Coach Inc. Case Analysis Essay

B. External Analysis

Coach Inc. operates in the luxury goods industry where it sells leather handbags, accessories and other leather products. The firm is among the best-known luxury brands in this growing submarket in North America and Asia. Within the luxury goods market there are three sub-categories: haute couture, traditional luxury, and accessible luxury. When Krakoff joined Coach in 1996 he helped position the company to lead in the “accessible luxury” segment. By 2000, Coach was dominating this market along with other competitors such as Michael Kors, Salvatore Ferragamo, Prada, Giorgio Armani, Dolce & Gabbana, and Versace. The luxury goods industry had a direct bearing on Coach’s profit potential. This effect can be explained…

The profit potential that exist in the luxury goods industry could be better understood through an analysis of Porter’s five forces model. Starting with the threat of entry, the industry is unlikely to have new entrants because of the sustained competitive advantages of the existing successfully luxury brands. Leading companies such as Coach, Michael Kors, Salvatore Ferragamo, Prada, and etc. all have brand name recognition due to their success and popularity. According to the article, “To be unique and exclusive you cannot be ubiquitous.” (Gamble, 2015, C-81) For instance, Coach, Inc. strengthened their brand by becoming a leader in their accessible luxury segment by focusing on being unique in this market. Coach, Inc. and the other popular brands, have strong personal identifications because of the strategies they put in place. For this reason, new entrants to the market will have trouble attracting consumers who stand strong with the popular brand because of their loyalty. The power of suppliers within the industry for the luxury good market is low as the industry is not very concentrated. Materials to produce luxury goods, such as leather, are supplied in various countries throughout the world. For Coach, Inc. the case states, “All of the company’s leather products were manufactured by third-party suppliers in Asia.” (Gamble, 2015, C-71) Since Coach and the other…

Many of these luxury goods firms aim to maintain their strong brand recognition in the existing markets. The luxury goods industry is said to have few new adopters. Instead of worrying about new competition many of the firms focus on the existing competition within the market. Many of the luxury good brands to are working harder to provide differentiated products from their competition. For instance, Coach, a brand who developed well made leather purses expanded their line of products offered to develop accessories, luggage, and even…