Coach-Industry Analysis Essay

Companies that produce accessories and handbags have to work very hard at keeping up with the latest fashions and making sure that they are designing items that their target market wants. The market for handbags and accessories is very large. Not only do women purchase these items for themselves, but men also purchase them for the women on such occasions as birthdays, anniversaries, Valentine’s Day, Christmas, etc. These brand name handbags such as Coach and Louis Vuitton come with a hefty price, but consumers still buy them.

What makes these designer bags worth the extra money? Today there is more of a focus on the name of the designer and how much you paid for it. Rivalry among luxury handbag and accessory makers is becoming increasingly stronger. There is competition of who has the strongest brand name and the newest products. The real struggle comes when you offer too many discounts and the products no longer are seen as being a luxury item. This industry has the opportunity to sell overseas in other countries as well as within the United States.

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Being able to open a multi channel approach for consumers to purchase these items online makes it easier to reach a wider range of consumers around the world and increase sales. Entry into this industry is not easily done. A new entrant would need to be well known and be labeled as a luxury designer. Many customers in this category are brand loyal, meaning that a new company might have trouble gaining their own customer base. Coach Inc. controls approximately 25 percent of the women’s handbag and accessories market in 2006, which is a large amount for one specific company to hold.

Companies in this industry use feedback to see what is the hottest and newest fashion trends out there so that they can keep their product line “fresh” and meets the needs and wants of their customers. This is the reason that Sara Lee, hired Lew Frankfort to head the handbag division. Frankfort’s first decision was to hire Reed Krakoff, a former competitor’s designer. Krakoff believed that the new products being added to the Coach line of handbags should be made to the expectations of the consumers, not what the designers think that people might like.

This in turn changed the outlook of Coach in general and helped them stay ahead of the game and maintain their huge market share. This also led to a learning and experience curve for the company. Coach started conducting consumer surveys and held focus groups to ask their customers about styles, comfort, functionality and size preferences. They then used this information to make sample designs and send them to stores for a trial run before they officially added these items to the product line.


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