland, from Salmon to Vodka whereas Walmart, Kroger, Target has dozens of brands in each categories. Each of those brands require their own time to garner consumer loyalty and trust.
3. Limited SKUs 3700 vs 100K+ in Walmart; High Volumes.
4. ~Zero marketing spend on Kirkland brand.
5. Leverages three decades of customer loyalty and trust of best prices and quality alike.
This great article by NapkinMath sums it up well.
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