Approach to Differentiation

Approach to Differentiation

The market research design process developed by Coach’s executive creative director, Reed Krakoff, provided the basis of the company’s differentiated product line, but the company’s procurement proc- ess (which selected only the highest-quality leath- ers) and its sourcing agreements with quality off- shore manufacturers were additional contributors to the company’s reputation for high quality. Monthly product launches enhanced the company’s voguish image and gave consumers reason to make purchases on a regular basis. The company’s market research found that its best customers visited a Coach store once every two months and made a purchase once every seven months. In 2006, the average Coach customer purchased four handbags per year, a fig- ure that had doubled since 2002. Lew Frankfort said the increase was attributable to monthly product launches that “increase the frequency of consumer visits” and women’s changing style preference of “using bags to complement their wardrobes in the same way they used to use shoes.”6 A retail analyst agreed with Frankfort’s assessment of the impor- tance of frequent product introductions, calling it “a huge driver of traffic and sales and has enabled them to capture the . . . customer who wants the newest items and fashions.”7 Seventy percent of Coach’s 2006 sales came from products introduced within the fiscal year.

The aesthetic attractiveness of Coach’s full- price stores, which were designed by an in-house architectural group under the direction of Krakoff, further enhanced the company’s luxury image. A 2006 survey of 2,000 wealthy shoppers by the Luxury Group ranked Coach store environments 10th among luxury brands. The surveyed shoppers found few differences among the 10 highest-rated store atmospheres, with number one Louis Vuitton scoring 88.1 out of 100; number two Hermès scor- ing 87.9; Armani and Gucci scoring 86; Versace, Ferragamo and Prada all scoring 85; and Burberry and Coach tying at 84.

Coach sought to make customer service expe- riences an additional differentiating aspect of the brand. Coach had agreed since its founding to re- furbish