Coach Case Study Essay

This expansion demonstrates how the luxury industry is now run by massive corporations whose focus is only on growth, visibility, brand awareness, advertising, and most importantly, PROFITS! With growth and expansion, has come a decrease in quality and rarity. The luxury garments produced are mostly not handmade but are even outsourced to large factories in places such as China and Turkey. Also, to meet quarterly turnover projections, “designers churn(ed) out increasingly trendy collections of clothes, handbags, and shoes.” (Thomas, Pg. 246) With hundreds of new stores around the globe the surplus of designer labeled merchandise is immense hence, the proliferation of outlet malls.

Many things have however changed since then and today we can see a huge variety of different luxury brands that are pertaining to different categories, targeting different customers. This has been enabled by different factors out of which I consider the emerge of a mass class of relatively wealthy people to be the most important one (Brandchannel.com). This has also had the

The author who inspired the topic of this thesis is Dana Thomas. As a fashion writer, Dana Thomas, has analyzed the changes in luxury fashion business. Thomas has been writing about fashion for the past twenty-five years in various journals such as Newsweek, The New York Times Magazine, New Yorker, Harper’s Bazaar, Vogue, Financial Times, and more. Dana Thomas’ two books, Deluxe and Gods and Kings, are the inspiration for this thesis. Deluxe: How Luxury Lost Its Lustre goes into great detail the secrets of the leading luxury industry brands, namely Prada, Gucci and Burberry, to showcase the “New Luxury” of today and how “luxury lost its luster” by featuring the manufacturing and logistical processes. Thomas exposes that many luxury brands use the same Asian factories that mass-market retailers employ, which raises questions concerning quality and craftsmanship for luxury brands.

Luxury fashion items can be acquired via several different avenues, as well as at several different price points in today’s market. Previously, the only options consumers had for the acquisition of luxury fashion goods was to purchase directly from the retail store; however, now there are an enormous amount of resources for consumers to opt for a used product at a much lower price by shopping on websites like eBay, or by purchasing from the growing amount of high-end consignment stores. Another option that luxury fashion consumers can easily utilize is to buy the item new and at a cheaper price by shopping at outlet stores or discount department stores like Nordstrom Rack and T.J. Maxx. Finally, these consumers have the option to borrow. Websites like BagBorrowOrSteal.com have created hugely profitable businesses by making the latest luxury accessory available to be rented at a cost that is a fraction of what the item would cost if purchased new from the retailer. These options have granted a much larger array of people the opportunity to experience aspects of the luxury lifestyle and the luxury image than ever before.

An increasing economic interdependence of national economies across the world experiences a rapid cross-border movement of goods, service, technology and capital. Luxury goods industry, serve as one of the most competitive industry, emerging and developing rapidly all the time. To a great extent, globalization promotes the development of luxury goods industry significantly in spite of the big shock hit by several times of economic crisis.

In the luxury goods industry, the rapid development has brought the market more brands and the latest design products. Industry matures has caused the accelerated development of a wide range of luxury goods (Chiari, 2009). However, one thing was constant, no matter how much increased production costs, the large luxury brand of origin will not be transfer. Long cultural history is an integral part of the luxury brand, and the origin of products have also brought a certain cultural value for luxury goods (Heine, 2012).Especially for Asian consumers, it seems that in the far west, craft superb tailoring and rich cultural history of the western area are the pursue of Chinese consumers (Sombart, 2001).Louis Vuitton 's president has said that (2013), “when customers buy our products, they expect Western quality. The mystery of the origin of our brand is closely linked with our brand”. Although with the close of trade, many luxury goods in the production and sales process will cooperation with other country’s companies, the final product definitely launch in the country of origin. Gucci is a legendary brand in Florence (Italy), and it will also strictly control the production done in Tuscany (Italy), to ensure pure and high-quality products (Gucci, 2015). Therefore, a regional feature has brought an intangible value and more local cultural characteristics to the luxury goods.

We think that the luxury goods market is very sensitive to economic conditions. Customers who are not as comfortable or upbeat about the economy tend to spend less or by cheaper substitutes. Recession or poor consumer confidence in the US or Japan could result in a decrease of sales for short or long periods of time. Also, strong competition from other companies creates further pressure to lower prices and reduce net income. Italian and French handbag makers have a history of being favorites of women seeking fashion. Coach will continue to see these companies as a threat as each attempt to regain customers.

This behavior brings competitive advantages to the European luxury brands. Moreover, customers in different countries have different purchase behaviors. For instance, some countries’ customers are willing to move away from common recognized brand, because they want to purchase more exclusive products. Furthermore, because of the increasing speed of globalization, people are more likely willing to travel between different countries. These travelers will buy luxury good during their trips. In fact, Chinese tourists contributed over one third of sales in Europe. The luxury goods industry should notice to adjust the actual demand between local people and tourists in Europe

Luxury goods serve a purpose that extends way beyond functionality and need. A bag that costs $15,000 or a pair of shoes priced at $500 does not necessarily signal that they perform better than goods priced significantly lower. The disproportionate prices of luxury goods reflect so much more than the eye can see, the history behind the brand, the story that it tells, and the scarcity and exclusivity it aims to achieve in the mind of the consumer. A premium brand, by contrast, can generally be described as a good that a customer pays more for because they are getting higher quality product. Luxury brands are not inherently inferior because they do not offer higher functionality. Sometime signaling the belonging to an exclusive group is important to a person, and thus worth the monetary cost. A premium product, though, is a good that people are willing to pay more because they believe they get more, whether that is higher quality or better performance. A customer does not purchase a luxury product because they know it will perform better, they purchase it because of the status and appearance that it signals to those around them.

Globalisation has been a significant factor towards to increase in consumer demand towards luxury brands. Increased travel and greater technology such as the internet, and the media are all driving forces which has lead to increased consumer demand, and contributed towards homogonised customer needs. Expansion of luxury brands globally has significantly been driven by increase of wealth in emering markets, such as Asia and India. (Nueno and Quelch (1998). Furthermore due to recession of population growth in Europe, which holds a large percentage of sales of luxury brands, many of these brands are rapidly expanding their operations to cater to affluent Asian consumers who regard Western luxury brands as a statement of good taste (Nueno and Quelch, 1998).

LV should focus more on the Europe and US markets, and the absolute and aspirational customer segments. According to date of world luxury goods market study, both Europe and Americas markets together shared over 65% of the total market in 2011, while they were also predicted to have over 5% growth in next year. What is more, data of competitor sales analysis also show that most of them had high revenue in those two markets. As it is well known, Europe and Americas are the traditional market for the luxury industry and almost have huge customer base who are main the absolute and aspirational customer segments. As to focus on them, LV needs to spent more money on built high as well as upper class fashion and offer more made-to-measure and high quality product and/or services. In the same, the degree of rivalry was high in this two market where all the luxury companies targeted and

Essay Question: 2. Using two appropriate case studies, explore the idea of luxury and its relevance to contemporary culture. How do modern ideas of luxury differ from traditional concepts?

In the article “Type of Luxury Consumers”, the author, Robert Frank, tries to deal with the issue of the behaviour of luxury consumers. He introduces the readers that the consumers will spend their money lavishly to show wealth and status based on their economic ability. They are willing to buy expensive items with a good branding compared to the low-end product that lack of explicit markers. The author argues every type of luxury consumer has their own desire and taste to follow the trend and the effect of these consumers towards the brand management. The author agrees with the research made by the USC Marshall School of Business about this issue. This can be proved when his thought is always parallel with the study.

The fashion industry is very competitive. Company that venture in fashion should therefore have a proper marketing strategies that will make it have competitive advantage over the other companies. Most companies engaging in fashion have therefore turned to luxury brands being that there is global interest in fashion. Based on the environment that the businesses operate, the target markets and product attributes as well as marketing methods, the companies have embraced luxury brand management and fashion marketing strategies that have made them be on top of the fashion industry. This paper looks

When looking at the fashion industry, the luxury sector is very important in terms of its monetary sales volume, valued at approximately $252bn (€185bn) in 2011 (The Economist, 2011) and predicted to continue growing, albeit at a slower rate than it has been up until now (Jackson, 2015).