costco

//**REMEMBER: DO NOT SUMMARIZE THE ARTICLE!!!**//

=TITLE OF EXTRACT:= = Costco's $140m stores plan =

=SOURCE:= http://www.theage.com.au/business/costcos-140m-stores-plan-20120219-1th5m.html

=DATE EXTRACT WAS WRITTEN:= February 20, 2012

=DATE CURRENT EVENT WAS WRITTEN:= February 23, 2012

=EXPLANATION OF THE ECONOMIC THEORY RELATED TO THE ARTICLE:= This article is an example of monopolistic competition. The industry, foodstuff and household goods, is comprised of several large supermarket firms such as Woolworths, Coles, and Costco. Each firm is able to set their own prices for their products, and each firm has their self-branded goods which are different in terms of packaging, brand name, appearance, design, price, and quality. In the article, it explains how brand loyalty has allowed costco to attract more Australian consumers, with "their heavily discounted branded and house-brand products" and membership fees.

=VOCABULARY TERMS AND DEFINITIONS:=
 * Monopolistic Competition - A market with many competing firms which each firm has a small amount of market power. Firms have the ability to set their own prices.
 * Brand Loyalty - Consumers believe the product sold by a particular firm or producer is better than the same product produced by another producer.

=DIAGRAMS:=

=EVALUATION:= Due to Costco's cheap prices, membership offers, and self-branded items, Costco has increased its customers brand loyalty. Because customers have been persuaded into believing costco products are better, and have been offered good prices, it has seen an increase in customers over the past few years. This has put a lot of pressure on its competitors, Coles and Woolworths, Australias main supermarket chains.