Understand the stages of the new-product development process
Understand different marketing considerations to think about during the product life cycle
Branding and Strategic Value
This video examines Costco’s development of their store brand, Kirkland Signature, which accounts for about one-third of the company’s sales. You’ll see this video case study again later in the module.
How did Costco’s decision to consolidate multiple private labels into a single “Kirkland Signature” brand challenge conventional retail wisdom at the time?
Costco’s decision to consolidate multiple private labels (Chelsea toilet paper, Cloud detergent, Traditions, Pinnacle) into a single “Kirkland Signature” brand directly challenged the established retail practice of using separate private labels for different product categories. The industry feared that negative experiences with one product would damage consumer trust across all categories carrying the same brand. By consolidating under one name, Costco took a significant risk that one poor product could damage the entire Kirkland brand across hundreds of diverse items.
However, Costco recognized that multiple labels created internal confusion. When a warehouse manager couldn’t identify that Pinnacle legal pads were a Costco private label, it was sign to CEO Jim Sinegal who realized that if the employees didn’t understand store brands, the customers wouldn’t either. This insight revealed that the benefits of brand clarity and consistency might outweigh the conventional wisdom about risk separation.