Coach Inc. Case Study
Case Position Paper B - Coach Inc. - by Henrik Müller
1. External Environment
1.1 General Environment
1.1.1 Economic Environment:
As the case is from 2006 the company was probably facing some issues between 2007 and 2010. Luxury goods are usually one of the first market segments to decline in case of an Economic downturn / crisis. However, the fact that Coach Inc. is a lot cheaper and therefore have a broader customer base than most of their competitors, they are probably facing less financial problems than them and might therefore be able to keep or even further improve their current market share.
1.1.2 Global Environment
In recent years, the number of wealthy households, especially in Eastern Europe and Asia increases at a high pace. With an increase in total households with assets of more than $1 million by 7 %, this number has been expected to rise by another 9 % in 2009, reaching more than 10 million households all over the world. This of course increases the demand for luxury goods in those emerging countries. China for example is expected to be the world's largest market for luxury goods in 2014 if they keep their current pace of growth. These new markets offer great opportunities for Coach Inc. to increase their global brand awareness, sales and market share while further increasing their total number of especially full price stores, which is their main focus compared to wholesale and factory outlets.
1.1.3 Demographic Environment
The world is aging as birth rates decrease and medical progress helps increase the average age a person reaches in its life. This means that the potential market for luxury goods is growing as well since the average customer for Coach's products a 35-45 year old, college educated, professional female. Also, there's a trend towards two income households and a change of buying habits of mid income consumers, who seem to be more interested in luxury goods through effective advertising. These facts present promising opportunities
1. External Environment
1.1 General Environment
1.1.1 Economic Environment:
As the case is from 2006 the company was probably facing some issues between 2007 and 2010. Luxury goods are usually one of the first market segments to decline in case of an Economic downturn / crisis. However, the fact that Coach Inc. is a lot cheaper and therefore have a broader customer base than most of their competitors, they are probably facing less financial problems than them and might therefore be able to keep or even further improve their current market share.
1.1.2 Global Environment
In recent years, the number of wealthy households, especially in Eastern Europe and Asia increases at a high pace. With an increase in total households with assets of more than $1 million by 7 %, this number has been expected to rise by another 9 % in 2009, reaching more than 10 million households all over the world. This of course increases the demand for luxury goods in those emerging countries. China for example is expected to be the world's largest market for luxury goods in 2014 if they keep their current pace of growth. These new markets offer great opportunities for Coach Inc. to increase their global brand awareness, sales and market share while further increasing their total number of especially full price stores, which is their main focus compared to wholesale and factory outlets.
1.1.3 Demographic Environment
The world is aging as birth rates decrease and medical progress helps increase the average age a person reaches in its life. This means that the potential market for luxury goods is growing as well since the average customer for Coach's products a 35-45 year old, college educated, professional female. Also, there's a trend towards two income households and a change of buying habits of mid income consumers, who seem to be more interested in luxury goods through effective advertising. These facts present promising opportunities