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3. Is There a Net-Buyer Benefit (NBB)?

GREAT BUYER BENEFIT:
Costco

Imagine a store which provided such good deals that customers are willing to pay a fee just to get in the door. That is what Price Costco does.

Price Costco, a retail discount chain based in Issaquah Washington, charges it's customers a yearly membership fee of $30 to $35 for the privilege of shopping at any one of the chain's 250 locations. Price Costco does not accept credit cards or rebate coupons, does not advertise, and packages the customers goods in used cardboard boxes.

What customers get when the walk in the door is a warehouse full of bulk hard and soft goods, foods and apparel offered at dramatic savings. Merchandise is top quality national and regional brands offered at prices consistently below traditional wholesale or retail operations.

Price Costco's 18 million customers agree the company offers high net buyer benefit. Customer's biggest complaint is stock outs and waiting for re-orders. Customer's praise for Price Costco is "What a deal"

MEDIUM BUYER BENEFIT:
Wal-Mart Stores Inc.

"Everyday Low Prices" have made Wal-Mart Stores the world's largest retail company.

Wal-Mart was founded in 1962 when Sam Walton, convinced that consumers would flock to a discount store with a wide variety of merchandise, opened his first Wal-Mart store. By building a sophisticated distribution system, Sam Walton was able to control expenses and pass the savings on to customers in the form of low prices.

Wal-Mart is an example of medium net buyer benefit. Every-day low prices are a form of price stability. Wal-Mart's customer' are obviously delighted with the "can't beat the price" deal they are getting, but they're not so excited about the benefit that they are willing to pay an annual fee to shop at Wal-Mart, like Costco's customers.

LITTLE BUYER BENEFIT:
My Corner Store

I probably have the worst corner store in the world. The building is run down, poorly lit and not very clean. The parking lot is full of pot holes, and strewn with candy wrappers. The stock is dusty, over-priced and probably out of date. The owner is grumpy, and peers over a haze of cigarette smoke as he tries to short change me on every purchase.

The only thing good I can say about My Corner Store is that it is open, and it's 2 miles closer to my house than it's nearest competition.

My Corner Store is an example of low net buyer benefit. The only benefit the proprietor offers is convenience. As a result of his poor sales, he feels under pressure to discount. Thus his refusal to spend money on overhead or even effort to improve his service. My reaction to the low net buyer benefit every time I leave the store is "What a rip-off!"

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