How Costco Uses Consumer Behavior

How Costco Uses Consumer Behavior Successfully

December 2, 2014

How Costco Uses Consumer Behavior Successfully

Having worked in or around the human services field for most of my life the behavior of people has always been an interesting subject to me. Behavior is how we respond to stimulation and is often driven by need. From birth, we learn how to get our needs met through actions such as crying when we were hungry, needed changed, or wanted to be held. As we get older and our needs become more complicated, so do our behaviors. It used to be only in the professions of psychology and sociology that people would study human behavior. However, in today’s world the understanding of why we behave the way we do has bled into many different professions including marketing. With the increasing options a consumer has to choose from, it is important for a company to become better at identifying who the market is and what they need or want and then delivering it. One company that has done this well is Costco. This paper will explore how Costco has utilized understanding consumer behavior to become a successful retail giant.

Costco is currently 19 on the Fortune 100 list and is a Fortune 100 staple largely in part to how it has mastered finding its target market. Costco is often in the news for delivering high quality products at a good price and paying their employees better than most retailers. According to an article by Boyle (2006), Costco had the second largest average of sales per square foot of retails space at $918. Twice as much as the largest retailer in the country Wal-Mart which averaged just $438. One of the founders of Costco, Jim Sinegal, has publicly disclosed that no product will ever have more than a 14% markup making volume of sales an important factor in its success. In order to move a large volume, having the right products available for the consumer to purchase is essential. The other important factor in Costco’s success is its...