How Costco Should Improve Its Marketing Strategy

Costco’s marketing strategy is still very conventional. The company does not spend money on advertising campaigns or promotions of its products in newspapers, radio, television, billboards, etc., through this standard the company saves around 2% per year in its operational costs. The use of email, in addition to the company's website, and occasionally sending coupons to existing members is the direct and only ways that the company uses to promote certain products with its customers. When there is an opening of a new store, it is possible that marketing managers make phone calls to potential clients about the future opening. Word of mouth advertising has been the best showcase for this organisation for decades. By providing their clients with quality products and services, Costco has gained one of the most loyal customer bases in the industry. This has been an essential and key element for using word-of-mouth advertising, which is not only the cheapest but one of the most effective methods as well.

To cope with the strong digital competition, Costco has developed an e-commerce website so their clients can make purchases from the comfort of their home. On their website they show products, online sales, display seasonal items, display daily offers, promote exclusive items, etc. Another use of Costco’s website is to show all the departments that exist in it. The website also allows online purchases for users, whether or not they have a Costco membership, however those who are not members have to pay an additional fee. The tracking of purchases made is also possible, an aspect that reflects the efforts of the organization to participate in electronic commerce by delivering electronic invoices and offering different payment options. In addition, Costco has developed a partner program with Google with the purpose of offering at home delivery on the day of purchase constituting an important advantage over its physical and digital competitors.

However Nikki Baird, a contributor at Forbes understands perfectly how Costco's digital strategy completely misses the point. In summary, she said, “Costco is perhaps doing the best it can with what it's got. But because its online choices are inherently designed not to support each other, what Costco really has is a lot of disjointed online content that does not connect to commerce – and certainly does little to help promote either Costco's brands or its connections with customers.”

This strategy to digitalise the brand mainly targets younger generations. This approach to attract younger clients has forced Costco to foray into the world of social media platforms. Nonetheless, Costco’s social media marketing strategy is very lacking, although the company has presence on platforms like Facebook, Twitter and Instagram, the company puts little to no effort in them. An advise Tanner Jones said is that, “what Costco should be doing is creating all social media accounts possible and get discounts to their customers. Most people already are aware of, and love, the Costco name and brand and doing this will make it easier to reach their customers and give them the products they want.“

Costco should further develop its technologies in marketing. The only ones they are trying to implement are customer insight and social media marketing. They use customer insight because they gather information on their clients when they first register for a Costco membership. The data they collect helps them figure out potential new clients. As previously stated, they have also implemented social media marketing by opening accounts in different platforms but because they are not updated regularly, they barely make a positive impact for the company.