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Costco Wholesale was founded in 1983 and it customers are mainly members who are registered. Hence, they are much loyal to its products and operations. Its product ranges from groceries, appliances, electronics, apparel, food to furniture. Costco is an international company with its headquarters in Washington. The company has approximately 147,000 employees who are employed full and part-time. The company also has 55 million members. Despite the fact that it enjoys a big market share, it is facing stiff competition especially from sam’s club and the Wal-Mart division. To counter this kind of scenario most business ventures to the extensive advertisement. Strategic Business Units (SBU) refer to independent organizational units or partition small in size and supple to apply control on matters affecting their long-term performance.
The essay addresses an important problem of the company for it does not advertise its products; the Company does not advertise through billboards, television commercials, radio jingles, and adverts on buses. Wholesale is not known to do extensive advertisement of its products, but they still thrive in the market, the question in the mind of many is for how long this will be in existence despite the changing customer needs and stiff competition. The strategic alternatives available to the problem have been identified and its advantage and disadvantages have as well been evaluated to ascertain how advertisement would affect corporate and strategic business unit’s level of the recommended strategic alternative given.
The argument against advertisement using the modes stated above is that it will be irrelevant for the public to shop from Costco wholesale, but being a member is paramount as the wholesale has created customer loyalty by internally advertising to their members.
Available strategic alternatives to product advertisement include offering quality products to consumers, ensuring that product prices are always low as compared to other competitors and or proper and appealing product packaging. The three alternative are; lower prices, quality products and proper product packaging (Pricken, 49). If well thought and implemented will definitely ensure that any business and for this matter Costco wholesale will continue thriving even without actively advertising their products and services through billboards, television commercials, radio jingles among other forms of ads.
One of the advantages of this alternative is that it will increase and intensify customer loyalty as they are offered with quality products, well packed and lower prices. Secondly, due to increased customer loyalty, Costco wholesale will definitely increase sales hence it will as well increase its revenue generation. Its worth to note that, the entire business will have saved itself a lot of money which could have been used to carry out advertisement, such money would be used to improve the wholesales strategic business units in terms of working environment, increase pay for employees among others. Finally, the alternatives mentioned earlier usually are successful in keeping competitors at bay with necessarily ‘fighting’ with them in the field of advertising for instance penetration pricing can result in fast diffusion and adoption and can achieve high market penetration rates quickly surprising competitors and not giving them time to react.
On the other hand, these alternatives have varied disadvantages to both the corporate and strategic Business Units. One notable is that the venture can be expensive in that the firm will have to buy packaging material and as it is known, Costco do not offer packaging materials as customer are to come with their own carrying facilities. Secondly, it’s a challenge to combine low prices and high quality products. For the company to successfully thrive in the market, I would recommend a combination of all the three alternatives so as to be on top of the business and keep competitors at bay.
Pricken, Mario. Creative Advertising. New York: Thames & Hudson, 2008. Print
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