Coach Inc

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

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

Company History ▪ Founded in 1941 by Miles Cahn, a leather artisan, who began producing women’s handbags; simple in style and resilient to wear and tear. ▪ Even after 40 years of business, coach was able to grow at a steady rate by setting prices about 50% lower than most luxurious handbags, adding new models and establishing accounts with retailers such as Bloomingdale’s and Saks Fifth Avenue. ▪ After 44 years of family management, Coach was then sold to Sara Lee, a diversified food and consumer goods producer (acquisition strategy). ▪ Sara Lee left Coach’s strategy and
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▪ Strategy: o Increase frequency of customer visits by regular product launch and sending out catalogs to strategically selected households (defensive strategy). The company’s market research found that its best customers visited a coach store once every two months and made a purchase once every 7 months. o They adapted to the fact that women usually use bags to complement their wardrobes the same way the used to use shoes. o Coach is a brick and click company, having its products sold on its web site as well as in the full-price and factory stores (web site strategy). Coach’s web site had 40 million unique visitors and generated $54 million in net sales. The company also sends promotional e-mail to 55 million selected customers in 2006. ▪ Functional area strategies: o R&D engineering: making prototypes and test them with the consumers by keeping them in the factory stores for 6 months before the actual launch. o Production: outsourcing the procurement and manufacturing processes to 40 different suppliers in 15 countries. o Marketing and sales: extensive market research to find out consumer preferences about new styles, comfort and functionality. The retail distribution is both direct (full price and factory stores, internet sales, catalog sales and stores in Japan) and indirect (wholesale accounts with department stores in US and in international market outside Japan). ▪ Coach can be

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