Q1
High quality, durable, creative, and innovative products define luxury industry products. Luxury industry products stand out in any industry and have a distinct place among consumers. Additionally, luxury industry products are available within sophisticated store ambiance. The industry of accessories and bags is divided into various segments. Luxury industry products are segment of accessories and bags that is consumed by high purchasing power consumers.
Coach Inc. is a luxury industry that deals with the luxury handbags and accessories and has the strategy of accessible luxury which has made it sustain the competition. Bags and accessories of Coach Inc. are considered as an “accessible” luxury which has attracted diverse pools of customers. Coach handbags are liked by high purchasing power consumers as well as middle-income consumers who want the taste of luxury. Due to immaculate services of Coach Inc., the brand has become the best bag selling brand in the United States.
Q2
The market of luxury goods is highly competitive, and some brands are available with luxury goods that are liked by consumers. Competitive forces such as high level of customer services, pricing strategies, quality, and attractive retail stores have the greatest effect on the attractiveness of an industry. Competitive weapons that are used by competitors and rivals include gamification, styling, comfort, functionality, remarkability and other consumer preferences to outmaneuver one another in a marketplace.
Consumers are an integral aspect of any industry. Every competitor in the market targets the consumers to sustain the competition on a large scale. With many options and tools available in the market, the pace of rivalry is quickening in the industry. Some brands that deal with luxury bags and accessories are entering the market and competition has become intense. However, strong brands such as Coach Inc. and Italian designer wears such as Prada are ahead of the new entrants, but these brands are still effectively considering changing consumers’ preferences.
Q3
With competition increasing at a large scale, the market and consumer preferences are also changing drastically. The market of handbags in the United States has increased effectively in last few decades. 67% of revenues of Coach Inc. come from handbags that have helped the brand to sustain the competition in the market. The underlying driver of changing preferences of consumers is high purchasing power and affordability. Consumers have the ability to buy luxury goods which mean that they are not willing to pay a high price and receive a mediocre product.
Consumers have the sense which makes them demand the high quality product at the price they pay. Customer services demand has increased which has changed the market to a great extent. Consumers buy their product due to wealth or status but whatsoever case; they want a high quality and stylish product.
Q4
Key factors that contribute to the success of makers of fine handbags include global capabilities, product development, and quality control. In 1999, Coach Inc. launched its online channel to deal with direct sales as well as retail outlets are widely distributed in the United States, Italy, Hong Kong, China, and South Korea. Coach Inc. has been involved in manufacturing high-quality products and proven to be one of the best brands available in the luxury industry.
Q5
Coach Inc.’s strategy and industry positioning along with an approach to differentiation have contributed to the rapid growth of brand throughout the world. A competitive strategy such as integrating high-quality styling with a high level of customer services has helped the brand to gain an advantage over the competitors available in the industry. Due to such approach of customer satisfaction and brand loyalty, Coach Inc. gained growth in net sales that contributed to the rapid growth of stores in the United States. Coach Inc. tries to satisfy its customers by providing them high-quality handbags and employees of Coach Inc. are always available to listen to consumers who are competitive advantage and strength of Coach Inc. in highly competitive industry.
Q6
Coach Inc. is one of the top most brands that cater the needs of consumers which has contributed to the essential strength. Other strengths of Coach Inc. are product designing that is done on market research, the introduction of new products monthly, high-quality leather contractors, globally available distribution channels, and strong customer base. Furthermore, weaknesses of Coach Inc. are increasing the number of new-born brands, no availability of extensive men’s accessories, and other luxury items of Coach Inc. do not contribute to overall sales much.
Other rivals do not have effective advertisements like Coach Inc. and other competencies such as Coach Inc. can provide high customer satisfaction and multiple retail capabilities which other rivals lack. Opportunities such as growing demand for luxury handbags throughout the world and increased purchasing power of consumers. However, the company faces competitive forces from other brands in the industry.
Q7
An appropriate recommendation to Lew Frankfort would be to monitor the number of stores about economic condition which has deteriorated over the years. Another recommendation would be saturation of current markets while stepping in new markets. Coach Inc. needs to follow industry brands such as Gucci, Prada, and Versace carefully. Existing market trends should be followed by Coach Inc. to stay in the industry.
Reference
Beer, M. (2013). Coach Inc. - Is Its adventure in luxury handbags sustainable? Munich: GRIN Verlag.
