Coach Situation Analysis

Internal Environment

Coach's mission statement is found on the company's website, a surprisingly good source for information about the company. The mission statement is: "Coach seeks to be the leading brand of quality lifestyle accessories offering classic, modern American styling." Coach does not elaborate on overall business objectives, but in a general sense it is safe to assume increasing revenue, increasing profit and increasing market share are all on the list.

Coach's brand is its most unique asset, and the elements that back up that brand also contribute to competitive advantage. The company has established itself as a leading luxury goods provider, especially for its handbags. The Coach name is widely recognized as a leading luxury brand, and that allows it to launch new products and enter new markets, gaining acceptance right away. The brand has been ranked as the #7 retail brand in the United States by Interbrand, behind Walgreens and ahead of Sam's Club (Interbrand, 2012). The brand is backed by high standards of quality and design, both of which derive from in-house competencies. The company's marketing package, including the in-store experience, also supports the brand strength, so therefore Coach's retailing is a core asset. None of these resources, save the brand, are especially unique, and are matched by every other luxury goods company, but they support the brand well and as a result Coach has carved out a niche for itself within that industry.

The company combines high quality products and image with pricing that makes it a more affordable proposition than many other luxury brands, a feature that heightens...

The company also has competency within the marketing sphere. Slywotzky (2012) notes that the company has taken the time to understand its customers, perhaps to a degree that other luxury goods manufacturers have not, and that has helped it to grow, because Coach has the ability to be more responsive.
iii. The marketing function is centralized around the core brand. The brand image is controlled in New York, and then disseminated around the world. In-store experience, brand image and products are the same the world over. There is little variation between the different markets in which Coach operates -- global consistency is one of its hallmarks.

b. External Environment

i. The industry for Coach is best characterized as the luxury goods market, as this market functions differently than the general market for handbags, and needs to be understood on those different terms. The U.S. market is relatively mature, but internationally there is tremendous opportunity for growth (Wahba, 2010). The total global market for luxury goods is estimated at $225 billion (The Economist, 2009), meaning that Coach's revenues of $4.1 billion (MSN Moneycentral, 2012) give it a market share of around 1.8%.

ii. The luxury goods industry is heavily fragmented, but the firms within the industry tend to specialize in a handful of different products. Thus, many firms in the industry are as complementary to Coach's business as they are competitive. Ostensibly, Coach competes against low-end handbag makers, but more likely the point of competition comes from small designers, Chanel, Ralph Lauren, Chloe, Christian Louboutin, Fendi,…