Marketing strategy of Costco ~ Marketing mix, STP


Costco Wholesale Corporation is one of the biggest retailers in the world. Costco is the world’s biggest and most well-known ‘warehouse club’. It is the third largest retailer in the world, lying at the top after giants like Amazon and Walmart. In this article, the marketing strategy of Costco wholesale includes its marketing mix, STP, and many more.

Costco Wholesale is a global retailer that specializes in warehouse club operations in 8 countries and is known for its dedicated quality and good business ethics.

Costco maintains a marketing mix that capitalizes on pricing and the value of its products. This combination of value and price sets the business apart from other firms in the market and facilitates the competitive advantages.

Costco’s Product Mix

As a big-box retailer, Costco Wholesale offers a wide variety of products to match market demand. Compared to some large retailers, the company has a limited product mix, but expands its product offerings over time. Costco’s product mix includes the following main product categories:

  1. Appliances
  2. Auto & Tires
  3. Baby, Kids & Toys
  4. Clothing & Handbags
  5. Computers & Printers
  6. Electronics
  7. Furniture
  8. Grocery, Floral & Pets
  9. Holiday, Gifts & Tickets
  10. Home Improvement
  11. Health & Beauty
  12. Home, Kitchen, Bed & Bath
  13. Jewelry & Watches
  14. Office Products
  15. Patio & Outdoor
  16. Sports & Fitness
  17. Travel & Luggage
  18. Photo Center services
  19. Optical services
  20. Hearing Aid Center services
  21. Gasoline
  22. Business Services
  23. Home Services
  24. Life Services

In addition to the typical basic goods found in its warehouses/stores, Costco offers services, such as photo printing services, life insurance (under Life Services), and payroll services (under Business Services).

This element of the marketing mix shows that Costco Wholesale Corporation has expanded its product mix to a considerable degree of diversification to meet market demand. The evolution of this element of the marketing mix represents product development for growth and competitiveness.

They have expanded their product services also online. They also bring seasonal products to their customers which gives them an added buzz. Costco also sells premium quality products and services under its private label Kirkland Signature.

Costco’s Pricing mix

Costco is known for competitive prices, especially for bundled merchandise or goods sold in large amounts. These selling prices are a result of the company’s pricing strategies, which dictate price points and price ranges that are lower than the market average for some product lines. In its marketing mix, Costco uses the following pricing strategies:

  • Market-oriented pricing
  • High-low pricing

Costco Wholesale uses the market-oriented pricing strategy. The company’s goal in this component of the marketing mix is to offer the lowest possible prices for bulk/wholesale purchases, relative to the prices of other firms in the retail market. Moreover, Costco’s marketing mix involves a modified version of the high-low pricing strategy. Still, many of the company’s goods are available at discounted prices through bulk or wholesale purchases.

Costco is known for having specially low prices for bulk purchases, and also special prices on limited edition goods. Costco’s main business thrives on giving low prices to customers on high volume purchases. People who become members of Costco membership can avail special prices and discounts on the goods being sold.

Costco’s Place mix

Warehouse-style stores are the main places where Costco sells its products. In this case, Costco’s marketing strategy involves a product distribution strategy with the following places or locations:

  • Warehouse-style stores
  • E-commerce website and mobile app

The company’s goods and services are available at its warehouse-style stores. However, customers can also purchase products through Costco Wholesale’s e-commerce website. Mobile users can use the Costco mobile app to access information about products and to make a purchase. Customers can opt to have their online or mobile purchases delivered to their doorstep.

Costco Wholesale Corporation harnesses information technology for a wide market reach. In the brick-and-mortar aspect, the locations of the warehouses and other facilities reflect Costco Wholesale’s organizational structure, which influences the geographic location of retail operations for the optimal effectiveness of the marketing strategy.

Costco’s Promotion Mix

Costco Wholesale promotes its products through four main marketing communications tactics. Costco’s main promotion tactics are as follows:

  • Sales promotion
  • Direct marketing
  • Personal selling
  • Public relations

Costco uses bulk/wholesale discounts as a form of sales promotions to lure consumers to its warehouses/stores. Members are guaranteed low prices for products sold per pack or in wholesale amounts.

In addition, Costco uses direct marketing through emails to members, as well as The Costco Connection, which is a publication that promotes products available at the company’s stores. Costco’s marketing mix applies public relations to boost the corporate and brand image.

The lack of advertising is a major factor that separates Costco’s marketing strategy from those of other big-box retailers. The company does not advertise and relies more on its low prices and product value to attract customers and maintain its competitive position in the retail market. This element of the marketing mix shows that Costco Wholesale Corporation effectively promotes its business and products even without advertising.


Costco Wholesale Corporation happens to be one of the biggest warehouse chains. Costco is an American membership-based warehouse club. It has been thriving for a long time in an increasingly competitive environment because of its efficient marketing mix strategy