2. Table of Contents
Integrated Marketing Communications Plan 1
Table of Contents 2
Executive Summary 3
Campaign Background & Research 3
SWOT Analysis 6
Target Audience/Potential Market 7
Customer Profile 9
Marketing Goals, Objectives, and Strategies 10
Creative Strategy 11
Promotional Mix/Communication Channels 12
Creative Execution 14
Conclusion 15
Reference List 16
2
3. Executive Summary
Since the first Costco opened its doors in 1983, it has grown to become the United
State’s fifth-largest retailer as well as the world’s eleventh largest. Currently, Costco relies on
word of mouth and email marketing to inform its consumers about products and services. The
“Smile More, Worry Less” campaign’s goal is to increase Millennial membership sales in order
to retain a large customer base. As a business grows, so too do its customers. This campaign
aims to foster meaningful relationships with customers who used to visit Costco as children, as
well as those learning about Costco for the first time.
Campaign Background & Research
How Did the Company Start?
According to Trewin, Costco Wholesale started as Price Club in 1976, in a single
business-shopper dedicated warehouse converted from an airplane hangar in San Diego,
California. The business was successful, and in 1983, the first Costco was opened. Costco
quickly expanded, having nine warehouses under its name by 1984 (Trewin). In 1985, Costco
started selling their famous hot dog and soda combo for $1.50, a price that continues to remain
steady in all Costco warehouses. In 1987, the bakery, produce sections, and optical centers
opened in stores. Price Club and Costco continued to expand throughout the world, and in
1993, a merger between Price Club and Costco occurs, with the merged company being
dubbed PriceCostco. The famous “Kirkland Signature” brand of Costco products was introduced
in 1995, and in 1997 PriceCostco’s name was changed to Costco Companies, Incorporated
(Trewin). 1999 was a big year for Costco Companies; as they introduced a “co-branded”
membership card in partnership with American Express and changed their name to Costco
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4. Wholesale Corporation (Trewin). By 2004, “Costco is the 5th largest retailer in the US and 11th
largest in the world,” (Trewin).
Mission Statement and Core Values
Costco’s mission statement is “To continually provide our members with quality goods
and services at the lowest possible prices,” (Costco). The company has set a “Code of Ethics”
that the company and its employees must follow. The first on the Code of Ethics list is “Obey the
Law,” (Costco). The company promises to obey the laws specific to every country and
community they operate businesses in.
Next on the list is “Take care of our members,” (Costco). Both individuals, as well as
businesses, are able to purchase Costco memberships. Because memberships cost money, it’s
important that each member is given the time and attention they need to feel satisfied with their
purchase.
Number three on the Code of Ethics list is “Take care of our employees,” (Costco). In
order to keep employee retention, it’s important for Costco to be a positive working environment.
To ensure this, Costco offers competitive wages, as well as benefits, and opportunities for
promotion with a primary internal-hiring system, Human Resources, and an Open Door Policy.
The fourth item on the Code of Ethics list is “Respect our suppliers,” (Costco). The
company aims to treat suppliers as they would want to be treated. This means not taking
gratuity on purchases. It also includes keeping commitments to the suppliers.
The fifth and final item on the Code of Ethics is “Reward our shareholders,” (Costco).
Because Costco has public stock with the ticker symbol of COST, shareholders are considered
“business partners,” (Costco). In order to keep shareholders, it is important that Costco uses
their investments wisely. As long as Costco does well, Shareholders are rewarded monetarily for
their investments.
Finances
As of 2021, profits have been trending upwards. Like many businesses, the covid-19
pandemic caused a downward trend in revenue and profits. According to Costco’s financial
reports, in 2021 total net sales were $192,052 billion company-wide. This staggering number is
more compared to $149 billion in 2019 and $163 billion in 2020 (Costco).
Target Market / Products and Services
Costco has a large variety of products and services meant to satisfy the needs of its
members. As Costco grew in size and number, they were able to open more aspects of the
business and expand their markets.
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5. Target Market
Costco targets an audience that appreciates “the value of memberships,” (Best).
According to Best, in the beginning, this included affluent, college-educated customers.
“Costco’s target market is middle to upper-income and educated customers such as those
working in management, medicine, finance, law, IT, and government as of 2022. Costco’s
market is not generally gender or ethnicity-specific, but it does target people who are aged 30
and above and have their own families.” (Thomas).
Products and Services
Costco offers a wide array of products and services. They have a food court at every
store exit and sell a variety of everyday grocery items, including fruits, vegetables, meats,
ready-made dinners including fresh rotisserie chicken, frozen foods, and bakery products.
Occasionally, a seafood section opens when in-season. They also sell bulk necessities, like
toilet paper, cleaning supplies, laundry detergents, pet food, and processed foods. Costco has a
rotating selection of household decorations as well, ranging from holiday decor to furniture to
instruments. Each Costco has an Optical center, where members can get an eyeglass
prescription and buy glasses. Each Costco also has an electronics section with phone carrier
kiosks, as well as photo processing centers. Each Costco has a tire center, employed by
technicians to install new tires on members’ cars while they shop. In more recent years, Costco
has expanded services to include travel agencies, floor and kitchen remodel, new garage doors,
and more. They also offer a variety of insurance to their members.
Competition
The largest competition Costco faces is the Wal-Mart-owned Sam’s Club. Sam’s Club is in direct
competition with Costco, as it also sells products in bulk for less money. Sam’s Club also offers
services to members who pay membership fees.
Other smaller competitors exist as well, such as Wal-Mart and Target, and other retail and
grocery stores, but only because they sell the same items not in bulk and with larger profit
margins.
Current Marketing Strategies
Unlike many other retailers, Costco does not advertise to non-members. Instead, they
implement direct marketing, relying on “emails to members, as well as The Costco Connection,
…a monthly publication that promotes products available at Costco warehouses/stores,”
(Thompson). Costco’s Public Relations exists to “boost its corporate and brand image. For
example, the company has sustainability programs for its supply chain and gives donations to
support programs for children, education, and health and human services,” (Thompson).
Members receive a portion of the money back every year in the form of a check, and if enough
money is spent, members can afford another year of membership with the check they are given.
5
7. Target Audience/Potential Market
It is argued as to what years classify the Millennial generation. For this market, we are
defining Millennials as being born between the years 1981 and 1996. This means the oldest
Millennial is 41, with the youngest at 25. With such a difference in age, the living situations and
lifestyles of Millennials differ greatly. With this in mind, many of the youngest Millennials are in
the life stage of getting married and starting families. According to Pew, the Millenial generation
now outnumbers the Baby Boomers, making them the largest generational population (Fry,
2020). The average Millenials have families of their own, potentially with teenage children.
Although the number of Millennials with families is smaller than it ever has been, it remains a
generational majority, as shown in Figure 1.
In 2017, “the median adjusted income in a
household headed by a Millennial was $69,000 …
That is a higher figure than for nearly every other
year on record, apart from around 2000 when
households headed by people ages 22 to 37
earned about the same amount – $67,600 in
inflation-adjusted dollars,” (Fry, 2018). However,
the $69,000 is describing established Millennial
households. According to USA Today author Leo
Sun, the average earning fresh out of college is
low, about 35.5 thousand dollars per year (Sun,
2017). This low number forces many Millennials to
save their money. Despite popular belief,
Millennials are more frugal with their money than
previous generations. According to Sun, “lower
salaries, rising living costs, and high levels of student debt (an average of $37,172 per
7
8. graduating student in 2016)” are what is causing Millennials to have to save their money (Sun,
2017). This raises the need for low-cost goods, especially when Millennials have the need to
spend their hard-earned dollars on their families.
Millennials care about cost and environmental sustainability, and this is reflected in their
spending habits. This is a perfect mix when reflecting on Costco’s goals. Costco Wholesale
should choose Millennials to market to because of their low-cost bulk items, their family-oriented
products, and their sustainability efforts which are highlighted on their website at
https://www.costco.com/sustainability-introduction.html. As of now, Costco’s efforts to market to
Millennials are non-existent. Millennials get their news and entertainment largely online. As of
now, Costco only uses email marketing, and only to members. This is an issue for Millennials,
because they rely less on emails to get business news, and rely more on phone notifications,
text messages, and mobile apps to receive news about sales and other promotional information.
If they know of Costco, most Millennials know about the company because of their parents or
grandparents. Once they are of age to have a membership of their own, they have to rely on
themselves to purchase said membership without any reminder. Some Millennials appreciate
Costco Wholesale for its products and services, while others feel that bulk items aren’t
necessary for their way of life. Costco could use this information to target all sorts of Millennials
and grow their business.
8
9. Customer Profile
This is James, a member of the ideal market for Costco Wholesale Corporation.
James is 32, married, and has a three-and-a-half-year-old daughter. Originally from
Virginia, James attended California State University where he obtained a Bachelor’s degree in
Computer Science. He now works as a Software Engineer and lives in the Fresno, California
metro area with his family in a small single-family home. He makes $76,000 per year on a salary
and is very money-conscious due to the high living expenses of his area. Having just purchased
a home for the first time, his family is aiming to rebuild their savings. Because of this, James and
his spouse seek to get the best price for their necessities.
James is very proud of his heritage. He strives to pass his family traditions on to his
children, including the language of his parents and grandparents. His grandparents had
immigrated to the United States when his father was young, making a life for themselves and
setting their family up for success by starting a restaurant. James grew up eating rice-based
dishes and has continued making those foods for his family. He goes through his rice supply
quickly and wishes he could buy more at a time to save money. His social life outside of the
family has slowed down since having a child, but he enjoys visiting and spending time with
9
10. friends and coworkers, as well as talking to online friends over social media channels like
Messenger, Instagram, Twitter, Reddit, and Discord. Although James now lives far away from
his family, he loves them dearly and makes sure to call and/or facetime them at least twice a
week, planning visits whenever he gets a chance.
Marketing Goals, Objectives, and Strategies
GOAL: To expand Costco Wholesale’s relevance to Millennials and earn their customer
loyalty.
OBJECTIVES & STRATEGIES:
1. Increase membership purchases by the target market by 15% within the next
12 months.
○ Provide multiple incentives for purchasing membership cards
○ Include membership fees in advertisements
○ Provide the ability to purchase memberships online
○ Create family membership plans that can include extended family
2. Improve brand awareness for 30% of the target market within the next 12
months.
○ Create advertisements for young families with a marketing campaign
through online platforms and social media
○ Collaborate with content creators to attract new customers
○ Highlight the vast array of products Costco Wholesale offers in
advertisements
○ Promote a large number of services available through Costco membership
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11. Creative Strategy
Venn Diagram: Emotional vs Rational Reasons People Shop at Costco
Creative Statement
“WITH COSTCO WHOLESALE, FAMILIES ARE ABLE TO WORRY LESS AND SMILE MORE.”
Rejected Statements:
● COSTCO WHOLESALE PROVIDES A VARIETY OF LOW-COST GOODS AND
SERVICES.
● FAMILIES LOVE COSTCO WHOLESALE ALLOWS THEM TO BE THEIR AUTHENTIC
SELVES BY PROVIDING A VARIETY OF GOODS AND SERVICES.
● COSTCO WHOLESALE ALLOWS FAMILIES TO SPEND MORE WISELY.
● WITH COSTCO WHOLESALE, FAMILIES ARE ABLE TO WORRY LESS AND SMILE
MORE.
● BY PROVIDING FAMILIES WITH LOW-COST GOODS AND SERVICES, COSTCO
WHOLESALE IS ABLE TO HELP FAMILIES WORRY LESS AND SMILE MORE.
● COSTCO WHOLESALE HELPS FAMILIES STAY AT EASE.
Tagline
“SMILE MORE, WORRY LESS!”
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12. Creative Brief: Questions & Answers
● What are we advertising?
We are advertising memberships to Costco Wholesale.
● Whom are we talking to?
We are talking to millennials (Gen Y) who are starting families or live a lifestyle
where bulk items would be a necessity.
● What do they currently think?
Currently, millennials are aware of Costco. Not many are aware of the vast
amount of products and services the company offers.
● What would we like them to think?
We’d like them to be aware of everything a membership with Costco would offer
them.
● What is the single most persuasive idea we can convey?
That a single-family saves money when they choose to buy their bulk necessities
with Costco.
● Why should they believe it?
We aren’t trying to sell something that isn’t true. We want to convey transparency
and a sense of caring in our advertisements.
● Are there any creative guidelines?
The ad has to be family-friendly since the business is geared toward middle-class
families.
Promotional Mix/Communication Channels
Media Channels to be Used:
● Social Media Marketing
Budget: Social Media channels price their campaigns differently. On Tiktok, “ads start at
$10 per CPM (cost per 1000 views). Also, they require you to spend a minimum of $500 on a
campaign,” (Geyser, 2021). On Facebook, “research suggests that advertisers should expect to
pay: $0.94 per click [and] $12.07 per 1,000 impressions,” (Dopson, 2022). “The average
Instagram CPC in July 2021 in the United States was $1.28 per click, as opposed to 2022 CPC
which is $1.33 per click,” (Geyser, 2022). If advertising with promoted Tweets, “Twitter… [costs]
$0.50 to $2.00 for each action,” (Fitzpatrick, 2020).
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13. Reasoning: “79% of millennials use social media more than once a day,” (Digital Media
Ninja, 2021). As they scroll on social media, ads scroll by their screens. Costco can appeal to
users on sites like Instagram, Facebook, Tiktok, and Twitter. The company can start its own
page, make content, and use Internet Ads to point people to their social media page.
Appeal: There is a high chance that the target market will see Costco’s social media
profiles.
● Internet Ads
Budget: Advertising on Reddit costs “$5 per day… Users of Reddit can buy ads on CMP
or a cost-per-mile basis… they can buy 1,000 impressions [if they’d like to spend more],”
(liberty2048, 2022).
Reasoning: For this marketing campaign, the target audience is millennials. Most
millennials use the internet during their daily activities, whether they are using it for business or
leisure. We will be putting ads on advertisement banners throughout websites that millennials
frequent, like Reddit.
Appeal: This is a simple, cheap way to get users’ traffic onto social media channels and
into the store. Static images made by the advertisement team can be used to promote Costco
Wholesale by visuals alone to millennials browsing the popular website.
● Email Marketing
Budget: “The average costs of an email marketing agency typically range from a base
price of $300 to $500 per month, with tiered pricing that rises with the monthly email volume or
contact list size. The cost for a large business could be $2,000 to $12,000 per month,” (Rowe,
2021).
Reasoning: The use of email marketing is essential to the Costco Wholesale name, and
will continue during this new marketing campaign. This is a great way to keep our current
customers and encourage them to visit the new media channels.
Appeal: Customers have come to expect email marketing from Costco Wholesale, and
continuing this campaign would be in the company’s best interest.
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15. Conclusion
Gen Y, otherwise known as Millennials, are essential customers of Costco Wholesale.
Millennials are currently starting and raising families, and as their families grow they’ll require
more products and services to suit their changing lifestyles. Most, if not all essential items are
available at Costco Wholesale Corporation. It only makes sense to market to this new
generation of customers and to foster meaningful relationships with them.
Many Millennials grew up with
Costco as a part of their lives. Like
them, the children that join the
Millennials on their shopping trips will
remember Costco fondly. They’ll
remember riding in the cart or getting
salty/sugary treats at the low-cost
food court. They’ll remember the
large stacks of products on the shelf
and wonder how the pallets stack so
high. They’ll be raised on Kirkland
Signature brands, and will learn
about Costco through their parents.
Hopefully, they’ll remember Costco
and come back when they have a
family of their own.
By starting the “Smile More, Worry Less” campaign, the company will draw in members
of Gen Y to purchase memberships with Costco and start saving on their essentials. Potential
customers who used to visit will have nostalgia and realize they have the need for Costco’s
products and services, and new customers will be impressed with the low-cost bulk items that
Costco has to offer and purchase memberships of their own. Gen Y is essential to keeping
Costco’s customer base alive and well.
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