Costco Company’s Analysis and Strategic Management

Market Opportunities

Typically, business growth is depicted by a pattern that shows an increase, reaches a limit, and then tends to decline. Although products and markets for particular items will decline, businesses need not. For Costco, the best strategy should be based on continued growth possible by properly developing new products that fit assessed opportunities. Since company resources are limited, only selected opportunities can be effectively cultivated.

Market opportunities stem from both external and internal forces. For Costco, market opportunity is not automatically assured by either population growth or lower prices. Technological developments and changing market environments are externally based, whereas research and development, and modifications of products, packages, marketing channels, and advertising campaigns, are internally based (Hollensen, 2007).

Extend on-site Services

One of the proposed strategies is extend on-site services. The main advantage of this approach is that it will help to retain consumer loyalty by branching out and introducing large product lines. Costco must add new products that are tied to different phases of market development. When some products are declining, others should be enjoying market growth. Sometimes this is achieved by a merger; sometimes it is done internally. Regardless, the combination of the total product line as it relates to markets establishes (Bearden et al 2004). When assessing market opportunities, executives are confronted with a spectrum of situations that vary from the relatively easy to the most difficult to assess.

Internet retailing

The discovery of new technology, new methods, new processes and new opportunities open the opportunity for Costco to introduce the internet retailing. Expenditures on research and development have risen sharply recently and resulted in new products and processes. Opportunity assessment requires the creation of a counterpart to research and development — a function of discovery of new markets and market opportunities that can act as a generator for innovation. The main advantage of this strategy is low risk and the new virtual market (Crawford 2003).

More Stores

Recent years, diversification has been the main strategy in retail industry. In order to compete on the market, Costco has to increase number of stores around the country. The main types of stores will be business centers and home wares outlets. Opportunity assessment, therefore, must cover a span of time, and continuously add growth opportunities to a company’s present product assortment. Planned market cultivation through such activities as product development, credit, advertising, or personal selling has an impact on opportunities.

Though it is unrealistic to separate the assessment of market opportunity from marketing planning and programming, for discussion purposes we shall treat them in separate chapters. Market opportunity should determine the particular kind of mix to be offered (Paley, 2006). The major decisions on changing product lines or automating production, for example, imply risks and should be made only after assessing market opportunity. Thus, the choice of fundamental policies and strategies, and hence company survival and growth, depend on opportunity.


Costco should take into account three main factors: market structure, competition and personal resources. These factors suggest that the best growth strategies are extend on-site services, increase the number of exclusive product lines, Internet Retailing. Competition stresses that management does not focus on products or processes that it now possesses. Rather, Costco becomes concerned with satisfying changing consumer wants and needs, and continuously adjusting company resources to that end. This indicates that effective opportunity assessment is critical in developing marketing strategy, since that strategy consists of defining targets and developing a marketing mix. A good system of sensing market requirements provides ideas, information, forecasts, and the evaluation of their potentialities.

Works Cited

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