Costco

1
Costco

• Party of three
• Carla Olivas
• Tad Moyer
• Andrea Andrews

Monday, February 09, 2004
2
Introduction

• Carla Olivas

3
Costco
4
History of Costco

• Jim Sinegal Founder
• Costco traded on stock exchange COST
• Costco merges w/ price club
• Costco Largest wholesale store in world

5
Stock Cost
6
430 Locations
7
Sales
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Strategy of Costco

• Product Pricing
• Hot items
• Market changes

9
Costco

• Tad Moyer

10
Government Fiscal policy

• Fed Reserve
• Money supply

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Federal Reserve

• Four functions
• Conducting the nations monetary policy
• Supervising and regulating banking, protecting
  credit rights
• Maintaining the stability of the financial system
• Providing financial services to the U.S.
  government, the public, financial institutions,
  and foreign official institutions.

12
Money Supply

• Three tools
• Open Market operations (buy and Sell T-bills)
• The discount rate
• Primary Credit 2.00
• Secondary Credit 2.50
• Seasonal Credit 1.05b
• Fed Funds Target 1.00
• Reserve requirements
• (Dec 25, 2003, Low reserves 45.4 M)

13
Comparative Advantage

• David Ricardo
• Early part of 19th century England
• Absolute advantage vs. Comparative

14
Productivity

• International trade enables nations to
  specialize, increase productivity, and increase
  output available for consumption. (McConnell,
  Page 737)

15
Costco

• Andrea Andrews

16
Market Substitutions

• A substitute good is one that can be used in
  place of another good. (McConnell-Brue, p. 45)
• Grocery stores

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Market Substitutions
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Sams club

• Size
• Membership
• Benefits
• Merchandise

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Smart n Final

• Size
• Membership
• Benefits
• Merchandise

20
Market Structure
Oligopoly A market dominated by a few large
producers of a homogeneous or differentiated
product (McConnell Brue, p. 493)
21
Market Structure

• Non-price strategy
• Samples
• Costco connection
• One-on-One
• Incentives based on membership levels

22
Elasticity - Inelastic

• Substitutability
• Luxury vs. Necessity

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Conclusion

• Andrea Andrews

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Costco

• ?