The 4Ps of marketing

Product:

Costo’s product portfolio is divided across five types of products. At the time the largest offering by Costo is its hats. The company has over 30 hat collections, each of which available to up to 12 different models. A few models of bags and gadgets, such as tablet sleeves, smart phone covers and wallets complement the collection. All accessories are made from premium quality leather.

The hats are characterized not only by their unique design but also by their interchangeable bobbles. This allows the customer to create different combinations among its collection of Costo hats. Since the hats are Costo’s best product and offer the chance to differentiate from competition, Costo will only introduce its hat collections to New York City. 

Given New York City’s geographical area and climate, there are no drastic needs to adapt the hat products. There may be a need for some kind of local adaptation, such as adapting to particular if any colors and motifs prove to be particularly popular in New York’s urban culture. According to Lopez & Fan (2009) it is advantageous for fashion brands to utilize their original concepts with some local adaptations when expanding to the United States. Therefore Costo will not be required to modify the ecological and sustainable values represented in its products.

Place:

New York City has one of the most active fashion districts in the world, known as the Garment District. According to the New York City Economic Development Corporation, the Garment District is the most densely populated area in the world in terms of fashion businesses. Unlike for example Fifth Avenue  characterized by expensive luxury brand stores, Garment District suits for more relaxed lifestyle and would thus be a great fit for Costo's brand image and sustainability values.

As stated, it would be beneficial for Costo to open a store in the Garment District. Costo's limited resources pose challenges for finding an optimal location to sell the products. The New York Times reported that rents in the Garment District fell by 25% since 2007. Still, opening a permanent store would not fit Costo's budget. Costo should open a pop-up store in the district instead. That would be a Costo store opened only for a limited time. This could be launched during fashion week, one of the world’s busiest and most competitive fashion events.

Promotion:

Costo is limited in its resources and therefore must be conscious about its promotion activities. Billboards in New York City are rather expensive and are generally thought to be utilized by the larger brands with large marketing budgets such as Marc Jacobs, H&M, Zara, etc. Therefore advertising on billboards is not an option that is within Costo’s resources. On the other hand, other affordable options do exist for Costo to use and to make the brand stand out.

In order to make use most effectively of its resources, Costo would be best to create buzz by guerilla marketing. It is a more affordable method than billboards and could better reflect the company's environmental and ethical values, as well as help in building awareness of Costo's brand essence. Furthermore, Costo could focus its promotion in the online environment. In addition to being a low-cost tool of promotion, social media can increase the awareness of the brand across the city by specifically targeting the IP addresses of the internet connection located within the Tri-State area of New York, New Jersey and Connecticut. 

Also, social media campaigns would be rather cheap to execute. For example, Costo could build a launch campaign "Where's the bobble?" via Instagram, where people could post pictures of their bobbles around different places. These kind of campaigns are critical in taking the brand to the next level, from brand awareness all the way to brand judgments and brand emotions, targeting the ultimate goal, reaching brand resonance (Keller, 1998).

Price:

The current pricing structure of Costo’s products range varies from €59 to 80€ depending on the models and includes free worldwide shipping. The pricing is similar to those observed in similar brands based in New York City, such as Gorin hats which are ranging from $40 to 100$. Costo will need to convert its prices from Euros to US dollars while maintaining profitability.

Using the Big Mac Index, we are able to compare the purchasing power parity between Finland and the United States. The Big Mac Index of January 2013 estimates that there is a price difference of 20% between Finland and the United States. At the current exchange rate of 1EUR=1.36050 USD (29 November 2013) the price range of Costo’s hats would range from 80$ to 110$, which could be reduced by 20% to represent a range from 64$ to 88$ to represent the purchasing power parity differences between the two countries. This would place Costo’s products in the upper end of the spectrum, leaning towards a premium pricing, which will reflect the brand’s quality in terms of the materials and the values of the firm.

It is important to note that while Costo's hats would be priced in the more premium segment, they would still be a significantly cheaper option than individual tailor-made hats. Costo would not directly compete with the "unique pieces" made by artisans, but offer quality design hats more affordably.

References: 

Keller, Kevin Lane. Strategic Brand Management. 3rd ed. 1998. New Jersey: Pearson Educaiton, Inc., 2008. Print. 

Lopez, C. and Fan, Y., 2009. Internationalization of the Spanish Fashion Brand Zara. Journal of Fashion Marketing and Business, 13 (2), pp.279-296.

Porter, M., 2006. Competition in Global Industries: A Conceptual Framework. International Marketing, 3 (1), pp.159-198.

Rantisi, N., 2001. How Local Institutions Fashion the Design Innovation Process in New York City’s Garment District. In: Druid, Winter 2001 Danish Research Unit on Industrial Dynamics Academy. Klarskovgaard, Denmark. January 18-20. 2001. Toronto, ON. Available  at http://www.druid.dk/conferences/winter2001/paper-winter/Paper/rantisi.pdf. [Accessed 29 November 2013]