Coach Case Study

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In 1941, Coach Inc. was founded in a loft located in Manhattan, New York. Inspired by the baseball glove, it was the driver behind the soft, yet strong and durable leather. Not until the 1960s did Coach start manufacturing handbags when they introduced their first collection which consisted of 12 different styled bags. Then in 1985, the company was acquired by Sara Lee Corporation. Following this acquisition fifteen years later, Sara Lee Corporation decided to spin off Coach through an initial public offering in 2000 to focus on its food and beverage industry (Wikinvest, 2008).
1. What are the defining characteristics of the luxury goods industry? What is the industry like? The definition of a luxury good is a product that gives
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With the financial problem looming over Americans, the average factory outlet shopper is the one being most affected. With the decrease in disposable income for the middle class consumers, industry members are scrambling to secure customers, which makes competition more intense (The Economist, 2008). While the average full-price shopper is a 35 year old, college educated, either single or just married working woman, the average factory outlet shopper is a 45 year old, college educated, working women with children. The first of these shoppers that is usually going to cut back on spending on luxury items is the 45 year old working mother who is less worried about fashion and more worried about her own children having the necessities before she has her perks (Business Week, 2005). One of the competitive forces that have a great effect on industry attractiveness is the threat of new entrants and how hard it is to build up a brand name that can compete with the likes of Coach, Louis Vuitton, Dolce & Gabbana, and Versace. It takes deep financial pockets and great commitment to create luxury image with well-known brand and superior quality. Thus making it costly for new entrants to gain exposure and market share. Luxury items are known for their superior quality and to some people, the status that they carry. New entrants must build this status from the ground up, which can prove difficult without

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