Questions About The Luxury Goods Industry

Question 1

Luxury goods industry based on high quality goods with high price along with brand recognitions, as customers need to feel good about spending their money. The industry includes drinks, fashion, cosmetics, fragrances, watches, jewelry, luggage, handbags.

Question 2

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The competition in this industry is intense as the differences between the companies becoming less, and the market it self is expanding, therefore, it is important to gain a better section of the market share to maintain sustainability.For instance, Companies are using the internet, among other methods, to introduce their newest catalogues. Also using a new method of pricing & offer economy level of product, plus offering the good in accessible locations and easy to reach for customers will increase selling average.

Question 3

The market for luxury handbags and leather accessories is changing rapidly, this is due to fact that generations are changing, plus that the basic income of the average population is becoming high, thus, the middle class is becoming involved in such products.

Question 4

Key factors that determine the success of makers of fine women handbags and leather luxury products can be brand image, quality, and price accessibility over a large range of economic classes, effective advertisements, product display, innovation and country of origin. All these factors builds up the market segment for a company involved in the business of women handbags and leather luxury products.

Question 5

Through 2000 and 2006, Coach Inc. implemented a new strategy in order to increase its sales, market shares and to become one of the major competitors n the ladies handbag and leather accessories industry. Coach Inc. ’s new strategy keyed to “Accessible” Luxury. 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. Coach’s strategy was a success because it didn’t only appeal to middle income consumers wanting a taste of luxury, but also affluent consumers with the means to spend $ 2,000 or more on a handbag to buy their products.In addition to the winning combination of styling, quality and pricing, the attractiveness of Coach Retail stores and their high levels of customer service provided by its employees contributed to its competitive advantage and success. Coach Inc.’s targeted both high and middle income customers. Throughout their Full-Price, Factory, Japan other International stores; Coach was able to reach to a whole variety of customers and to build an excellent relationship with them. Coach Inc. ’s strategy yielded a sustainable competitive advantage in the market.Between 2000 and 2006 Coach’s net sales has grown at annual rate of 26 percent and its stock price had increased by 1,400 percent as a result of their new strategy. By 2006, Coach had become the best-selling brand of ladies handbags and leather accessories in the United States with a 25 percent market share and was the send best-selling brand in Japan with an 8 percent market shares. Coach Inc.’s performance proved to be stellar as their annual sales had increased from $ 500 million in 1999 to more than $ 2. 1 billion in 2006. Its earnings over the same period of time improved from approximately $ 16. million to $ 494 million.

Question 6

Coach Inc. strengths’ lies in the development of strong retail network in the US through themed stores and wholesale accounts to major department stores. Additionally, Coach has begun developing a strong network in Japan.

The use of themed stores, factory and full-price, selectively targets shoppers to increase sales and turn over inventory that is been discontinued or overstocked. Marketing initiatives through advertising, postal mailers, and printed catalogs have improved the direct-to-consumer channels each year.Customer service was been rated as number one per the May 2006 Consumer reports review (Consumer Reports, 2006). As for their weaknesses, the high rate of product releases creates a higher inventory of unsold or overstocked items. Coach leverages its factory stores to move this inventory but this result in large inventories. Stores are located in select regions of the US and Japan, Coach relies of wholesale sales to department stores to move additional inventory. Another weakness in this industry is its dependence on seasonal market; this could affect availability of cash.

Couch Inc. ’s market opportunities include opening stores in the International markets will further increase Coach Inc. ’s market share and enable the company to better endure regional economic downturns in the US and Japan. Leveraging its image of High Quality Coach can push into other markets and product lines with less risk. Customer acceptance of high quality creates less resistance to accept a new product from the company. We think that the luxury goods market is very sensitive to economic conditions.Customers who are not as comfortable or upbeat about the economy tend to spend less or by cheaper substitutes.

Recession or poor consumer confidence in the US or Japan could result in a decrease of sales for short or long periods of time. Also, strong competition from other companies creates further pressure to lower prices and reduce net income. Italian and French handbag makers have a history of being favorites of women seeking fashion. Coach will continue to see these companies as a threat as each attempt to regain customers.

Question 7

Sustain and improve their product’s styling and quality Maintaining creativity by employing the most talented employees to sustain customers’ loyalty  Remain exclusive; Coach Products are sold exclusively through a network of directly operated stores, or under exclusive Coach Franchises and in carefully selected department stores and specialty stores around the world. Take advantage of emerging markets such as China, India, and to continue to develop an integrated distribution network. Increase global distribution, with an emphasis on direct retail distribution in North America and Japan.

References

1. www.Coach. com
2. Coach annual report available at: https://secure. coachorg. com/publications/annual_report_&_more. htm
3. Marketing Management knowledge & skills Book.
4. http://www. marketresearch.com/map/research/luxury_goods/1831. html
5. The future of luxury: custom fashion, cheap chic, available at : http://www. post-gazette. com/pg/07004/751257-314. stm#ixzz15GWITJQk
6. The biggest opportunity for luxury brands in a generation, available at: http://www. europeanbusinessreview. com/? p=2391

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