Palmers Limited Case Study

termss they all overlook the quality. While BC tries to look pretty to their customer, Cost pay less attention to their look and more to provide the low gear tolls for their members. From 1997 to 2001, Wall-Mart store numbers were increased by 53, Bis stores went up by 50, still Cost went up by 91 . Costs business strategy Is in truth simple, To generate lavishly sales volumes and rapid Inventory turnover by offering members very low prices on a limited weft of nationally branded and select private-label products In a wide freewheel of merchandise categories (Thompson, 2008) .They stand able to implement this strategy very successfully. They have too been very successful in making their customer call back that product is a better quality than their competitors, interestingly their competitors in nigh cases dont carry the same kind of product. Costs selling strategy is simple and effective, the brain of providing the lowest price and good quality product is a strategy to be reckon with. Plus there marketing idea of Treasure Hunt has allowed them to saved tons of money from broad advertisement.After a membership base Is established In an area, to the highest degree new memberships came from ledger of mouth. This simple marketing and advertisement strategy has allowed Cost to keep Its marketing expenses low relative to those at typical retailers, discounter, and supermarkets. Cost is as well as cognise for its price strategy. They have become a master in providing nip quality products even including some brand products at the lowest price possible to their customers.Instead of marking up their cap to 20 or 50 percent like their competitors they unflinching to cap their mark up to hardly 14 percent, which itself a key element in Costs pricing strategy. This excessively indicates that Cost is trying to do what it takes to please their customer to increase their wampum so they can make their shareholders happy at same time. Its this price st rategy that has allows Cost to only only make profit over the yr, exactly Increase their member to $110. Costs product selection strategy Is also very Impressive. Unlike their competitor who carry from where from 40000 to 1 50000 SKU items , Cost decided to selecting Ana prove only auto mess I en ultimately Includes everyday Items sun as kitchen supplies, Electronics, health and beauty products, automotive supplies, gasoline, games, cleansing supplies, canned goods, Food. They categories their product in commercial and professional use. Plus, Costs treasure fly the coop merchandising strategy is also an attention grabber. Out of the 4000 items on the account about 1000 were the treasure hunt product, meaning their prices with constantly changing.In most cases these were higher end products like furniture and TV. Costs growth strategy is also quite remarkable. On average they have been opening about 20 to 25 new stores each year. Most of them in American but some internationall y as well including Canada, Korea, I-J, Japan, Canada, and Mexico. In recent year they experimented by opening independent Furniture store to sell high end bigger furniture items which resulted in good success. Later or else than opening more stores they instead added extra space about 45000 real feet to the Cost it self and called it Cost Home.Now the furniture category has become on of the tope 5 selling items on Costs website. They are very progressive when it comes to their warehouse and management strategy. Costs CEO, Jim Senegal, quoted, Cost is able to offer lower prices and deter values by eliminating virtually all the frills and costs historically associated with established wholesalers and retailers, including salespeople, fancy buildings, delivery, billing, and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass on dramatic savings to our members. They stored the enumeration on racks above the items being sold in the war ehouse. That cut backd their labor movement cost and saved them a lot time on use and stocking. They treat their manager as entrepreneur and allows them to decide what item should be sold in their store. They adored most of the inventory directly from the manufactures. It any came directly to the store or went to their distribution center called crosschecking depots. The point of these depots were to reduce the transportation cost by making sure all transport are full when they come the store.As an investor I wouldnt would want to invest in a company that has a good reputation, consistently growing, good sustainable growth, and good future plans. Lets talk about sustainable growth rate, which essentially means that a firm can grow while safekeeping its profitability and financial policies unchanged. Sustainable growth model allows us to separate reasons or changes that have led as a company to stiff growth so at the same time we can single out the causes for those change. I t is represented in four steps.