Coach Inc.: From Staid to Stylish
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Case Code: BSTR235 Case Length: 23 Pages Period: 1941-2006 Pub Date: 2006 Teaching Note: Available |
Price: Rs.500 Organization: Coach Inc. Industry: Aviation Countries: USA Themes: Textile, Apparel, and Accessories |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Creating A New Coach
Despite earning a good reputation for the quality of its products, over the years Coach had lagged behind its competitors on the 'trendiness' dimension. The company had built its reputation on classic designs in elegant styles, because of which its main customers were older women who gave precedence to quality over fashion...
Coach's Product Strategy
From its inception, Coach's product strategy was to produce timeless, classic pieces which would not be subject to the vagaries of fashion. In keeping with this strategy, Coach generally did not change its designs to suit the trend of the moment. Because of this, Coach's leather goods were identified with classic and elegant designs, rather than being known as fashionable. However, despite staying away from fashion trends, what set Coach apart from its competitors was that it offered durable and functional handbags in superior quality leather. It was said that the average life of Coach handbags was around 15 years, and when maintained well, they could last well up to 40 years. Coach also offered lifetime service to its customers. The company offered repair services and also replaced some parts of Coach products for free, with the customer bearing only the shipping cost...
The 'Accessible' Luxury Brand
In addition to product innovation, one of the major factors that contributed to Coach's success was its unique positioning in the high-end luxury market. Coach's products were known for their high quality, but were priced lower than other designer products. In other words, Coach positioned itself as an 'accessible luxury brand.' Frankfort and Krakoff understood that price was a source of competitive advantage for the brand, and maintained the same positioning even in the early 2000s...
Image Makeover
In the late 1990s, Frankfort and Krakoff undertook an extensive image building exercise for the Coach brand. As the creative director of Coach, Krakoff was responsible for overseeing the 'creative side' of activities like advertising, catalogs, direct mail, store design, visual, and public relations...
Production
Coach had maintained high standards of manufacturing right from its inception. Even as a small leather goods company back in the early 1940s, Coach selected only the top 10 percent quality of leather for its products (the company maintained this policy even in the early 2000s). Not only did Coach use the best quality leather, but it also paid special attention to how the leather was treated and processed. The company's manufacturing process was designed to give the 'glove tanned' look, feel, and quality to its products. The leather was slow cured by rotating it in large drums for several days, after which it was treated using extracts from plants and aniline dyes to produce a softening effect and to bring out the individual grains in each piece of leather...
Coach's Expansion Strategy
In the early 1990s, Sara Lee sold Coach products mainly through Coach retail stores, the catalog, and through Sara Lee-owned retail outlets. As of 1996, Coach products were sold through 141 company-owned retail stores in the US and 147 stores located outside the country. By 1999, this number had increased to 165 retail outlets in the US and 150 stores outside the US (mainly in Europe and Asia). In the late 1990s, Frankfort embarked on a massive expansion spree. Coach followed a 'multi-channel international distribution model' to reach a larger number of customers. Frankfort believed that increasing Coach's distribution was one of the primary growth drivers for the company. Under Frankfort's management, Coach increased its presence nationally and internationally by opening new stores in new as well as existing markets, and expanding the company's most productive stores...
Outlook
As of early 2006, the US contributed around 70 percent of the total sales of Coach, while Japan contributed around 22 percent of the sales (the US and Japan together accounted for close to 70 percent of worldwide spending on luxury handbags). Therefore, Frankfort decided to increase the company's retail presence in these two markets. However, he also believed that Coach could have better opportunities by creating (or targeting the existing) demand for its products in emerging markets...
Exhibits
Exhibit I: Brief Profiles of Some of the Popular Fashion Labels in the US
Exhibit II: Consolidated Statement of Income of Coach Inc., from 1999 to 2005
Exhibit III: Coach: Share Prices from 2001 to 2006
Exhibit IV: A Coach Travel Bag
Exhibit V: The Coach Signature Collection Handbag
Exhibit VI: The Prints of LVMH, CHANEL and Coach's Signature Collection
Exhibit VII: Coach's Product Portfolio in 2005
Exhibit VIII: Coach's Product Mix as of August 2006
Exhibit IX: Ways to Identify Authentic Coach Products
Exhibit X: The Coach Logo
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