J.e. Gamble, R.w. Eastburn
Running head: J.E. GAMBLE, R.W. EASTBURN 1
J.E. GAMBLE, R.W. EASTBURN 4
Coach Inc. in 2012: Its Strategy In Accessible Luxury Goods Market: Case Study
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Coach Inc. In 2012: Its Strategy In Accessible Luxury Goods Market: Case Study
Coach Inc. designs, manufactures and markets luxury handbags and leather accessories. The company was founded in 1941 by Miles Cahn, and had belonged to Cahn family for 44 years until Sara Lee, a diversified goods producer, acquired it in 1985. In order to improve marketing and financial performance, the producer hired Lew Frankfort as a head of handbags division. The turnaround was made when the design of goods became more consumer-centric, survey-based and not relied on designers instincts and tastes, as it was before. Under Lew Frankfort, the company was the first among leather handbag producers to implement the accessible luxury strategy.
In 2012, with the purpose to go global, Coach started implementation of two strategies: 1) increase of global distribution by building new market shares; 2) improvement of the same store sales productivity, promoting dual-gender lines and brand awareness.
However, despite the fact that successful combination of competitive advantages with well-built strategies brought a commendable performance to Coach Inc., the company still faces threats from other prestigious European and North American brands. These impediments result in low companys profit margins.
In the course of case investigation, such strategic tool as SWOT-analysis was applied. The analysis of opportunities provided by the exterior environment showed the following prospects: 1) emerging markets as key growth drivers for the industry development; 2) growing demand for the accessible luxury goods.
However, the company has to deal with such exterior threats and internal weaknesses, as 1) significant dependence on the economic conditions; 2) strong local market rivalry, which is getting more intensive due to growing demand and emerging markets; 3) preferences towards local designers in China and India; 4) counterfeiting.
It can be supposed that the main problem of this case is that Coach Inc. faces a very intense rivalry in the accessible luxury goods market. The company has to compete with native brands, popular European and Asian luxury goods brands, and with counterfeit brands. In addition, even considering wide opportunities the emerging markets can provide, they always come across serious challenges from local designers too.
The solution of the problem of the strong rivalry will be to develop additional advantages, while keeping hold on its main sustainable strategies of accessible luxury. In other words, Coach Inc. should minimize the weaknesses and develop the strengths.
Due to emerging markets and growing popularity of accessible luxury goods, the strategy to build a ramified branch net in China, India, and North America seems to have reason. It covers more potential consumers and creates bigger marketplace share. With the same purpose, Coach strives to gain a dual-gender audience by offering luxury handbags and leather accessories for both men and women. The strategy of sales productivity boost exists in order to transform all potential customers into the real clients.
As for developing additional advantages, Coach does its best to win the biggest part of the market share and offer resistance to the rivalry with all the strengths. Coach Inc. offers a solid survey-based approach to marketing; it has attractive appearance of the stores; well-thought discount system; compelling pricing; high quality and styling of goods; two-income targeted audience; retail stores opened in China and India; diversified range of products; well-developed distribution network.
In this battle of strategies for consumers brand loyalty and worldwide recognition, where ends justify the means, there could not be enough weapons. Therefore, to outmaneuver foreign prestigious brands in the native marketplace, Coach Inc. could launch a new line of women and mens handbags decorated with national North American ornament motives. The strategy of national identity emphasis can be useful in China and India, as well. For instance, the handbags with elements of Indian national coloring and embroideries, similar to what the local designers make, will perfectly suit traditional saris in India. As for the counterfeiting, Coach Inc. should follow the general tendency to team up against the fake brands and pirate copies.