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Kirkland Signature Private Label – Powering Costco

Case Code: MKTG422
Case Length: 12 Pages
Period: 1995-2020
Pub Date: 2020
Teaching Note: Available
Price: Rs.300
Organization : Costco Wholesale Corporation
Industry :Wholesale
Countries : United States
Themes: Brand Loyalty/ Brand Strategy/ Brand Differentiation/Consumer Marketing
Global Economic Impact of Coronavirus – Assessment and Mitigation (B)
Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Reasons Behind Kirkland Signature's Success

According to Statista, a Germany-based research and analysis company, in 2018, Kirkland Signature products accounted for 29% of Costco’s overall sales. The same year, private label sales at US retailer Walmart stood at 19% of the overall sales, and Target’s private label products accounted for 13% of the company’s overall sales. In addition, private label products accounted for 17% of all US retail sales in 2018. In fact, in 2018, Kirkland Signature sales (US$39 billion) were more than the annual sales of a few leading US department stores, including Macy’s, J.C. Penney, Kohl’s, and Nordstrom, which registered sales of US$25 billion, US$11.7 billion, US$19.2 billion, and US$15.2 billion, respectively...

Minimal Marketing and Advertising Spends

Costco did not invest much in the marketing and promotion of the ‘Kirkland Signature’ product range as it wanted to keep its prices low. The company did not have an advertising budget or public relations and advertising departments. The only marketing and promotion activities that it carried out were targeted mailers to prospective customers, coupons to existing members, marketing brochures, social media advertising on Facebook and Instagram, and online advertising on YouTube...

Road Ahead

The US retail industry was a highly competitive one and companies that earned consumer trust were able to thrive. As Costco consistently focused on building consumer trust for its Kirkland Signature products, it was able to outrun fierce competition by retaining customers and registering good sales on a consistent basis. Customer retention also meant recurring membership fees, which compensated for the lower revenues earned through deep discounts offered to customers and drove profits...

Exhibits

Exhibit I: Few Kirkland Signature Products
Exhibit II: Private Labels Sold in the 19th Century
Exhibit III: Few Best-Selling Kirkland Signature Products
Exhibit IV: Square-Shaped Cashew Boxes and ‘Kirkland Signature Bottle’
Exhibit V: 2019 Kirkland Signature Products
Exhibit VI: Factors Driving Private Label Sales in the US

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