Costco and their Cheap Chicken Strategy

My family has been a loyal Costco member for over 10 years. As a local WA company, it’s grown to over 400 stores in the US and almost 200 internationally. The store doesn’t do a lot of PR, but frankly, it doesn’t have to. Costco is a store that expanded its $55+ membership base through the network effect and trial. Its business model highlights value through bulk shopping and sparsely decorated warehouses, while they send additional in-store and online coupons monthly to their members – not to mention cheap pizza and hotdogs. Their primary social media channel is on Facebook, where they have over 1m followers who keep track of new releases and behind the scenes photos and videos.

Despite not running commercials or large marketing campaigns, Costco differentiates its message from competitors at multiple levels, often garnering attention in the news. For one, it’s been seen as a leader in fair wages, benefits, and career growth (unlike other big box competitors) – so much so, President Obama visited one store to promote his minimum wage executive order. The retailer is also known for its generous return policy, even for opened and eaten goods. It’s also been noted for fighting with vendors to pass along savings and its cheap chicken strategy. Combined, it appears their focus is on existing customers and making them feel like their money is well-spent – though they do run the occasional promotion to grow membership on platforms like LivingSocial. Currently, Costco is differentiated enough from a community management standpoint, but may want to help grow its cultish following (like the Starbucks secret drink menu).

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