Coach Inc. Case Analysis

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Identification of Case Situation

Six years after deciding to be an independent public company in late 2000, Coach Inc.’s net sales had grown at a compounded annual rate of 26 percent and the stock price had increased by 1,400 percent due to a strategy keyed to a concept called accessible luxury. Coach crafted the accessible luxury category in women’s handbags and leather accessories by differentiating themselves on price, but matching competitors on styling, quality, and customer service. The accessible luxury strategy mirrors a focus (or market niche) strategy based on low costs. Coach concentrates on a narrow buyer segment and outcompetes rivals by having lower costs than rivals and thus being able to serve niche members at a lower
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Consumers are willing to spend less for an item they know is not authentic. Many aspects within the luxury goods industry point to the competitive forces from new entrants being moderately high. Healthy earnings from competitors indicate an ease of entrance for newcomers in the industry. The industry’s annual revenue figures as well as an emphasis on brand name and P/Q rating, place the industry at low risk of failure. Two other factors that contribute to the ease of entry for newcomers in the industry are a large pool of entry candidates and relatively small capital requirements.
Strengths and Weaknesses The factors of Coach Inc. internal environment can be seen in the strengths and weaknesses section of exhibit 8. Coach strives to offer a differentiated, yet quality product at a lower price. Some aspects within their business that point to these product characteristics are their attention to market research design process developed by Coach’s executive creative Director, Reed Krakoff. The company’s ability to easily adapt to the changing tastes within the market makes them attractive to consumers. Within Coach’s financials, performance is seen to be improving in revenues, operating profits, net income, and assets from years 2000 to 2006.

On the other hand, focusing primarily on women’s apparel and accessories can be classified as one of Coach’s largest weaknesses. Handbags and women’s accessories along accounted for

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