How to Become An Admired Company

March 21st, 2008 · No Comments

I was just reading an article in Fortune magazine about America’s Most Admired Companies (Costco is tied for 14th in the US and holds the 11th spot in the worldwide rankings) and they pointed out something that is just so obviously the “Costco Way”. It seems Costco wanted to find a better value for its customer’s than the typical rotisserie chicken that you can get elsewhere (2.75 pounds for $7.99 as Costco tells Fortune.) Well what makes a better value? Is it just cheaper, no. Is it just larger, no. In the Costco world it’s both!

It turns out that Costco buyers went to the chicken farmers and “persuaded” them to grow bigger chickens for Costco. No, that doesn’t mean pumping them up with growth hormone, doing some weird genetic engineering thing, injecting them with water during processing, or even blowing high pressure air into the end of a wing so they blow up like on a cartoon. It simply means keeping the birds alive longer so that they grow bigger because they can eat more. Costco sells its 3.25 pound chickens for only $4.99. That’s both cheaper AND larger than the benchmark they found their competitors selling at! And that’s why Costco has sold 40 million of these in 2007. (For the record, that makes Costco a steal at $1.54/pound vs. the other guys $2.91/pound. That’s almost 50% better.)

This sort of constant innovation, in the form of pushing hard to provide the best value to the customer, is why I’m addicted to Costco.

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Tags: Food · General · In the News Share

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