Case Cach

RUNING HEAD: Coach Inc. Is Its Advantage in Luxury Handbags Sustainable?

Coach Inc.: Is Its Advantage in Luxury Handbags Sustainable?

Necandra Thompson

Marketing Management 504

Dr. M. Lamer

Westwood Online

May 2, 2010

In 1941, Coach Inc. was founded in a loft located in New York by a Leather Artisan named Miles Cahn. Cahn began producing women’s handbags; simple in style and durable to wear and tear. In 1985, the company was acquired by Sara Lee Corporation.

After 40 years of business, coach was able to produce at a sturdy rate by setting prices lower than most luxurious handbags, totaling new models and establishing accounts with retailers such as Bloomingdale’s and Saks Fifth Avenue. After 40 years of family management, Coach was then sold to Sara Lee, a diversified consumer of goods which was the producer in its achievement strategy. Sara Lee left Coach’s strategy and operations in one piece by the 1990’s in which the company performance began to decline as consumer shifted to more elegant French and Italian handbags such as Gucci, Prada, Louis Vuitton, and Dolce and Gabanna to name a few.

By 1996, there was change in management having Reed Krakoff as the new creative director, which he was an ex Tommy Hilfiger designer. Krakoff believed that new products should be based on market research rather than on designer’s instincts and what would sell. Coach then conducted unwarranted research and held focus groups to ask customers about styling, comfort, and what their preferences would be. Upon research they found that customers look for, softer leathers, and leather-trimmed fabric handbags.

For about 6 months before announcing the launch of these handbags, these prototypes were tested in selected stores that sold the coach products. During this process and prior launch, Krakoff adopted a strategy that would improve its market to a competitive edge that would be fair and quick. To increase its sales with a consistent growth rate the market...