Marketing Management Case Study - Coach Inc.

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Coach, Inc. is a designer, producer, and marketer of a prestige line of handbags, briefcases, luggage, and accessories. The company made its reputation selling sturdy leather purses in unchanging, traditional, classic styles, and it remains one of the best-known leather brands in the United States and has a growing reputation overseas. In addition to its main product line, the company offers Coach brand watches, footwear, and home and office furniture through agreements with licensing partners. Nearly two-thirds of company sales are derived from direct-to-consumer channels. These include about 190 Coach stores in the United States, among these, approximately 120 are retail stores and the remainder are factory outlets, direct mail catalogues, and an online store. There are also 175 Coach locations outside the United States, in 18 countries. The company's indirect channels include the wholesaling of Coach brand products to approximately 1,400 department and specialty store locations in the United States. Formed in 1941, Coach was family owned and operated until 1985, when Sara Lee Corporation purchased the firm. Coach remained a subsidiary of Sara Lee until 2001, when the firm regained its independence via a spinoff. In the late 1990s, Coach underwent a major transformation under the management of its CEO Lew Frankfort and designer Reed Krakoff. Under their direction, Coach adopted a unique positioning as an 'accessible luxury brand'. In other words, though the company offered high-end products, their prices were lower than the prices of most other luxury brands in the US. This extended Coach's appeal to a wide range of consumers.

SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieve that objective. The SWOT analysis for Coach Inc. is as follows:

1. Strengths
a. matching key luxury rivals on high quality leather and innovative styling b. beating competitors price by 50% or more
c. high level of customer service
d. monthly introductions of fresh new handbag designs
e. strategic alliances to bring Coach brand of handbags into luxury categories such as watches, footwear, glasses, fragrances outerwear, and men’s f. outsourcing to cut cost and maintain low price

g. channels of retail distribution from full-priced store, factory outlet, internet and catalogs 2. Weaknesses
h. factory outlet stores outperforming full-priced store i. diluting brand with increased growth of factory outlet stores j. men’s accessories only account for 2% of sales
k. outerwear only accounting for 2% of sales
l. luggage only accounting for 1% of sales
3. Opportunity
m. growing demand of luxury goods in emerging global markets, such as China and India n. increased wealth of consumers in global markets of Asia (Japan, China, Malaysia) and Middle East

4. Threats
o. French and Italian designer brands such as Gucci, Prada, Louis Vuitton, Dolce & Gabanna, and Ferragamo p. Brand diffusion: Manufactures of the finest luxury goods launching diffusion lines to exploit middle-income consumers. For example, Dolce & Gabanna launching “D&G”, a sub brand sold at modest price points. q. Counterfeiting of luxury merchandise, totaling $500 billion worth of goods sold in countries throughout the world in 2006. PORTER’S FIVE FORCES ANALYSIS

Porter's Five Forces is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore...
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