Abstract
Coach, Inc began operations in 1941 in New York to produce women’s handbags. It’s initial strategy focused on being the lowest cost provider by setting prices approximately 50 percent lower than more luxurious brands. This strategy was very effective until the mid-1990’s when consumer preferences began to change away from traditional leather bags (Gamble, 2007).
Coach began a restructuring of its approach to sales in 1996 with the introduction of market research to determine consumer demand by the new creative designer, Reed Krakoff.
Through rapid prototyping and new collection releases every month, Coach began to regain market share. Combined with a targeted store campaign and good internal controls, the company was able to increase the allure to the shopper while reducing internal costs through outsourcing agreements. Low cost combined with good quality attracted more affluent customers to its stores.
Subsequently, annual sales continued to increase from $500 million in 1999 to more than $2.1 billion in 2006. Share price also increased by nearly 15 times the original IPO value in 2000.
Coach, Inc. Case # 8
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What are the Key Success Factors (KSF) for makers of fine ladies handbags and leather accessories?
Table (Rapidbi, 2008):
The Industry
Critical success factor Supplier costs
Customer preferences (Taste, styles)
Store locations
Counterfeiting (identification and control)
Competitive strategy and industry position
Differentiation, developing customer brand loyalty
Low Costs, economic conditions creating tighter budgets requiring changes in shopping habits.
International markets, diversifying shopping markets to increase market share and reduce local impacts ...