Industry analysis (1.5%):
What is the driving forces changing the luxury handbags and leather accessories industry globally? Defining luxury goods is the key to answering this question, they are items not considered essential to the consumer and are often associated with affluence and abundance. Coach belongs to the luxury handbags and leather accessories industry. In order to afford luxury goods, one has to be affluent and abundant, which makes the economic force a key driving force in this industry. The increasing incomes and wealth in the emerging markets such as Eastern Europe and Asia has driven the growth for luxury goods internationally. The other key driving force in the luxury goods industry is the changing consumption habits of consumers. The growing segment of consumers in luxury goods earn substantially less than traditional ones (those who earn 300,000 or better), but they still desire products with superior quality and styling. This is due to the effectiveness of television advertising and programming. The other factor being that middle income household would like to rewards themselves with luxuries for their hard work. Effective pricing strategy also contributed to the industry. Big box discounters such as Walmart and Target allow consumers to buy necessities at very low prices then spend lavishly on extravagances such as luxury goods. All in all, the combination of these forces had driven the growth in demand in luxury growth. 2. Competitor analysis (1.5%):
What competitors’ actions to capture the opportunities from the changing luxury goods market will be the greatest threat to Coach? The top brands of luxury goods tends to exploit Middle-income consumers by introducing “diffusion lines” that are “affordable” and “accessible” luxury. What is meant by accessible luxury is when a marquee or designer label such as Giorgio Armani, launches a sub-brand which have a retained quality and styling as the marquee brand, but sold at a much...
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