Costco Company Consumer Behavior Essay - Essay Prowess

Costco Company Consumer Behavior Essay


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Consumer behavior at Costco company.


Costco, based in Issaquah, Washington, is an American operator of discount stores known as wholesale or warehouse clubs. Goods or products of merchandise are purchased in bulk or large quantities and sold at discounted prices to people who pay an annual membership fee. Costco store contains a supermarket and contains a variety of goods and it is an ever-changing selection of goods and services including luxury goods (Annual report). The stock encloses more than 140000 square feet of floor space is stacked high in the cavernous warehouse. It stocks 4000 different items at a given time despite the large area covered in a Costco store, one can still have access to pharmacy and gasoline stations.

Costco has grown from zero to a $3 billion sales in under six years. It has become the largest retailer store in the world ( Gambler 184). If it feels the wholesale price is too high for an individual product, they will generally not stock it. Despite Costco engaging in price reduction the cost of its stores is relatively high.

A pioneer of warehouse retailing club called Sol Price opened the first price club in San Diego back in 1976. The first Costco was opened in Seattle in the year 1983 by Jeffrey H. Brotman and James D. Sinegal. The price company and Costco combined into price/Costco which later in 1997 changed the corporate name into Costco companies, Inc. as time progressed, the company operated various stores in different parts of the world such as Mexico, Australia, Canada, the far east and United States (Hoover’s). The company was praised for giving its employees higher payments and better benefits than any field of retail.

The company does not do outside advertising and has no public relations department. The cost of advertising is greatly reduced hence a lot of money is saved. The company rules are that no item should be marked over 14% cost and no Kirkland signature product should be marked over 15%. Costco obtains very low profits of 2% and 10% revenue (Gambler 184).

Trends in consumer behavior

Marketers need to be well informed of the latest trends in consumer behavior and follow how they change over time. Consumer behavior encompasses the study of consumers and processes used to choose, consume, and dispose of the products and services. Processes can be physical, emotional, or environmental. Costco uses consumer behavior to determine what influences their base and can be able to predict decisions and generate new products and innovation to suit the perceived markets. Costco uses the established consumer data to their advantage hence they can reach, engage, and convert their target audiences.

Consumer behavior trends can be influenced by individual influences such as personal opinions and interests (Jansen 13). Costco has to put into consideration the purchasing power behavior by the consumers. The consumer can do complex buying of expensive or infrequently purchased products. Costco gets highly involved and does thorough research on the investment.

Costco is highly involved in the habitual changes, in which there are small attachments in the product such as groceries and variety-seeking where the consumer buys goods for fun or in need of a change. Costco has to observe and articulate all these behaviors so that they can determine the trends in the consumers (Jansen 13).

Personal preferences such as likes, dislikes, moral oppositions, values, and priorities should be put into considerations for their rank among the top of consumer behavior drivers. Costco should access and evaluate these preferences and determine how they affect product buying (Jansen 13).

Costco deals mostly with memberships and has consistent membership growth. Group influence can be a common factor that leads to consumer behavior change. Members can influence the company’s selling rate in that, a member can recommend or warn another of the impact caused by a product. These influences either positive or negative can be very crucial in determining the purchasing power.

Consumer reviews need to be gathered as it the best way to find out about consumer experience of the goods and services received. Costco needs to gather such information to get insights about deciding factors for their products and also this can help in determining the common issues in their marketing sector.

Customer surveys need to be carried out regularly and should be sent directly or after certain intervals to gain more information on user experience (Gambler 184). Costco gets the information and learns about the trends in what motivates their buyers or what they think about their products and they respond according to the specific needs of the consumer.

At Costco it’s about consumer resonation, they ensure that customers are satisfied with whatever product they purchase and make sure that it is of the best quality. They switch the consumer approach accordingly.

Retailers concern about the possibility of a recession shortly, Costco benefits in that it has private labels and most buyers shop for private labels during times of economic uncertainty. Costco fares well in times of economic struggles.

Club retailers ensure that they treasure hunt such that they do not stock lots of items. Costco stocks just a thousand, consumers feel they have the insight to the best merchandise and can access goods and services that are not available without a membership.

Costco has created a website that it uses to sell its products to prevent markdowns. The use of digital inventory makes Costco move its merchandise faster especially products at bay. Most retailers face these markdowns due to the slow sale of merchandise.

The club retailers mostly rely on membership and not margins. New members or consumers can sign up and make them renew their membership, they are often offered low prices on key products that other retailers cannot compete with (Jansen 13). More consumers relate to more purchase hence business growth.

Costco ensures that it has the best quality product at cheaper prices, this attracts more consumer hence gains their trust. Building customer trust is essential not only for retailers but also for the marketers as large. This club retailer company always gets products before any other company. Most of its items are exclusive to Costco.


It is rare to find a surviving retailer. Costco company has struggled to maintain its’ state for a long time. Costco has been trading well and it has not faced massive store closures.


Gambler & Neal. “The magic in the warehouse.”  fortune. 2016 pp 184-189

caroline Jansen: “At Costco ‘everything resonates with the consumer’. 2019 pp. 13-15

2019 Annual Report, Costco wholesale. October 10, 2019. Retrieved December 10, 2019.

Costco wholesale corporation company. Hoover’s. Retrieved April 17. 2019.

Chelsey & Frank. biography of Jeffrey Brotman. June 2007. Retrieved February 2012.