Coach Inc. in 2012: Its Strategy in the “Accessible” Luxury Goods Market Coach was founded in 1941 when Miles Cahn, a New York City leather artisan began producing leader handbags. In 1981, Coach was able to grow at a steady rate by setting prices about 50% lower than those of more luxurious brands, adding new models, and establishing accounts with retailers such as Bloomingdale’s and Saks Fifth Avenue. After 44 years of family management, Coach was sold to diversified food and consumers goods producers, Sara Lee. The company continued to build a strong reputation for long-lasting, classic handbag. By the mid-1990s Coach’s performance began to decline as consumers developed a stronger preference for stylish French and Italian designer brands. In order to solve the problem, in 1996, Coach hired a new creative director and began to conduct the extensive customer surveys and focus groups to ask customers about styling, comfort, and functionality preferences. By 2000, the changes to Coach’s strategy and operation allowed the brand to build a sizeable lead in the “accessible luxury” segment of the leather handbags and accessories industry and made it a solid performer in Sara Lee’s business lineup. At the last quarter of 2000, Sara Lee management elected to spin off Coach through an IPO. After that, Coach Inc.’s financial result and stock price performance proved to be stellar, as its quadrupled growth in annual sales reach $4.2 billion in 2012. As coach was evolving more of a global growth-oriented in 2012, it was believed that the key growth initiatives was stores expansion in the U.S, Japan, Hong Kong, and mainland of China. In addition, Coach was considering expanding to the European and North America market but the threats from the existing prestigious brand are too strong. Coach was also racing to build brand loyalty in China, India, and other developing countries. These strategies are the tools to boost Coach’s profit margin and stabilize its stock which...
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