Case Analysis: Coach Inc.
The following is an analysis of Coach Inc. The company designs and markets both men and women bags, apparel, and accessories. Coach was founded in 1941 by Miles Cahn and was sold to food and consumer goods producer, Sara Lee, 44 years later. Today, Coach is among the best-known luxury brand that focuses on matching key luxury rivals in quality and styling while beating them on price (Thompson A., Peteraf, Gamble, & Strickland, 2014). Within this analysis, five questions will be answered regarding Coach’s characteristics, competitive forces, strategies, strengths and weaknesses, and a recommendation on how the company should improve their competitive position. Although Coach’s performance has been commendable, the company is faced with many threats and prestigious competition that offers similar brands at indistinguishable price points (Thompson A., Peteraf, Gamble, & Strickland, 2014). To sustain the growth of their evolving company, Coach must consider new strategic options for the future. Coach Inc. faces challenges not only within their business, but outside of the company as well. Due to the unstable economy, profit margin levels have been below average and share price has experienced a sharp decline. Coach is also challenged by the launch of new accessible luxury brands such as Michael Kors, Salvatore Ferragamo, Prada Giorgio Armani, Dolce & Gabbana, and Versace (Thompson A., Peteraf, Gamble, & Strickland, 2014). These businesses are both aggressive and successful; providing strong competition for Coach to overcome. Although the company must keep these emerging markets in mind, there are also the threats of counterfeiting, changing fashion trends, and consumer preference that Coach must take into consideration. Recommendations for Coach include new marketing strategies, opening up to new markets, bringing in new customers while maintaining the old, and business expansion. Each of these recommendations is looking to the future to achieve the company’s five key initiatives: to build market share in North America and Japan, raise brand awareness in underpenetrated markets, raise awareness through coach.com, and increase sales of men products.
Question 1: Defining Characteristics of Luxury Goods Industry The luxury goods industry relies on creative designs, high quality, and brand reputation to attract customers and build brand loyalty. When looking at Maslow’s hierarchy of needs (Appendix A), Coach and other luxury goods fall under the esteem level. Many people feel the need to purchase these products to boast self-esteem, provide confidence for themselves, or to gain respect from others. Although price-sensitivity for luxury goods is driven by brand exclusivity and customer-centric marketing, a large extent goes towards the emotional sense of status and value (Thompson A., Peteraf, Gamble, & Strickland, 2014). The luxury goods market can be divided into three categories: haute-couture, tradition luxury, and accessible luxury. Haute-couture is considered to be very high-end market that targets the extremely wealthy. The traditional luxury market includes brands such as Prada, Gucci, and Calvin Klein. Some of these companies cross over into the accessible luxury market to compete with Coach and lesser luxury brands. These brands are typically sold for about 50 percent less than similar-looking, haute-couture items. Although the global luxury goods retail market was significantly affected by the economic slowdown and financial crisis in 2007-2009, more than $224 billion was spend on luxury goods in 2010 (Thompson A., Peteraf, Gamble, & Strickland, 2014). There has been a growing desire for luxury goods by middle-class consumers who aspire to own higher-quality products. Whether it’s the effective advertising or television promotions, middle-income consumers feel the need to reward themselves with luxuries. An increase in...
References: Thompson, A., Peteraf, M., Gamble, J., Strickland, A. (2014). Crafting & executing strategy: the
quest for competitive advantage (19e). New York: The McGraw-Hill Companies, Inc.
Please join StudyMode to read the full document