Coach Paper

Topics: Luxury good, LVMH, Gucci Pages: 8 (2128 words) Published: October 8, 2013

External Analyis


Introduction_________________________________________________1 Strategic Profile_____________________________________________1 External Environmental Analysis_________________________2
Dominant Economic Traits________________________________3
Customer Analysis__________________________________________3 Differentiation_______________________________________________3 Product Innovation_________________________________________ 3 Competitor Analysis________________________________________4 Competitive Forces_________________________________________ 4-5 SWOT_________________________________________________________5 Driving Forces_______________________________________________6 Industry Attractiveness_____________________________________7 Key Success Factors_________________________________________7-8 Recommendation___________________________________________8

Coach Inc is a high end handbag and accessory manufacturer that has been around since 1941. Throughout it’s existence, Coach has enjoyed a respected position in the luxury goods market. They have achieved this standing by consistently providing their customers with quality stylish at a deeply reduced price. Currently the company is dealing with changing market conditions such as new entrants, changing customer base, and emerging markets. Coach is in the process of altering its competitive strategy to meet the needs of the changing luxury goods industry.

Strategic Profile
The strategy that Coach has employed focuses on matching rivals on quality and styling while beating them on price by over 50%. By providing a comparatively low price luxury item they have attracted both middle income consumers and wealthy consumers. This ability to produce top of the line items at low cost has developed into a competitive advantage that Coach has leveraged to attract new customers. The large discounts that Coach enjoys were made possible by the outsourcing policy the company has put in place. They outsource production to 40 suppliers in 15 countries. The two primary strategic objectives for 2012 were to increase global distribution and improve same store sales. Coach planned to utilize a multichannel distribution model to achieve these strategic objectives. This model includes wholesale sales to third party retailers but focused mainly on direct-to-consumer sales which accounted for 87% of net sales in 2011.

External Environmental Analysis
There is a growing desire for luxury good by middle income consumers. The day to day rigor of two income household living might suggest that consumers are rewarding themselves with luxury items. The “trade up/trade down” shopping strategy is becoming more prevalent. This leaves more discretionary spending for luxury items.

The luxury goods market is going global. Growing demand for luxury goods in emerging markets like China and India are expected to give the market a major boost. There is an economic boom in India which is driving demand for luxury items. The market is still recovering from the economic downturn. The market for luxury goods has been divided into three segments haute couture(custom), traditional luxury, and accessible luxury(more affordable).

Market entry by outsiders is no longer restricted by China’s government. Allowing outsiders into the market has created great opportunity for firms to increase earnings. Competition in this new marked is now moving from major cities to smaller towns.

Companies are striving to gain brand awareness and build market share through e-commerce sites and social networking initiatives. Companies are using market research, and trend analysis to give the consumers the product they want to buy. Email and websites are being used as direct marketing tools to increase the brand exposure and to facilitate repeat...
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