Coach Inc. operates in the luxury goods industry where it sells leather handbags, accessories and other leather products. The firm is among the best-known luxury brands in this growing submarket in North America and Asia. Within the luxury goods market there are three sub-categories: haute couture, traditional luxury, and accessible luxury. When Krakoff joined Coach in 1996 he helped position the company to lead in the “accessible luxury” segment. By 2000, Coach was dominating this market along with other competitors such as Michael Kors, Salvatore Ferragamo, Prada, Giorgio Armani, Dolce & Gabbana, and Versace. The luxury goods industry had a direct bearing on Coach’s profit potential. This effect can be explained…