Understanding Customer Loyalty and Distribution Strategies

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Marketing Strategies in Costco's Retail Stores

Retail Store Loyalty

Besides being one of the leading U.S. retail stores, Costco has won the hearts of many customers. As a customer, I have maintained my loyalty to this retailer, thanks to their small, surprise gifts that often remind me to visit the store in a delighted manner. Often, these unexpected gifts reflect the law of reciprocity, meaning the company responds to my positive actions with a positive action (Dahmen, 2004). The gifts range from simple things like a digital card. However, I feel that Costco could improve their customer experience by offering a personalized, compelling and seamless brand experience. While seeking to satisfy consumers' demands, the retailer must focus on the degree of involvement that consumers have with their brands across channels. Therefore, Costco must deliver value to me to continue earning my loyalty. In the wake of e-.commerce boom, Costco needs to think about how they can expand their loyalty strategies to the online environment. As one of their consumers, I have embraced social media and mobile devices; thus, Costco must understand that the loyalty mix has become significantly more complex.

Games are another approach that Costco uses to ensure that I remain loyal. This strategy has helped in solidifying their brand image. The company organizes frequent contests and sweepstakes whereby the winner gets rewards. Since 2011, I have been playing their games, and this proves my level of loyalty. For instance, once I place two unique orders, regardless of the price, I qualify to play a game for an opportunity to win free stuff.

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2. Distribution Strategies (Starting a Franchise)

The current economic downturn is motivating me to enter into business. In fact, I am considering purchasing a franchise because of the associated benefits. One notable advantage of franchising is the ability of the franchisor to shift the responsibilities and costs of complying with payroll taxes, laws, permits, insurance and zoning compliance to the franchisee. The only thing I cannot shift to my franchisee is the burden of monitoring the franchise network. Therefore, I must have a supervisory workforce to offer visits to each unit, conduct test compliance, additional training and project problems within the franchise system (Lamb et al. 2009). Besides, franchising is the best approach to access the best talent. Through franchising, I will be able to find talented individuals to manage my business the hardest working, and most qualified people prefer to invest in operating a business for profits instead of taking a salary as a worker. So through franchising, I will get hardworking people to build my business.

This approach has drawbacks too. As a franchisee, I will not be completely independent. I will be expected to run my business according to the restrictions and procedures stipulated by the franchisor in the franchising contract. Usually, these restrictions include the services or products that may be offered via geographic territory and pricing. For me, this is the most serious drawback to purchasing a franchise. Moreover, besides the initial franchising fee, I will be required to pay ongoing advertising fees and royalties. I must….....

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