Costco

CH.16: Symbolic Consumer Behavior

2020-12-11T15:36:00.000-08:00

Costco provides profane items such as household products that everyday consumers like to purchase and enjoy without having any specialty. Items such as coffee, milk, pens, and toilet paper are products that Costco provides to its customers throughout the year. Costco also provides sacred items like jewelry. Jewelry items can be passed down through generations since they are made of durable quality. Items like these can be considered sacred because they are treated with great respect. Costco understands this and ensures their Costco members are receiving the best deal on jewelry items.

Stages of gift-giving

Costco is, no doubt, a place where one goes to buy gifts for people. When people go to Costco in hopes to purchase a gift for someone they are in the first stage of gift-giving, which is the gestation stage. In this stage, Costco members consider what to get as a gift for the person. Costco offers a variety of items that are great gifts, such as kitchenware sets, jewelry, and electronics. They also have baskets stuffed with goodies like chocolate, popcorn, and even wine. These baskets are offered year-round with new offerings for different seasons allowing people to buy and gift them for different holidays. During the holidays, in December, Costco’s revenue increases due to all the gifts people are purchasing for their loved ones.

CH. 15: Innovations: Adoption, Resistance, and Diffusion

2020-12-04T13:57:00.005-08:00

As people mob this beloved grocer amid the coronavirus panic, Costco has taken various steps to protect shoppers in stores. It is no longer offering its much-loved samples, it is limiting the number of shoppers allowed in stores at any one time, and it has ramped up the sanitization of its stores. Costco is trying to protect its vulnerable customers, and now customers 60 and older can shop between 8 a.m. and 9 a.m. Tuesdays and Thursdays. Costco has had to change some of their ways in order to comply with the regulations made during the pandemic. This is part of their innovation to ensure consumers are shopping safely while still ensuring that they get what they need.

As this innovation takes place, consumers start to form some resistance. They do not wish to shop in Costco during such stressful times and give in to the innovations Costco is implementing. Consumers worry they may get exposed to the virus and will opt to shop at Costco during these times. However, Costco has assured its consumers that they are taking every precaution when it comes to one’s safety when shopping at any one of their warehouses. By adopting this new way of life, Costco continues to show that they truly care about their members.

CH.14: Psychographics: Values, Personality, and Lifestyles

2020-12-04T13:55:00.004-08:00

As we all know Costco’s membership is open to business owners, as well as individuals. There are plenty of shopping alternatives for the members which is why Costco chooses to provide them with the best services. Costco upholds its mission to adhere to consumer’s values by inputting it into their code of ethics. Costco’s continues to earn the trust of their consumers by pledging to:

Provide top-quality products at the best prices in the market.
Provide high quality, safe, and wholesome food products by requiring that both suppliers and employees be in compliance with the highest food safety standards in the industry.
Provide our members with a 100% satisfaction guarantee on every product and service we sell, including their membership fee.
Assure our members that every product we sell is authentic in make and in the representation of performance.
Make our shopping environment a pleasant experience by making our members feel welcome as our guests.
Provide products to our members that will be ecologically sensitive.
Provide our members with the best customer service in the retail industry.
Give back to our communities through employee volunteerism and employee and corporate contributions to United Way and Children’s Hospitals.

Costco also adheres to the different lifestyles of their customers. For example, they sell tents and thermal flasks for people who like to go camping in nature. They also have toys for kids, pots and pans for cooks, books for readers, cosmetic products for beauty enthusiasts, and much more to comply with consumer's different lifestyles. Costco also provides services like gas for cars, optical services, home improvement, car maintenance, car washes, and prints photos for their members.

CH 13: Household and Social Class

2020-11-21T12:28:00.003-08:00

Household Influences

Purchasing behaviors are highly influenced in a single household whether it be a single person living alone or a group of individuals in different life stages living together. When an individual goes to Costco they consider the needs of their household. For example, if they have babies, pampers and wipes are a necessity within their need. This shows how the age of the person in the household influences consumer decision making. Certain decisions made by spouses, parents, and even children help make purchasing selections. Costco adheres to these decisions by offering products like children gummy vitamins, toys, books to kitchen appliances, electronics, and apparel.

Social Class Influences

Social class influences have a huge role in one's consumer decision-making process. For example, larger households who are within the underprivileged community tend to buy in bulk due to the fact that it is cheaper in the long run. They live a voluntarily simple life that tends to be less materialistic. Individuals who belong in the overprivileged community tend to look at electronics such as; laptops, televisions, refrigerators, and so much more. The overprivileged community likes to purchase high-end items that become status symbols, to show they are in a higher class. For example, this may be seen in jewelry purchases that are not necessities but maybe a pleasure purchase.

CH.12: Consumer Diversity

2020-11-19T19:19:00.004-08:00

Costco adheres to millennials by providing items like electronic items from Apple. Millennials are known to be the generation to grow up to new technological advances that have shaped them to be a tech-savvy generation. Costco also offers TVs and other electronic devices like fancy new appliances, vacuums, toothbrushes, and hair dryers. Costco makes sure to have new electronic devices for businesses but also for individuals who love those kinds of products. Costco also adheres to baby boomers' wants and needs by providing products of necessity like clothes and food. For Gen Z, products like the latest electronic devices such as air pods and Ipads are offered by Costco. This is because Gen Z mostly cares about the latest new devices as they are the digital natives. Costco tries to understand and respect consumers’ needs and wants and makes sure they do their best to satisfy them. In 2018, the age group that mostly shopped at Costco were millennials. According to a graph on statista.com, 55.45% of shoppers at Costco were millennials. 24.73% of the age group that shopped at Costco were baby boomers and 46.96% of the age group that shopped were Gen Z. The people interviewed for the graph were aged 18 and older.

Costco has everything, not just things that both genders can share, but items that attend to both male and female needs. For example, many women go to Costco to get feminine hygiene products such as pads and tampons which come in bulk. The 88 count Always pads for women are only priced at $15.99, when in other stores the count would on behalf of the 88 and be just as expensive. We also see items such as supplements that benefit only women. For example, the hair, skin, and nails, vitamins that women love to take because it adheres to women standards. Now, Costco also has supplements that focus on only men such as the One A Day Men’s vitamins. Overall, Costco has items that target just a specific gender or items that anyone can use.

CH 11: Social Influences on Consumer Behavior

2020-11-06T14:12:00.002-08:00

Costco has hundreds of pages on several social media platforms such as Instagram, Facebook, youtube, and they are solely dedicated to great Costco products and reviews. For example, on Instagram, there is an amazing page called @costco_doesitagain and their marketing is so amazing and captivating to Costco consumers. The Instagram page is considered to be a secondary reference group. Even though this is a non-marketing source page they actually have a hundred thousand more followers than the official Costco page on Instagram. This page notifies their 800k followers of the best deals and finds. On the other hand, Costco’s main marketing source comes from its Facebook page where there are 2 million people followers.

@costco_doesitagain on Instagram

@RemLife on Youtube

On youtube, there is a social media influencer/opinion leader named Remi Ashton (@Remlife on YouTube) and she does an amazing job of doing Costco vlogs where she shows what she picks up from Costco. She also does comparisons of other stores such as Ralphs and proves that Costco prices are so much better than other stores. This allows her 1.38 million subscribers to be influenced by her consumer behavior. Remi impacts the lives of her subscribers into wanting a Costco membership because they want to live her lifestyle, and this is seen in her comment section.

Ch.10: Post-Decision Processes

2020-10-30T13:44:00.000-07:00

Consumers tend to be more dissatisfied when a product: fails to perform as they thought it would - makes them feel worse than they forecasted it would. However, at Costco, they have figured a way in order to keep consumer’s satisfaction even if a product is not up to par. At Costco, consumers do not have to have their receipts or the original packaging in order to return an item. Costco is known for having one of the best return policies. “We will cancel and refund your membership fee at any time if you are dissatisfied” (Costco). It starts with the memberships, if one does not like what Costco has to offer, they can cancel it and get their money back. “We guarantee your satisfaction on every product we sell and will refund your purchase price*” (Costco). For the most part, Costco will accept returns and do refunds for any purchase the consumer has made with the exception of some items such as alcohol. Then with bigger items, there is a number of days that can do so. Many bloggers and Costco consumers believe Costco has one of the best return policies which is great for those who feel those post-decision emotions. They know they can simply return their item or items and feel better.

CH. 9: Judgment and Decision-MakingBased on Low Consumer Effort

2020-10-23T13:34:00.005-07:00

Costco does an amazing job with visual aspects as they know how to affect consumers’ feelings, behaviors, thoughts, and actions. There are several sample stations located inside of Costco. Customers are able to pinpoint them when they see that there are several individuals standing near the sample stations. They tend to go towards the group of people to see what the hype is all about. Once the customer tries the sample or samples out they tend to do an impulse purchase especially if it is a familiar brand like Kirkland. This develops a habit for consumers by repeatedly making purchases based on Costco samples. This makes their life simpler and more manageable because customers then believe that the samples are both top tier and tasty.

Consumers believe that Kirkland is a top-quality brand due to their great prices and quality standards. Consumers often see the Kirkland logo and do not have to think twice about getting the product as they know that Kirkland is a familiar brand they trust. Consumers buy the same brand repeatedly as they have a strong preference for it. Individuals remain loyal to one brand as it causes consumers to do more research on another brand in which in many cases they don’t have time to do so. They stick to a brand that they know and love.

CH.8: Judgment and Decision-Making Based on High Effort

2020-10-18T17:20:00.000-07:00

Emotional Accounting

Consumers are given positive feelings with each mental account for saving/spending at Costco because of their deals and unique finds. Upon Costco's mission statement of continually providing its members with quality goods and services at the lowest possible price, consumers feel good about shopping at Costco. With such discounts on goods like name brand products, foods, and clothing items, consumers relate their shopping experience to be a positive one. Their mood can also increase when they find a certain item at Costco. This also gives consumers the incentive to come back to Costco if they have experienced a positive mood/feeling. Not only can they feel good about having an exclusive deal based on their membership, but they also acknowledge the fact that they get to save more going to Costco rather than going to a grocery or department store. This allows consumers to make such purchases based on high effort. When consumers feel good about shopping, it becomes easier to make these purchases.

Group Decision Making

At Costco, people make their decisions both by the influence of other people as well as their own influence. There is a goal when going to Costco or any other place. The goal is to buy what you need. While trying to achieve your goal it is easy to catch yourself buying things that you do not need but maybe want. With individual-alone goals, a person will get what they went for and saw something they liked and made it a part of their goal. They influenced themselves. I would say food may be an individual-alone goal because it is a necessity. In individual-group goals, the goals have been influenced by another individual or a group. Clothes or electronics may be an individual-group goal because it's not a necessity and may take more persuasion to buy. At Costco, it's easy to create a new goal especially with the abundance of products they have as well with the price those products are marked at.

CH.7 : Problem Recognition and Information Search

2020-10-18T12:50:00.000-07:00

Costco focuses on providing the best possible service for its consumers which means they are on top of their problems with persistent information research. One problem that Costco has always had is its long lines due to popular demand. Even though Costco has so many registers available they have always struggled with maintaining them. Costco recognized this problem and provided an amazing solution to it which is self-checkout! With self check-out being available customers are able to scan their products at a much faster rate. Customers will be able to get in and get out without having to wait through those long lines.

As we all know Costco is primarily membership-based. This means people who don’t sign up for the membership can not enter or purchase anything within the warehouse. Costco relies on the membership program, which is why they won’t allow nonmembers to shop. However, as of recently, they have been allowing nonmembers to purchase merchandise using another member's card. Costco is becoming less strict with their rule of members-only which gives others an opportunity to see what Costco is all about. Also, to add to the solution, Costco’s website allows nonmembers to purchase their bulk items as well, however, there is going to be a 5% surcharge. This allows nonmembers to have access to Costco’s items but with an additional charge. This is great problem recognition on Costco’s part as it benefits both the company and others outside of the membership program.

C.H 5 & 6: Attitudes Based on High-Effort and Low-Effort

2020-09-25T13:41:00.003-07:00

Costco is known for understanding the bigger picture before getting into the details as it is a 42.5 billion-dollar company. So what does this mean for the customers and how they view Costco as a corporation? When customers go to their local Costco they feel as if they are a part of a club due to the fact that without a membership you are not welcome inside of the store. Costco always makes sure to switch up the store depending on the seasons which keeps the customers and their attitudes going towards a positive direction. One thing that Costco has always done to catch their customers' eye is to hang up seasonal items. For example, in the summertime and wintertime, Costco will have swimming rafts hanging and big snowman statues so that no matter where you are it is visible to the eye.

Another thing is that Costco makes sure to always keep their customers' culture in mind. With that being said Costco culture is predominant in the attitude, language, and behavior of the whole organization. One of the main characteristics of Costco’s organizational culture is to always keep a positive attitude. Courteousness and friendliness are emphasized in Costco’s organizational culture. The company believes these behaviors are important in attracting more customers to its warehouses/stores. This feature of Costco’s organizational culture contributes to its employee morale. Costco has never allowed employees to use the word "discount." The way Price’s mind worked was to focus on the lowest possible markup rather than the deepest discount. In Sol’s mind, the word discount equated with cheap. So the core ingredient in Costco’s addictive drug is its value proposition that stands for high-value products at the lowest prices. Consumers are addicted to Costco. The renewal rate is a whopping 90 percent each year. I guess that captures the power of an addict’s behavior. Renewing a Costco’s membership becomes a high-effort decision as it is a membership that only allows you to shop there with their Costco card. Costco has recently come up with a way for customers to renew their membership automatically. This high-effort decision now becomes a low-effort one as customers no longer need to worry about missing a payment.

A great thing that Costco provides is online enrollment for customers which is an extremely low-effort option since no one has to leave the comfort of their home. They have also created an auto-renewal process for the members. This makes it more convenient for Costco members to renew their membership without the hassle. This makes consumers feel like they have one less thing to worry about. With a few clicks, they are able to set up their auto-renewal and carry on with their day. This is a low-effort decision for customers because consumers don’t have to think about the renewal process each year.

With the pandemic that is currently going on this is amazing as it benefits both parties in various ways. Customers believe that shopping is at an all-time low and Costco is implementing certain strategies to make it safer for consumers to shop at Costco without having to worry about their safety. Costco has teamed up with instacart to accommodate the surge in shopping delivery which is making it easier for consumers to get their groceries. This is a fantastic low-effort decision that is being implemented as consumers are one click away from getting their daily necessities.

Costco’s annual membership makes the store feel a little bit exclusive and more appealing. Consumers at Costco go crazy for a deal, and Costco has designed its entire strategy around this core tenet. For example, some products that are manifestations of Costco’s value ethos have become cult favorites people return for like their rotisserie chicken and sheet cake. Price is another factor because an October 2017 price comparison by J.P. Morgan found Costco prices to be 58% cheaper than Whole Foods Prices. This relates to the consumer’s attitudes at Costco because they will want to pay for a membership to take part in their deals.

CH.4: Memory and Knowledge

2020-09-20T13:36:00.000-07:00

Sensory memory: Costco samples

There are many reasons consumers keep coming back to Costco, but one reason is because of their sensory memory, which stores input from our 5 senses. When you ask someone why they go to Costco, their answer is most likely going to be because of their free samples. The Atlantic wrote, “Costco knows that sampling if done right, can convince people that its stores are fun places to be” (Pinsker, 2014). Costco is using free samples to make its stores more fun and has people coming back because they remember the taste of the different samples and how fun it was to walk around tasting different things. I personally have memories from when I was a child going just for samples. Another memory I get when I think of Costco is the smell of the rotisserie chicken that's being cooked daily, having that entire section smelling like chicken. The way I go back for the chicken and how it smells, others go back for the free samples that are stored in their memory.

Brand image: Kirkland

Costco carries all kinds of brands at their warehouses. But Costco is known for its signature brand, Kirkland. Their private label accounts for 27.5% of company sales in 2018. Which is above the industry average of 17%. As a private label, Kirkland has shown to have quality products that consumers love. As of recently, it has been shown that consumers prefer private label goods as it is affordable and is better than other name brand items. Even during times of hardship, people often shop for private labels. Consumers also love to “treasure hunt” for items in Costco, as they only carry a couple thousands of items, making consumers feel as if they have access to the best goods that are not accessible without a membership. As the Kirkland label proves to be a brand that contains high quality at low prices, Costco maintains its mission of providing high-quality items at affordable prices. Making their brand image stronger.

Brand Personality

The warehouse focuses on its ideal members and refuses to chase customers who aren’t a good fit. The $55 gold star members pay for a membership each year weeds out lower-income customers and higher-end customers pay twice as much for executive-level membership. The products and prices are designed to appeal to the savvy shopping mentality. The selection at Costco reflects a mix of triggers that prompt visits such as core items like laundry detergent, cereal, and toilet paper, and treasures, other items that become un-impulse purchases like pentagon new jackets and oversized teddy bears. Costco isn’t afraid to limit the choices of their customers.

CH. 3: From Exposure to Comprehension

2020-09-13T16:23:00.005-07:00

Exposure

Costco is a wholesale corporation that offers bulk quantities of merchandise that are sold at discounted prices to club members who pay an annual membership fee. It is known to be the largest retailer in the world. However, when it comes to exposing themselves through marketing, they don’t. Costco uses direct marketing, like emails as well as a monthly magazine called the “The Costco Connection,” that exposes and promotes their products. They also have sales personnel that persuade customers to buy certain products within the warehouse. Besides that Costco does not advertise. Instead, they rely upon their mission to provide low prices and product value to lure in their customers. This, in conjunction, makes Costco so successful. Costco also applies public relations to boost its corporate and brand image, like having a sustainability program for its supply chain.

Attention

As we all know it today Costco is known for its great deals and bargains that always have customers on their feet. Costco is also known for always switching up its merchandise to catch the customer’s attention. For example, every season they have something new right when you enter so that customers can get excited while getting their shop on. In the wintertime, Costco puts out blankets as a catch since its cold outside and they know customers won’t second guess purchasing a cozy blanket to Netflix and chill in their living room. In the summertime, Costco will put out shorts and fragrances so that people can be comfortable in the heat while smelling good even if they’re breaking a sweat. Costco knows its audience and knows exactly how to gain their consumer’s attention at everyday low prices that’ll make them never want to miss out on a bargain.

Comprehension

Costco has a mission “to continually provide our members with quality goods and services at the lowest possible prices.” Consumers would comprehend this mission/statement objectively as it is easy to understand, which is good for any company. Providing any marketing stimuli it is best to make sure that it is easy to read, which is what Costco does. The mail they send out to their members and the signs they provide online and in-store are easy to read and comprehend. Upon comprehending what we've seen and read, we can see that what they're saying aligns with what we see in the store.

Perception

Costco always has a big red sign in front of every store, which attracts customers to come shop there. They have a food court where customers can order food and eat. When customers enter the store, they see a variety of electronic equipment like flat-screen televisions, high tech computers, and Samsung Galaxy phones. They also offer delicious samples for the food products they sell. This entices people to try out their samples and purchase them if they like it. Costco also sells a variety of clothing brands, coupons, and books in their stores, which also tells customers that their store has a variety of items.

CH.2: Motivation, Ability, & Opportunity

2020-09-04T13:02:00.001-07:00

Costco has proven to be extremely popular in the United States, with nearly 700 stores. Making sure they put their consumers and employees first. Costco offers different memberships in order to adhere to individuals and businesses that have different needs. This gives the opportunity for people to sign up for the best membership that is suited for them. As each membership offers a different price point with distinct benefits. With executive membership being $120 annually, it includes a free household card that’s valid at all Costco’s locations worldwide, an annual 2% reward on qualified items and extra benefits on select Costco Travel products. Business Membership also offers a free household card, valid for all locations worldwide, as well as, adding a second card for an additional $60, and purchasing products for resale. Business members must provide Costco with the appropriate resale information. And lastly, Gold Star membership includes a $60 annual fee that includes the free household card that is valid at all locations worldwide.

Gold Star - $60/year
Gold Star Executive - $120/year
Business - $60/year
Business Executive - $120/year
Student membership Promotion - Students receive a $20 Costco shop card when they join as a new member
Military Membership Promotion - Military members who sign up and enroll in auto-renewal receives a $30 Costco Shop Card

Costco has a buy-in bulk program and it motivates people to buy everything they need in one instead of buying separately.

Domestic volume sales: The minimum purchase amount is $10,000 per order and the service is available to all Costco members.
Export sales: Costco exports offers people a centralized source and point of contact for your order, commercial invoice and packing list, consolidation of merchandise for export shipments from Costco distribution centers throughout the United States, and assistance to your freight forwarder in arranging shipment to the final destination.
Costco business centers: Products from Costco business centers can be ordered online and delivered to your business. They are dedicated to bringing their members the best possible prices on quality brand merchandise.

CH.1: Understanding Consumer Behavior

2020-09-03T15:24:00.001-07:00

There has not been a single person that i’ve met who said they have never been to Costco. Different people from different backgrounds have all shopped at Costco before. Their current customers range from single households, to a big household, and even business owners. The reason these people go to costco is because costco provides an abundance of goods, services, and experiences which is what consumers look for when buying. Costco attracts these customers to come back with their sales promotion and direct marketing. They rely on their low prices on goods and emailing or mailing out sales promotions, so their already low-priced goods are even more low-priced. Costco makes sure to focus on their price to please their consumers and have them return.

Due to the pandemic Costco has actually gained much more customer volume which is great for the business. According to Lawrence Rothman “It was clear that customers had increased shopping at the stores when the outbreak hit, with traffic rising by 9% in the United States versus the year-ago period. This accelerated in the last week of February.” I clearly remember when the pandemic hit the first place my mother went to was Costco. Costco has always had a high demand but due to the pandemic it increased so much more which eventually made the company place restrictions on how much one member could buy. For example, a member would only be able to buy two cases of water and three meat products in order to make sure there was enough for other members to buy as well.