Costco’s business model- to retain prices low, which will then increase sales measurements to lower lost profits via marketing membership. Customer must pay a membership subscription fee in order to gain entry to their low-cost goods accessible only at Costco stores, these limited offers preserve Costco customers.
Costco’s strategy- offering low-cost to its consumers. This strategy involves maintaining the lowest prices possible which is called Cost leadership strategy. Costco’s strategy correspondingly requires membership subscriptions to create a low cost of operation within their position. The use of this strategy is primarily to gain an advantage over competitors; keeping operating costs and overhead low, supplying items that sell rapidly, and charging low prices that kept customers coming back to shop. Generic strategy of cost leadership is essential to strengthen Costco’s business model.
The chief elements of Costco’s strategy were ultralow prices, a limited selection of nationally branded and private-label products, a “treasure hunt” shopping environment, strong emphasis on low operating costs, and ongoing expansion of its geographic network of store locations. (Costco Case)
Yes, Costco have a winning strategy, Costco’s idea was to keep customers coming in to shop by attracting them with low prices and in that way generating big sales volumes. Keeping operating costs at a bare minimum was a major element of Costco’s strategy and a key to its low pricing. sales at Costco’s existing warehouses grew by an average of 10 percent chiefly because members shopped Costco warehouses an average of 4 percent more often and spent about 5 percent more per visit. (Costco Case)