Coach Inc. Case Study

The luxury goods retail industry experiences continual changing market trends and consumer preferences. Because of this it is rather easy for new companies to enter into the industry. When it comes down to it, in the long run most companies lack the abilities to stay competitive within the market because they are undercapitalized. New companies generally have inadequate marketing strategies to give their products an appropriate amount of exposure which is what helps to build brand loyalty among consumers. Exposure helps build the credibility of the brand name which instantly informs customers about a company’s reputation. Coach Inc. is a great example of a company that has beat its competition by building its reputation and generating very dependable products which enables their consumers to trust the quality of each product produced.

Coach Inc. is a luxury retailer of fine handbags, leather accessories, luggage and multiple other products. Coach distributes it's products indirectly to consumers and also direct-to-consumer. Coach’s consumers are able to buy products through full price stores, factory outlet stores, department stores and on the companies website, www.coach.com. By dividing it's company owned stores into two categories, full price stores and factory stores, Coach has had tremendous success of selling luxury products for much less than their competitors. This has separated them from their competitors because they are able to offer very expensive products for the upper class but at the same time being able to appeal to the middle class as well. Being able to reach a market that was has previously been ignored has granted the company access to huge sales growth. Coach has achieved this by having their factory stores sell discontinued models and other special products at bulky discounts. Full price stores continue to appeal to the upper class by offering the most current and newest products at full price.

There are many different luxury accessory designers for consumers to pick among including but not limited to: Prada, Gucci, Louis Vuitton, Dior, etc., therefore, the strength of these companies brand name and recognition is extremely important to their success. Coach has an advantage in terms of pricing due to their factory discount stores that I spoke about in the previous paragraph, which are complementary to its high end stores. These supply product to price attentive consumers who do not need the most up to date styles. Due to the low prices Coach offers, their customers don’t have the ability to bargain. Coach offers so many different products at various prices to an extremely large customer base. In my opinion, it is in their` best interest to keep prices high to retain their brand image and be able to continue to appeal to their upper class market.

When it comes to threats in the market, there are specifically two types of substitute products that could be a possible issue to the company: counterfeits and alternative brands. Counterfeits are a fraudulent imitation of a product, in other words a product that looks exactly like a Coach product without the brand name. Alternative brands are brands that offer similar products to coach but for the most part offering not as good of quality and at a cheaper price. Much research shows the what drives sales in the accessory/apparel industry is the strength of the companies brand name and quality of the product offered, this is why currently, Coach and other firms within the luxury goods industry spend so much money and time focusing on advertising and maintaining their high quality standards. Counterfeit merchandising is a threat to the integrity of the Coach brand. Consumers can easily get confused and think that the counterfeit products are actually products of Coach, which can lead to dissatisfaction of the product. Dissatisfaction of a product can damage the company`s image and in turn, causes a reduction in sales. Coach works diligently with its competitors to minimize the amount of counterfeit products in the market place by suing companies who try to sell these substitute products.

Coach’s