BUSINESS

Marketing 501: The Role of the External Environment in Marketing Decisions Module 5 Case

Marketing 501: The Role of the External Environment in Marketing Decisions Module 5 Case

How do pricing and distribution complement each other when gowns are available at Costco?  What are implications for segmenting, targeting, positioning and branding?

Costco initially used to cater to its customer base by providing everything that a bride and a groom would need which ranged from wedding rings to honeymoon trips. Costco as a brand catering to such a market has ventured into introducing a related product line which is the wedding gowns. The pricing strategy and the distribution strategy of Costco with respect to wedding gowns is complementing each other to a higher degree. Costco has made use of penetration pricing at a time when the impact of recession is being felt by an average consumers while the other brands be it a famous one or an average one are still using the same pricing strategy as it was before the recessionary times or the time when the buying power of the consumer was high. Costco has made use of penetration pricing strategy which a brand uses when it has introduced a new product line or has is a new entrant in the market. Penetration pricing strategy entails keeping the price of the product or a service at price level that is below the price level of the products market. Other brands of gowns in the market ranged from $1000 and above however Costco; upon collaboration with Kirstie Kelly introduced gowns ranging from a minimum of $699 to a maximum of $1,399. At a time when couples are trying to save as much as possible such promising pricing strategy is bound to attract customers and increase Costco's customer base (www.cnbc.com).

The distribution strategy of ...