Situation Analysis of Costco – Supermarket Industry


SKU: MAR000432 Category:
  • Competitive Analysis
  • Customer Analysis
  • Marketing Mix Analysis
  • Brand Analysis



The situation analysis reviews and analyses of the current market, the marketing environment, the organisation, the customers, and the competitors – all of which influence the development of the marketing plan.

Your situation analysis should comprise the following sections:


Justify how your product fits within the industry.

Give a general introduction to the assignment.


(a)Definition of the market or category

  • What market is your company competing in?

(b)Market size

  • What is the size of the domestic market?
  • Quantify the size in volume (000’s) and/or value ($000) terms.

(c)Market potential

  •  Is it a growth market?
  • Can you estimate next year’s growth rate?
  • Is it an attractive market to be in?

(d)Market structure

  • Estimate market share of each competitive offering and indicate the competitive nature of the market (as much as possible without contacting any companies directly!)


Describe the macro environmental trends that affect the market. Present the nature of the effect, and include only those forces that are relevant to the market.

  • Economic – income, interest rates, unemployment rate, inflation, recession, value of Australian dollar
    • Ethical – to what extent do Australian consumers demand ethical business practices?
    • Environmental – to what extent do Australian consumers demand environmentally friendly business practices?
  • Demographic – population characteristics in terms of size, density, age, sex, race, occupation, location, education, income, etc.
  • Natural – includes environmental concerns, pollution, energy costs and scarcity of natural resources.
  • Technological – new products and new processes bring new market opportunities. Pace of technological change.
  • Social/Cultural – changes in society’s values, interests, perceptions, preferences and behaviours; the emergence of subcultures, i.e. 4Gs: gays, greenies, girls (working women) and greys (over 50s).
  • Legal/Political – government legislation that regulates business i.e., consumer protection laws, deregulation, protection, privatisation, nationalism; growth of public interest groups.


1.Identify direct and indirect (substitute products) competitors for your selected industry.

2.Select two direct competitors, and assess their strengths and weaknesses relative to your brand (whether your brand is local or national!)

3.How are direct competitors positioned in the market relative to your brand? Define their positioning and plot a positioning map.


1.It is recommended that this section be presented in tabular format (i.e. create a table). Divide the market into three to five discrete customer segments and describe these.

Use of one or more of the following variables as segmentation criteria:



  • Purchase occasion, regular or special occasion.
  • Benefits sought, i.e. off road, safety etc.
  • User status, i.e., non-user, ex-user, potential user, first-time user, regular user.
  • Usage rate, i.e., light user, medium user, heavy user.
  • Loyalty status, i.e., none, medium, strong, absolute.
  • Readiness stage, i.e., unaware, aware, informed, interested, desirous, intending to buy
  • Brand familiarity, i.e. insistence, preference, recognition, non-recognition, rejection.



  • Socioeconomic status
  • Values, attitudes and lifestyle (activities, interests and opinions)
  • Personality


  • By age, gender, income, occupation, education, religion, nationality, family size, family life cycle.


  • By suburb, local government area, region, density, climate.

This must relate to your company under analysis, i.e. what is their LOCAL area?

2.Describe the decision type (extent of problem solving) for the product, i.e.,

  • Routine response behaviour – rely on past experience, no decision is required – low cost, low risk, frequently purchased products).
  • Limited problem solving – some information sought, usually a preference for brand or store
  • Extended problem solving – a lot of information is sought – high cost, high risk, high involvement product


1.Describe the current marketing strategy for the brand using the Marketing Mix framework, i.e., what activities is the organisation currently undertaking to meet the needs of the target market(s)? If you are dealing with a service product (e.g. vitamins), what are the appropriate P’s to be included in this section?

2.Customer loyalty

  • What creates customer loyalty
  • Suggest methods to increase customer loyalty
  • Suggest how to measure customer loyalty


This is a summary of the external and internal factors that affect the industry and/or your selected brand, i.e., essentially a summary of your situation analysis. Your SWOT SHOULD NOT contain any new information, i.e., not provided in your situation analysis. It highlights the critical issues that must be addressed by the marketing plan.

With respect to the company chosen, identify:

(a) Strengths (internal)

  •  What do you do better than your competitors?
  •  What advantages does your brand have over competitors?

(b) Weaknesses (internal)

  • In what areas do you need to improve the marketing mix in order to be more competitive?

(c) Opportunities (external)

  • What new opportunities exist in the external environment for a new brand in that need category?

(d) Threats (external)

  • Can you anticipate any threats to your business from the external environment that may challenge or weaken your position?

When all four areas of the SWOT have been identified, there must be a decision about what each item means, and what actions are needed to enhance or deal with each item.  When deciding on your appropriate actions, consider:

  • Capitalising on strengths
  • Overcoming weaknesses
  • Maximising opportunities, and
  • Eliminating any threats or turning them into opportunities.


This section should highlight your key findings and outline your suggestions for the future direction for your company/brand/generic product type. This may include recommendations for further consumer research and developing new marketing mix strategies. You must justify your conclusions and recommendations.


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