Coach Inc.: Is Its Advantages in Luxury Handbags Sustainable?

Subject: Coach Inc.: Is its advantages in Luxury Handbags sustainable?

Analyze case study:

Coach was founded in 1941 when Miles Cahn, a New York City leather artisan, began producing ladies' handbags. The handbags crafted by Cahn and his family in their SoHo loft were simple in style and extremely resilient to wear and tear.

Coach created the "accessible" luxury category in ladies' handbags and leather accessories by matching key luxury rivals on quality and styling, while beating them on price by 50 percent or more. Not only did Coach's handbags appeal to middle income consumers wanting a taste of luxury, but affluent consumers with the means to spend $2,000 or more on a handbag regularly snapped up its products as well. By 2006, Coach had become the best-selling brand of ladies' luxury handbags and leather accessories in the United States with a 25 percent market share and was the second best-selling brand of such products in Japan with an 8 percent market share. Beyond its winning combination of styling, quality, and pricing, the attractiveness of Coach retail stores and high levels of customer service provided by its employees contributed to its competitive advantage.

Much of the company's growth in net sales was attributable to its rapid growth in company-owned stores in the United States and Japan. Other growth initiatives included strategic alliances to bring the Coach brand to such additional luxury categories as women's knitwear and fragrances.

However, when famous brands continually launched accessible products, Coach had many difficulties in sustaining its growth and competitive advantages.

Question:

1. What are the characteristics of luxury handbags and leather goods industry (characteristics of customers, demands, scale, growth, association, competition, etc.)?

2. What are competitive forces that impact on the industry’s attractiveness? What are the main competitive factors that determine a company’s success in the industry?

3. What marketing strategies are Coach using to compete in ladies’ luxury handbags and leather accessories industry? Do these strategies create sustainable competitive advantages?

Answer questions:

Along with the growth and development of the economy, human demands change in response to market demand. Luxury goods industry tends to grow rapidly in term of both scale and quality to meet the growing human demands. However, there is fierce competition in the luxury goods market in general and in the luxury handbags and feather goods industry in particular. Therefore, in addition to making the best use of their strengths, Coach and other brands have to offer strategic marketing plan to create their own competitiveness.

 1. What are the characteristics of luxury handbags and leather goods industry (characteristics of customers, demands, scale, growth, association, competition, etc.)?

        Luxury handbags and leather goods industry is an industry of high quality products. The majority of customers in this industry are rich women who want to confirm their hierarchy by spending huge sum of money on branded goods. Spending money on luxury handbags and leather goods is probably the hobby of the majority of women.