Introduction

Background in Brief:
Coach was rst estabshed n 1941, as a sma famy run eather goods
manufacturng busness. Over tme Coach became recognzed as a premum
brand that provded superor quaty eather goods n cassc styes and n the
1980`s t opened excusve Coach reta stores. Coach was sod to Sara Lee n
1985 and experenced rapd expanson. Coach`s product portfoo was expanded
to ncude, accessores, uggage and brefcases and many more excusve Coach
stores and Boutques were opened. By the ate 1980`s there were 12 excusve
Coach reta stores as we as approxmatey 50 boutques seng Coach products
wthn ager department stores. Whe Coach ntay grew t started to ag behnd
ts compettors n terms of trendness and saes began to decne. In 1996 Krakoh
|oned Coach and he was nstrumenta n postonng Coach as an 'accessbe
uxury brand`` for t was understood that prce was a source of compettve
advantage for the brand n the uxury market. In October 2000, Coach went pubc
under the name of Coach Inc. By 2005 Coach`s revenues trped and ther share
prce ncreased more than 900 % snce ther IPO n 2000.
The Organization Today:
Coach s one of the most recognzed ne accessores brands n the U.S. and n
targeted nternatona markets. Coach s a eadng Amercan marketer of ne
accessores and gfts for women and men. Ther product oherngs ncude
womens and mens bags, accessores, busness cases, footwear, |ewery, sun
wear, trave bags, watches and fragrance. Coachs dstrbuton strategy s
mut-channe. Coach operates n two segments: Drect-to-Consumer and
Indrect. The Drect-to-Consumer segment ncudes saes to consumers through
Company-operated stores n North Amerca, |apan, Hong Kong, Macau,
manand Chna, Sngapore, Tawan and the Internet. The Indrect segment
ncudes saes to whoesae customers n over 20 countres, ncudng the Unted
States; royates are aso earned on censed products. As Coachs busness
mode s based on mut-channe nternatona dstrbuton the success of the
corporaton does not depend excusvey on the performance of a snge
channe or geographc area.
Mission, Goals & Stakeholders
Mission:

``Coach seeks to be the leading brand in terms of quality lifestyle accessories ofering
classic, modern American styling Coach s focused on a specc type of stye - cassc,
modern Amercan, and wants to be the eader n that segment. Coach sts ts core
beefs as foows: The Brand is our Touchstone, Customer Satisfaction is
aramount, Integrity is Our !ay of "ife, Inno#ation $ri#es !inning
erformance, and Our Success $e%ends on Colla&oration. Coachs commtment
to ts msson statement and beefs are ceary workng as Coach hods the number one
poston wthn the U.S. premum handbag and accessores market and the number two
poston wthn the |apanese mported uxury handbag and accessores market.
Goals and O&'ecti#es:
To oher premum festye accessores and provde consumers wth
quaty, reevant and nnovatve products that are extremey we made,
and sod at an attractve prce.
Drve growth and market share by expandng ther dstrbuton channes
to reach oca consumers n emergng markets and everagng the goba
opportuntes.
Ensure that the Coach brand remans a premer, dstnctve and easy
recognzabe brand by deverng a consstent message to the consumer
through ther communcatons and vsua merchandsng whe protectng
the brand name from counterfet products.
Antcpate consumer changng needs by beng `consumer centrc``
through the use of extensve consumer research and surveys to nnovate
to create customer and sharehoder vaue.
Stakeholders:
(m%loyee)s: Coach`s approxmate 18,000 empoyees are extremey
mportant stakehoders for the company. They want to have a far
saary and benets for ther hard work.
In#estors: Sharehoder`s woud ke to see a return on ther
nvestment. Ths ncudes stock apprecaton as we as an ncrease n
the dvdend.
Board of $irectors and Management: are ookng for Coach Inc. to
perform we so that ther stock optons are n the money and ther |obs
w be safer.
Customers: are purchasng Coach products prmary for the brand
recognton and the percepton of a status symbo. They aso expect
the quaty good of the product to be superb.
Com%etitors: are utmatey ookng to ncrease ther market share
and prots. They w be evauatng Coach`s strategy and ookng for
opportuntes to stea customers.
(*ternal +nalysis
General (n#ironment ,Macro-:
(conomic: Durng the next severa years the economy poses sgncant rsk to
the uxury ndustry n the mature markets, however, emergng markets such as
Chna, Inda and Braz are expected to experence strong growth n the uxury
market as ther mdde cass deveops. The U.S (Coach`s argest market) must
address the Fsca Ch`` or another economc recesson w occur. Furthermore
there s currenty no souton n sght regardng the European debt crss.
Socio.Cultural: Changng soceta concerns, atttudes, and festyes
represents both opportuntes and rsks to the uxury accessory ndustry. The
changng preferences by mdde cass consumers towards uxury goods
nevtaby create new opportuntes for growth wthn mature markets.
Companes that shft manufacturng |obs overseas for ower wages have been
crtczed by consumers. Companes need to evauate the potenta costs as we
as benets before manufacturng or dspersng ther products nto a country or
regon.
Glo&alization: The prmary reason for the ncreasng gobazaton s that rms
wthn the ndustry are attracted by the rsng eve of ncome and weath and
the advantage of cheap abor wthn reatvey new ndustrazed countres such
as Chna, Inda, and Braz. Whe geographc dversty and gobazaton heps to
reduce companes exposure to rsks n any one country, they`re sub|ect to rsks
assocated wth a the dherent nternatona operatons, ncudng, changes n
exchange rates, natura dsasters , and government contros.
Technological $e#elo%ment: Frms need to contnuousy nvest n technoogy
n order to nnovate products and mnmze defects. Luxury products need not
ony to dever on quaty to ther customers, but aso |ustfy ther premum
prces over counterfet products. Luxury rms aso need to nvest n
technooges, to prevent counterfetng such as hoograms, smart cards,
bometrc markers and nks, whch can be used to protect and authentcate
genune products. Large goba rms aso requre sophstcated webstes that
need to consder anguage, cutura eements and product nes.
olitical/"egal: The potca andscape wthn the U.S. for the next four years
s uncear eadng to uncertanty for the uxury goods ndustry. If Governor
Romney wns the eecton he has stated that he w abe Chna a currency
manpuator whch coud resut n tarhs and a stressed reatonshp. The ega
ght aganst trademark nfrngement, trademark counterfetng and patent
nfrngement, and trade mark duton s sgncant for the uxury accessory
ndustry. Companes spend mons of doars tryng to enforce nteectua
property rghts around the word by workng cooperatvey wth other
companes wthn the ndustry, and government agences and aw enforcement
agences.
$emogra%hic: The uxury market s dened as ndvduas wth annua ncome
above USD $30,000. It s estmated to grow by more than 600 mon
ndvduas from 2010 to 2025 as goba economc reagnment contnues to pck
up speed. Chna s expected to contrbute 30% of the growth, wth 200 mon
more consumers enterng the uxury market by 2025.
Industry (n#ironment ,orter)s 0-
Threats of 1e2 (ntrants ,"o2.Medium-: The uxury goods reta ndustry s
experencng contnuay changng market trends and consumer preferences. It s
reatvey easy for new companes to enter nto the uxury appare ndustry,
however most companes ack stayng power because they are undercaptazed.
New Entrants generay ack marketng musce to gve ther products the exposure
requred to bud brand oyaty among consumers. Brand names have become
ncreasngy mportant to consumers.
Bargaining o2er of Buyers: ,"o2.Medium-: There are many dherent
uxury accessory desgners for consumers to pck among therefore, brand name
and recognton s mportant. Coach has an advantage n terms of prcng n a
number of geographc areas for t has Factory dscount stores that are
compementary to ts hgh end stores. These cater to prce conscous customers
who do not need the very atest styes. Coachs customers have ow barganng
power because Coach ohers so many dherent products at dherent prces to a
very arge, expandng customer base and t s n ther` best nterest to keep
prces hgh to retan ther brand mage.
Bargaining o2er of Su%%liers ,"o2.Medium-: Gven the arge quanttes
of goods Coach buys, the suppers reay want to have contract wth them,
therefore Coach has the barganng power to negotate prces. Aso Coach`s
man matera s eather, therefore Coach has the opton to of purchasng t from
many dherent paces.
Threat of Su&stitute roducts ,Medium.3igh-: There are two types of
substtute products that coud pose a threat to the company: aternatve brands
and counterfets. Brand name/mage and product quaty are what drves saes
n the Appare/Accessores ndustry whch s why currenty Coach and other
rms wthn the ndustry spends so much on advertzng and mantanng hgh
quaty standards. Coach works cooperatvey wth ts compettors to mnmze
the amount of counterfet products n the market pace by prosecutng
companes.
4i#alry among Com%eting 5irms ,Medium-: The uxury handbag and
accessores ndustry s hghy compettve but not through prce competton.
They a have sghty dherent products and compete for the upper cass to
upper-mdde cass. A the companes need to dstngush ther brand and
product. They aso need to spot new trends and adapt qucky to the changng
preferences. Brandng s ncredby mportant n ths ndustry as n mature
markets consumers tend to choose brands they know and n rapdy growng
deveopng markets consumers want to own symbos of success.
Competitor Analysis
67- olo 4al%h "auren Cor%7 ,4"-: Poo Raph Lauren Corporaton, together wth ts
subsdares has a market cap of $14.5 bon whe Coach has a market cap of $16.2
bon. RL engages n the desgn, marketng, and dstrbuton of festye products. The
company ohers mens, womens, and chdrens cothng; and accessores comprsng
footwear, eyewear, watches, |ewery, hats, and bets, as we as eather goods,
ncudng handbags, uggage and products for homes. Prce wse, t s at the ower end
of the uxury market whereas Lous Vutton and Gucc are at the upper end.
87- "9M3 MO(T 3(11(SS:.;1S +$4 ,"9M;::OTC ;S-: LVMH Moet
Hennessy Lous Vutton SA s a France-based uxury goods company wth a
market captazaton of $83.1 bon, ve tmes the sze of Coach. The
Company owns a portfoo of uxury brands and ts busness actvtes are
dvded nto ve busness groups: Wnes and Sprts, Perfumes and Cosmetcs,
Watches and |ewery, Fashon and Leather Goods, and Seectve Retang. The
competton wth Coach comes prmary n the fashon and eather goods
busness but hgher cost uxury rms ke Gucc and Lous Vutton do not want to
compete on prce n the uxury goods ndustry for fear of damage to ther
brand.
<7- G;CCI G4O; 19.1: 4(G S34S ,G;CG:OTC ;S- Through the Gucc,
Yves Sant Laurent and Sergo Ross brands t desgns, produces and dstrbutes
hgh-quaty persona uxury goods, ncudng: handbags, uggage, sma eather
goods, shoes, tmepeces, |ewery, tes and scarves, eyewear and perfume. The
company has a market captazaton of $13.4 bon and drecty operates
stores n ma|or markets throughout the word and whoesaes products through
franchse stores, duty free boutques and eadng department and specaty
stores.
+nalysis of Interaction of (*ternal 5orces
The macro envronment s chaengng, partcuary n mature markets but the
opportuntes gobay shoud mtgate some of the rsks. On the bass of Porters
Fve Forces t s cear that Coach`s ndustry s "attractve" because of the hgh
barrers to entry. The competton s there but Coach has ts own oya foowers
dedcated to ther brand name. The threat of new entrants s ow for reasons
prevousy dscussed. The threat of substtutabty s aso ow whch keeps the
uxury ndustry extremey protabe as we.
Internal +nalysis
Tangi&le 4esources
5inancial 4esources: The rm`s borrowng capacty and abty to generate
funds nternay s mpressve. They recenty repaced ther prevous ne of
credt on |une 18, 2012 wth a new $400 mon one wth |P Morgan Chase Bank
whch w aow them to fund any further expanson. Ths access to funds as
we as ts postve cash ows from operatng actvtes of $1.2 bon s
expected to be used to fund expanson nto emergng markets.
hysical resources: As of |une 30, 2012, Coach occuped 354 reta and 169
factory eased stores ocated n North Amerca, 180 Coach-operated
department store shop-n-shops, reta stores and factory stores n |apan, 96
Coach-operated department store shop-n-shops, reta stores and factory
stores n Hong Kong, Macau and manand Chna, and 34 Coach-operated
department store shop-n-shops, reta stores and factory stores n Tawan and
Sngapore. Coach reay utzes new technooges such as ther goba web
presence, wth 17 nformatona webstes n 18 countres.
Trademarks and atents: Coach owns the entre matera trademark rghts used n
connecton wth the producton, marketng and dstrbuton of a of ts products, both n
the U.S. and n other countres n whch the products are prncpay sod. ``Ma|or
trademarks ncude Coach, Coach and Lozenge Design, Coach and Tag Design,
ignature C Design, Coach !" Art Design and The #eritage Logo $Coach Leather%are
&st' ()*(+``
Intangi&le 4esources
Managerial Ca%a&ilities: The dramatc growth of Coach s a testament to the
strength of management taent at Coach. Coach`s management team has
enormous experence n the ndustry, massve taent and demonstrated abty
to contnue to nnovate and stay reevant.
Ca%acity to Inno#ate: Coach`s abty to nnovate can be attrbuted to Reed Krakoh
(Executve Creatve Drector) who has been wth the company snce 1996. Coach has
revtazed ts mage to attract a younger demographc. Coach s consumer-centrc, and
pays attenton to ts consumers needs and wants through consumer research.
Reputaton Resource, Perceved Ouaty: Snce ncepton Coach has focused on creatng
quaty products and t provdes a fetme warrantee for every Coach handbag.
Coach`s commtment to quaty and customer servce creates mportant brand oyaty.
Ca%a&ilities
Inno#ati#e Merchandising: Coach`s abty for nnovatve product desgns
merchandsng s one of Coach`s capabtes. Coach stens to ts consumer
through comprehensve consumer research to antcpate the consumers
changng needs, keepng the product assortment fresh and reevant.
,Marketing- (=ecti#e romotion of Brand: Coach has been hghy
successfu n promotng ts brand of ahordabe uxury. Ther after-sae servce
has engneered sgncant customer oyaty to the brand.
,$istri&ution- (=ecti#e use logistics management techni>ues: Coach
mantans three prmary dstrbuton centers: a dstrbuton center n
|acksonve, Forda, owned and operated by Coach, an Asa dstrbuton
center n Shangha, owned and operated by a thrd-party, and a dstrbuton
center, through a thrd-party, n |apan. The warehousng of Coach
Merchandse, store repenshment and the processng of drect-to-customer
orders s handed by these centers. The foundaton of Coachs nformaton
systems s ts Enterprse Resource Pannng (ERP) system whch supports a
aspects of nance and accountng, procurement, nventory contro, saes and
store repenshment.
Core Com%etencies
Brand Image: Coach`s dstnctve brand mage and easy recognzabe uxury
products provde customers wth a feeng of success. Coach`s customers have
an emotona connecton wth the brand because of ts ong hstory and
unmatched customer servce, and quaty. To keep ther mage reevant they
spend a tota of $245.2 mon on advertsng, marketng, and desgn costs, and
speccay $89.2 mon reated to marketng and consumer communcatons.
$istri&ution Channels: Coach`s mpementaton of a 'mut-channe
nternatona dstrbuton mode' everages ts dstrbuton channes whch
ncude reta stores, factory stores, department stores, drect ma cataogs, on-
ne store, and e-commerce webstes. Through these dherent channes Coach s
abe to ehectvey appea to mutpe segments that are often overooked by
ther compettors who are afrad of brand duton.
Management: Coach`s CEO, Lee Frankfort has been recognzed from 2005-
2008 as one of 30 "Most Respected CEO's" gobay. Creatve Drector Reed
Krakoh was formay recognzed when he was awarded Accessores Desgner of
the Year from the Counc of Fashon Desgners of Amerca n 2001 and 2004. It
s cear Coach has a superb management team that has created a vson and
successfuy mpanted strateges to acheve that vson.
erformance
Coach`s performance has been mpressve gven the economc uncertanty n
the word. Net cash provded by operatng actvtes was $1.04 Bon for sca
2012 compared to $880.8 mon for 2011 sca year end resutng n EPS
ncreasng from $2.92 n 2011 to $3.53 n 2012. An ncrease n number of stores
gobay open from 750 n 2011 to 833 n 2012 contrbuted to ther hgher
operatng ncome. Ther gross margn ncreased sghty to 72.8% from 72.7%
year over year. Despte these postve numbers ther share prce has faen
approxmatey 10% over the ast three months.
Strategy
Business "e#el Strategy
Coach uses product dherentaton as ther busness eve strategy postonng
tsef as an ``accessbe uxury brand``, wthn the uxury market of specaty
retang. It can defend aganst new entrants snce they have to surpass proven
products; they aso mtgate buyers power through the tered prcng structure
for ts products. When products are we dherentated customers are ess prces
senstve. A we dherentated product ne reduces chance of customers tryng
other products and swtchng to a dherent brand.
Cor%orate "e#el Strategy
At the corporate eve Coach empoys a reated-constraned dverscaton
strategy. As ustrated n tabe 1.0 Coach`s experences moderate eves of
dverscaton wth 65% of ts net saes attrbuted to men`s and women`s
handbags. Coach exhbts moderate forward ntegraton as the company
focuses on desgn, dstrbuton, after-sae servces and management, however,
t outsources manufacturng. Ther use of e-commerce aows vrtua ntegraton
whch creates market power and an avenue for coser reatonshp wth
customers. Ths reatonshp-budng wth customers s mperatve for Coach to
mantan ts uxury brand mage. Ta&le 67?
Coach@s
roduct
O=ering
s &y A
of 1et
Sales
Fsca Year Ended
|un-
12
|u-
11
|u-
10
Mens & Womens
Handbags 65% 66% 65%
Accessores 28% 27% 26%
A other products 7% 7% 9%
Tota 100 100 100
International Strategy
Coach uses a transnatona strategy to get above average returns for a
sustaned perod of tme. Coach aso benets from economes of scae and
scope and an ncreased market for ther product oherngs. By empoyng a
transnatona strategy Coach s abe to acheve emcences whe aso beng
exbe enough to cater to oca requrements. Coach uses a host of goba entry
methods ncudng, exportng, censng, strategc aances, and acqustons.
"icensing: Coach aso censes certan products wth partners outned n Tabe
2.0. In these reatonshps, Coach takes an actve roe n the desgn process and
contros the marketng and dstrbuton of products under the Coach brand.
Royates from censed products currenty comprse ess than 1% of Coachs
tota revenues, but they provde Coach wth addtona controed exposure for
ther brand.
Ta&le 87?
Coach@s
"icensin
g
4elation
shi%s as
of Bune
<?, 8?68
Category Licensing Introduction Territory License

Partner Date
Expiration
Date
Footwear Jimlar Spring 1999 U.S. Spring '99
Eyewear Luxottica Spring 2012 Worldwid
e
Spring '12
Watce! "o#ado Spring 199$ Worldwid
e
Spring '9$
Fragranc
e
E!tee Lauder Spring 2010 Worldwid
e
Spring '10
+c>uisitions: Durng sca 2009, the Company acqured ts domestc reta busnesses
n Hong Kong, Macau and manand Chna from ts former dstrbutor and n 2011,
Coach acqured 100% of ts domestc reta busness n Sngapore from the former
dstrbutor, and on |anuary 1, 2012, acqured 100% of ts domestc reta busness n
Tawan from the former dstrbutor. These acqustons provde the Company wth a
greater degree of contro over the brand n these markets and enabe Coach to rase
brand awareness and grow market share wth regona consumers. As part of ts
nternatona strategy Coach has aso announced that they w be buyng the remanng
50% of ther |apanese |ont venture for $225 mon.
Coo%erati#e Strategies
Over the years Coach has taken advantage of cooperatve strategc aances
wth companes to hep enter markets and overcome uncertantes. Coach
currenty en|oys the benets of a vertca compementary strategc aance wth
ts manufacturers wthn many dherent countres. Ths busness eve
cooperatve strategy heps Coach benet by takng advantage of ts
manufacturers core competency of manufacturng quaty products at an
nexpensve prce. |ont venture`s have reduced Coach`s rsk of enterng
markets and nstanty gve t a arge dstrbuton channe.
Synthesis
Strengths
67- Strong Brand Image of C+=orda&le "u*uryC roduct ortfolio: Coach
ohers a wde range of merchandse through ts stores, and reaches a arger
demographc compared to many of Coach's hgher-prced compettors. Coach s
the eadng Amercan manufacturer and retaer of eather goods, accessores
and appare for men and women n the U.S and the second hghest-seng
uxury handbag retaer n |apan.
87- Coach)s erformance 4emained Strong des%ite !eak (conomy:
Durng a dmcut economc envronment Coach, has managed to ncrease saes
at a tme when ts counterparts are struggng to keep consumers buyng ther
products. Ther success has come n part from the tered prcng strategy
system and ther dstrbuton network ncudng the factory dscount stores.
<7- Glo&al resence Through its Com%rehensi#e $istri&ution Channels:
Coach operates through ts two busness segments: drect-to-customer and n-
drect. The company's drect-to-consumers segment provdes wth mmedate,
controed access to consumers through Coach owned reta and factory stores
n North Amerca and |apan as we as ther e-commerce ste www.coach.com
and Coach Cataogs. The drect to consumer segment represented
approxmatey 89% of Coachs tota net saes n sca 2012.
D7- Customer Ser#ice: One of Coachs greatest strengths s exceent
customer servce. In an ehort to show vaue-added benets, Coach refurbshes
damaged handbags and provdes "Speca Request servce" to aow consumers
to custom order a product f a "partcuar handbag or coor wasnt avaabe
durng a vst to a Coach store". Ths exceent dstrbuton and consumer
servce cost $68.9 mon (1.4 % of net saes) n 2012.
07- Strong 5inancial osition: Wth nomna ong term debt, the ong term
debt to equty rato s 0.05 and gven the quck rato 1.6 t suggests that Coach
shoud have no qudty ssues. They recenty repaced ther prevous ne of
credt on |une 18, 2012 wth a new $400 mon one wth |P Morgan Chase Bank
whch w aow them to fund any further expanson.
!eaknesses
67- $e%endence on Inde%endent Manufacturers for rocuring Merchandise:
Coach sources a ts merchandse from ndependent manufacturers or vendors. Ths
makes Coach vunerabe to the rsk of ower product quaty. Coach s aso exposed to
the rsk of deays n shpments, foregn governmenta reguatons, and potca unrest
n the manufacturer's country. Dsrupton n any of the mentoned factors coud
nterrupt tmey product suppy at Coach.
87- $eclining O%erating Margins: Coach s experencng sowy decnng
margns on ts products. Ths s prmary due to the economys mpact on
uxury brand purchases whch has caused saes at ts factory stores to ncrease
as more consumers seek bargans. Coach has been reyng on saes at ts ower
prce ponts and though net saes have remaned steady the margns have
shrunk from 36.1% n sca year 2008 to 31.7% n sca year 2012.
<7- Geogra%hic Concentration: Coach currenty rees on the U.S. and |apan
for 85.6% of ts saes. Ths reance on the U.S. and |apan for the ma|orty of ts
saes makes t vunerabe to geographc rsks assocated wth each country.
O%%ortunities
67- (*%anding %resence in China, India Brazil: The Chnese uxury market
has been growng at annua rates rangng from 25-30%. Chna w soon
become the word`s argest purchaser of consumer uxury products. Emergng
economes ke Chna, Inda, and Braz wth ther deveopng mdde cass
provde opportuntes for ong term growth to counterbaance a smaer growth
rate n Amerca and Europe.
87- Boint 9entures: Wth nternatona partners n Europe Coach has aready
partnered or entered nto |ont ventures wth European companes but more
|ont ventures n dherent countres woud not ony dversfy the company's
busness rsk but aso add a wder customer base. Gven ts tered prcng mode
Coach s we postoned to wn market share from ts rvas n Europe. |ont
Ventures coud aso be used to enter the manufacturng ndustry, ganng
greater contro of the quaty of goods produced and ead tmes.
<7- Increase in Online Sales 2ill (na&le 3igher 4e#enues: Coach ses ts
products onne through ts brand-dedcated webste www.coach.com and aso
on macys.com, dards.com and nordstrom.com whch are the company's
whoesae customers. The company's webste acts as a key communcatons
vehce for the brand to promote tramc n Coach reta stores and department
store ocatons budng brand awareness as t dspays the Coach brand to a
arger customer base across dherent countres and thus drves saes.
Threats
67- Su&dued Consumer S%ending in the ;S: The sow recovery from the
2008 economc downtown and the rsk of another economc downturn has
ahected consumer spendng as househod have ncreased ther savngs rates.
A further deteroraton n consumer spendng aong wth hgh unempoyment
can be detrmenta for the organzaton gven the concentraton of saes n the
U.S. market.
87- Intense Com%etition: Coach faces ntense competton n the product
nes and markets t operates. The company competes wth European and
Amercan uxury brands and prvate abe retaers, ncudng some of Coachs
whoesae customers. Its compettors may deveop new products that attract
the customers. Therefore, the companys abty to compete depends on the
strength of ts brand, and ts trademarks and desgn patents.
<7- Counterfeit goods could damage re%utation: Counterfet
merchandsng and trademark trespassng are threats to the ntegrty of the
Coach brand. They can confuse consumers, eadng to dssatsfacton, damage
the company`s reputaton and reduce saes. Coach has aunched a
comprehensve ant-counterfetng tgaton campagn, known as "Operaton
Turnock".
D7- Brand di=usion: Manufacturng ne uxury goods are aunchng dhuson
nes to expot mdde-ncome consumers. For exampe, Doce & Gabanna
aunchng "D&G", a sub brand sod at modest prce ponts. Ths poses a serous
threat to Coach as ts tered prcng strategy systems has been one of ts
sgncant strengths.
CoachEs S!OT Matri*:
Strengths
Strong Brand
Image,+=orda&le "u*ury-
Strong $es%ite !eak
(conomy
Glo&al resence,
$istri&ution Channels
Customer Ser#ice
Strong 5inancial osition
!eaknesses
Geogra%hic
Concentration
Slightly $eclining
O%erating Margins
$e%endence on
Inde%endent
Manufacturers
O%%ortunities
(*%anding
resence in
China, India
Brazil
Boint 9entures
Increase
Online Sales
-Coach shoud use ts strong nanca
poston to expand nto emergng
markets.
-Shoud everage ts strong brand
mage and customer servce to
ncrease onne saes.
-Use ts goba presence and
dstrbuton channes to create |ont
ventures wth European companes
and manufacturng companes.
.Reduce geographc
concentraton and take
advantage of emergng
markets.
.Focus on reducng overhead
by usng onne and therefore
ncreasng onne saes.
. Reduce dependence on
ndependent manufacturers by
usng |ont ventures.
Threats
Su&dued
Consumer
S%ending in
the ;S
Intense
Com%etition
Counterfeit
Goods
Brand
$i=usion
.By usng ts customer servce and
ahordabe uxury and tered prcng t
shoud reduce threat of reduced
consumer spendng n the U.S.
.By usng ts nanca poston t can
focus on advertsng and ncreasng
the number of reta stores to
decrease the kehood of brand
dhuson.
.Use strong brand mage to reduce
ntense competton.
.Use ts goba presence to factate
taks wth governments to reduce
counterfet goods.
-By reducng ts geographc
concentraton n the U.S.,
consumer spendng n the U.S.
w be ess of a threat.
-By ganng tota contro over
manufacturng processes Coach
w reduce the rsk of
manufacturers not producng
quaty goods.
-Increase prces sghty to
ohset decnng margns whe
usng those funds to ncrease
attack on counterfet
producers.
S!OT Ft 2ith Strategy
Coach`s strategy emphaszes product dherentaton, to take advantage of a
nche market of ahordabe uxury wth ther tered prcng system. They have
used cooperatve strateges such as |ont ventures or equty partnershps
extensvey to enter new markets. They aso outsource ther manufacturng
to ndependent manufacturers to captaze on the manufacturers core
competency. Therefore, Coach`s current strategy s consstent wth the SWOT
matrx wth the excepton of becomng more vertcay ntegrated by enterng
the manufacturng part of the vaue chan.
+lternati#es:
Proceed wth expanson nto Europe`s Luxury goods market usng the
ohensve strategy of ts tered prce system to wn market share from the
other companes and poston Coach for the eventua European recovery.
Reduce number of Factory Stores to prevent brand duton- reducton n
margn.
Contnue the assaut on Chna`s Luxury goods market for t w soon be the
argest market for uxury goods n the word.
Increase presence n Inda and Braz to take advantage of the growth of ther
mdde cass.
Increasng presence wthn the Luxury Men`s Accessores ndustry as there s
enormous potenta to ncrease saes.
Acqure manufacturers to have greater contro of producton and reduce rsk
wth respect to product quaty.
Increase advertsng and brand promoton for the Coach name and ts
prestge s at the core to ther success.
Rase awareness of counterfet products so consumers can recognze the
dherence between the counterfet products and the rea products.
Increase E-Commerce saes through new creatve advertsng onne
Criteria for (#aluation:
1. Potenta Increase to Saes
2. Ehect on brand mage
3. Cost of nvestment requred
4. Management attenton requred
5. Length of tme requred
(#aluation: Matri* of Criteria to +lternati#es
4anks ,?.0- G Sales Brand
Image
Cost Managem
ent
Time
4educe
5actory
1um&er of
Stores
? 0 8 < <
Increase
1um&er of
Stores in China
0 8 D < 8
Increase
Stores in India
and Brazil
D 8 0 0 D
Increase MenEs
Market Share
0 < 8 8 <
4aise (=ort to
sto%
Counterfeit
8 0 < < <
Increase
+d#ertisement
< 0 8 8 ?
+c>uire
Manufacturer
? 8 0 0 0
roceed 2ith
(uro%ean
(*%ansion
8 < < D D
Increase (.
Commerce
0 8 8 8 8
G 4anking is from ?.0, 2here zero is no e=ect and F#e is the greatest e=ect/
use of resource
Short Term 4ecommendations
1. Increase brand awareness
2. Ensure quaty of goods s mantaned
3. Identfy opportuntes wthn Europe, Asa, and South Amerca and rank them
as to protabty
4. Address the probem of counterfet producers
5. Evauate decnng operatng margns and seek ong term soutons
"ong Term 4ecommendations
1. Expand presence n emergng markets such as Chna, Inda and Braz and
other South Amercan countres wth |ont ventures.
2. Anayze resuts from |ont ventures n emergng markets and determne f
acqurng other haf gan a greater share of prots.
3. Expot opportunty for expanson n mature markets and saturate were
approprate.
4. Focus on men`s opportuntes for the brand.
Im%lementation
+ction %lan and $escri%tion
1. Increase brand awareness through advertsng.
2. Communcate wth ndependent manufacturers mmedatey wth
respect to quaty contros.
3. Use unque poston of ahordabe uxury to contnue the assaut on
compettors wthn Europe, Asa, and South Amerca.
4. Estabsh task force to tacke the probem of counterfet goods.
5. Leverage the Coach Brand gobay to renforce the Coach message of
ahordabe uxury.
6. Look for |ont ventures n order to expand nto emergng markets.
7. Identfy further men`s uxury product markets coach can enter.
8. Identfy reasons for decnng margns over the ast few years.
9. Saturate mature markets of |apan and U.S. to grow current arge
poston.
4ationale for +ction lan
1. Increase brand awareness through advertsng, for Coach`s brand
recognton s ts greatest strength.
2. Communcate wth ndependent manufacturers mmedatey and estabsh
a pan movng forward to evauate ther quaty contros. Not beng
competey vertcay ntegrated can be rsky, however, Coach can everage
the fact that the suppers have ess power than Coach. Coach shoud conduct
nspectons of ndependent manufacturers to ensure quaty of products. The
rgorous seecton of raw materas has been a ma|or factor behnd Coachs
brand mage of superor quaty. It woud be too costy and s outsde of Coach`s
core competences for Coach to enter the manufacturng part of the vaue
chan.
3. Create team to ehectvey evauate the dherent opportuntes wthn Asa,
Europe, and South Amerca and focus resources so that Coach can everage
ther brand gobay
4. Estabsh Strategc Network wth compettors to tacke to the probem of
counterfet goods. Snce a of Coach`s compettors are mpacted severey by
counterfet goods they w a be on board. Ths w be smar to Operaton
Turnock a natona ant-counterfetng program targetng companes and
ndvduas nvoved n the dstrbuton or sae of counterfet product n the U.S.,
however, ths commttee w be nternatona.
5. Leverage the Coach brand gobay after dentfyng the best goba
opportuntes avaabe to Coach. By Leveragng Coach`s brand and budng
market share n markets n whch Coach s under-penetrated, most notaby n
Asa, Coach can ncrease, ts rate of growth.
6. Internatona expanson s factated by formng a partnershp wth a oca
rm. The advantages to ths nta step ncude shared rsk and abty to
deveop reatonshps wth oca department stores, governments, and
especay, consumers. Once Coachs name begns to gan recognton, Coach
shoud expand to have whoy-owned subsdary n the form of excusve
specaty shops. Athough a partnershp does provde vauabe knowedge
necessary for success wth ower rsk, an ndvduay owned shop w yed
the hghest prots n the ong-run.
7. Identfy new men`s uxury product markets Coach can enter by ncreasng
ts men`s product portfoo and dua gender stores. Coach shoud deveop an
advertsng strategy speccay taored to men, for exampe teevson
advertsements on sports networks. Men`s uxury product market s
extensve and Coach has faed to capture any sgncant saes.
8. The ssue of decnng margns has been masked by Coach`s contnued
growth n saes but t s an mportant weakness. Competton wth respect to
prce w contnue to grow therefore t s essenta the Coach use ts buyng
power to put pressure on suppers to cut costs.
9. To sodfy ther domnant poston, wthn the mature markets of |apan and
U.S. Coach shoud ncrease ther reta outets n comparson to ther factory
stores. Ths w hep Coach retan the mage of beng a uxury brand.
1e2 Structure and Control Systems 1eeded
Marketng and Saes Department needs a separate strategc unt for the
nternet. Ths specazed unt requres unque sks that w aow Coach
to everage ts brand over the Internet. Ths s an mportant yet
underestmated market.
New excusve stock optons wth short as we as ong maturty dates
shoud be gven to avod potenta agency probems to executves
runnng new departments.
Creaton of Strategc Network: Forma agreement s needed wth
compettors to form speca nter-rm network to tacke counterfetng
together. Ths network w create vaue for each of the rms that they
otherwse woud not have been abe to acheve ndvduay.
A new addton to ts nternatona reta organzaton w be needed
wthn Europe, run by a senor executve. Smar to the three ma|or Asan
hubs n |apan, Manand Chna and Other Asa Markets. Ths w be used
n pace to captaze on growth wthn the regon.
Criteria to (#aluate Success of Im%lementation
1. Increase current market share of men`s accessores to 10% of net
saes wthn three years.
2. Increase Internatona saes 100% wthn three years.
3. Increase onne saes by 50% wthn 3 years.
4. Decrease counterfetng wordwde by 20% wthn next ve years.
5. Rase the operatng margn.
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