Coach Inc.: Is Its Advantage in Luxury Handbags Sustainable?

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.

3.1.10. Management and Leadership ................................................................................. 8 Context Analysis ............................................................................................................ 8 Competitors and Industry Analysis .............................................................................. 11 Key Competitors ................................................................................................... 13 Market segmentation and target market group ..................................................... 16 Customer Analysis ....................................................................................................... 14 Collaborators ................................................................................................................ 17

The task instruction is: Analyze Company G’s competitive environment utilizing Porter’s Five Forces Model of competitive forces. While headings below may provide some guidance for how to organize the paper, please refer to the recommended text (index topic: “Porter’s 5 forces model”), the learning community, and recommended web sites. As you will see from the reading, Porter’s 5-forces is a way to examine threats to a company’s success – which was competition imposes.

This section provides the context for the issue / organization being examined. It is necessary and important that the class be given a feel for the type of organization and industry being examined, the marketplace in which that industry operates, and the overall business environment in which the discussion and analysis will take place.

From consumer’s perspective, the motivation of their purchasing high-end products is complicated. According to the report of Mintel (Academic.mintel.com, 2013), which showed that the reason why a large number of customs have purchased luxury merchandise in UK. There were 44 percent of female interviewees and 48 percent of male interviewees bought high-end goods due to the good quality. In addition, 31 percent of men and 18 percent of women consider the sophisticated technique

Price is an important factor in Burberry as price affects the value that costumers perceive they get from buying a product (Jobber & Ellis-Chadwick, 2012). Burberry uses competitive pricing similar to its competitors which produces a psychological effect on Burberry customers (Jacobson, n.d). If Burberry for example lowered its price dramatically then customers may believe the quality has decreased and may presume it’s not worthy to be named a luxury brand. However by being expensive it suggest better quality and desire to sustain its customers as well as making there products seem exclusive.

The following case analysis will assess Coach Inc. and its strategy in the accessible luxury brand goods market. The coach strategy focuses on its luxury rivals in matching key quality styles while offering it at a cheaper price. The company offers most products at a 50% off discount price less than other brands which gives them a competitive advantage pertaining to its customer base. Coach marketed its products to middle –income consumers desiring taste of luxury, but also affluent and wealthy consumers with means to spend considerably more on a handbag (Gamble, 2012. P.C-73) .The Company also has several other strategies such as to increase global distribution, improve same store sales productivity and continue its multi-channel business model which includes indirect whole sales to third party retailers but also focuses on direct consumer sales. Coach has done well in the luxury goods industry but the companies profit margin is still below the levels achieved prior to the onset of a slowing economy in 2007 ( Gamble, 2012. P.C-73.The Company had experienced a decline in sales as they are unsure if the company recent growth could remain constant and maintain their competitive advantage with other successful luxury lines Michael Kors, Salvatore Ferragamo, Prada and Dolce & Gabbana.

Luxury is uniqueness, attitude and ethnicity. Internet is purely a medium of communication for Luxury brands. The industry has been showing less dedication towards integrating complex technologies and its associated interactive and digital tools in marketing and overall commerce strategies. There is also a push to be present on the internet to evolve consumer needs and expectations. The initiation of internet as a universal supply channel provided an unparalleled medium by which to boost brand awareness and recover market share. This proposal provides an outline for exploratory research in sustaining the luxury brands online. The study overlaps research findings on internet marketing and consumer behavior for luxury brands.

Growth has been fueled by Coach’s niche as being ‘accessible luxury’. While Coach does not have the prices of most of its high-end competition, it is regarded throughout the industry, and most importantly by consumers, as being equal in quality to much more expensive brands.

1. What appeared to be New Century’s strategic objectives? Describe and evaluate the business model the company had adopted to achieve these objectives.

5. What is Coach’s strategy to compete in the ladies handbag and leather accessories industry? Has the company’s competitive strategy yielded a sustainable competitive advantage? If so, has that advantage translated into superior financial and market performance?

When trying to define the specific target market for Coach handbags we first need to identify those who have a desire, financial means, are eligible and have the authority to make a purchase (Christ, 2008a). There are typically two main markets that Coach will need to look at and those are the individuals who will purchase at the full-price and then those that will only purchase at a discounted price. The full-price purchaser is around her mid thirties and is either single or newly married working-woman. Those that will only purchase at a discounted price is typically in her early- to mid-forties and is a professional mom with children who looks for function over fad. There is also a target to market to

TABLE OF CONTENTS 1.0 EXECUTIVE SUMMARY3 2.0 INTRODUCTION3 2.1 Background to Organization3 3.0 ANALYSIS3 3.1 Porters 5 Forces (Model of Competition)3 3.2 PESTEL (External Analysis)5 3.3 SWOT6 4.0 KEY FINDINGS OF ANALYSIS/PROBLEM IDENTIFICATION/ KEY STRATEGIC CONCERNS6 4.1 Vertical Integration6 4.2 Diversification7 5.0 POSSIBLE SOLUTIONS & STRATEGIES.8 7.0 CONCLUSION9 8.0 APPENDICES11 Appendix 1: Porters 5 Forces11 Appendix 3: Luxury Goods Group & Brands Top Ten Competitors13 Appendix 4: Industry Map*.14 Appendix 5: Financial Performance14 Appendix 6: PESTLE Analysis15 Appendix 7: SWOT Analysis16 Appendix 8: Evaluating industry Attractiveness and Competitive strength19 Appendix 9: A Nine Cell Industry Attractiveness-Competitive Matrix20

The overall sales of luxury goods in the year 2009 is expected to be more than US$150 billion and Asia contributes 10% to it. The concept of luxury is now not confined to only to Europe and US, the Asian subcontinent contributes majorly to it, with India and China as the newly emerging markets. Professor James Twitchell (2002) comments on the democratization of luxury and the changing consumer psychology These new customers for luxury are younger than clients of the old luxe used to be, they are far more numerous, they make their money far sooner, and they are far more flexible in financing and fickle in choice. They do not

With concern to 26 to 45 years old consumers, we believe that a personal shopper service and made ​​to order service might be useful solutions in order to have their loyalty giving them specific services that only luxury brands do. In fact, that way they can get the most out of their luxury buying experience. To finish, we also suggest the creation of events during which the can purchase new collections in advance, generally the day before the collections are officially out in stores.