Naeja Silar November 29, 2011 Marketing Midterm Project

Coach Inc: Expansion into Childrens Apparel

Table of Contents Company Name/ Overview Executive Summary Situation Analysis Customer Competition SWOT Macro Environmental Analysis Market Segmentation Product Price Distribution Promotion Projections Projected costs/Categorized budget information Conclusion References pg. 3 pg. 4 pg. 5 pg. 6 pg. 7 pg. 8 pg. 9 pg. 10 pg. 11 pg. 12 pg. 13 pg. 14 pg. 15 pg. 16 pg. 17 pg. 18

Company Name/Overview
Coach Inc. is an American designer of handbags, leather goods, outerwear, travel goods and accessories for men and women. Coach has been in existence for approximately 64 years, while maintaining the strongest brand in affordable luxury. Coach operates in the United States, Japan, and East Asia. Coach has 190 stores in the United States, out of these stores, 120 are retail and the remainder includes factory outlets, as well as catalogs and online stores. Coach Inc. was founded in 194. Coach Inc was originally a family workshop, made up of six workers, who made small leather goods. In the early 1950s, Miles Cahn, who was one of the workers, began running the workshop for the owners. In the 1960s, Cahn borrowed money, so he could buyout the original companys owners and take full possession of Coach Inc. It is under Cahns possession, where Coach Inc took a more conservative, and high quality feel to the leather products, as the fashion changed, so did the Coachs traditional style. Coach Inc introduced products, according to certain seasons and trendy clothing. In the late 1980s, Coach Inc began a mail order business and specialty stores, to 3

help sell products, outside of the department stores. Coach Inc began to expand their business internationally, opening boutiques in England, London, and Tokyo, Japan. The expansion increased company sales five times as much to $100 million in a four year span, and the company stores had grown to 40. Coach Inc. operates in Japan through a 50% joint venture.

Executive Summary
The following market plan forms the basis for the introduction of an innovative new product to be introduced in accordance with the Coach Inc. Company. The sparkle stars product will be marketed as a unique, kid friendly, and fashionable childrens line by Coach Inc. Coach Inc. will continue to strive to become the leader in luxury goods, consisting of mens and womens apparel. The marketing strategy will enable Coach Inc. to reach a more profound market size and have a sales prospect growth of 7.3%, over the next 5 years. The success will be reflected by a sizeable capture of market shares within the market, while strategically carrying the company up to the top spot as the market leader in the luxury goods industry segment of leather goods. Coach Inc. has been able to find success in the leather goods sector, specializing in the design leather handbags for men and women. Although the Coach Inc Company is known for providing service to only men and women, I believe sparkle stars may be just what Coach Inc. needs in order to expand into the luxury goods for children. 4

Situation Analysis
Coach Inc. currently has a 25% share of the U.S. handbag market and an 8% share of the Japanese market. Coach Inc. gains their competitive advantage in the marketplace through their ability to access the middle class consumer by selling luxury items at an affordable price. Coach Inc. full price stores account for 54% of net sales they target the consumers who are willing to buy a higher priced luxury item. Coach Inc. factory stores make up for 19% of net sales, including 80% of womens apparel. Coach Inc. is able to create brand awareness through catalogs that are strategically sent to households around the country. Coach Inc. placed 3.5 million catalogs in retail stores, to allow shoppers to evaluate the style of Coach Products before going to the store, and they also sent out emails to 55 million customers. The brand awareness is enhanced by the number of locations that sell Coach Products. In the United States Coach can be found in over 900 department stores, 218 Coach Stores, and 86 factory outlets. Coach Inc. expansion into a childrens line will increase the number of sales and will reach 2.3 million more customer

in the U.S. By expanding the childrens within the U.S. will allow the expansion in other countries.

Customers
Coach Inc womens apparel accounts for 42.9% of the global luxury goods market. Coach should extend their depth within a childrens line including shoes, apparel, and accessories so they can compete more with premium brands. For example Gucci, one of their competitors, they have announced their childrens line. Coach Inc. will increase their target audience and sales by 7.3%, upon expanding into childrens. The global footwear market is expected to expand in the coming years. Coach Inc. can place more focus in this area, including children shoes. Coach Inc. already offers a wide variety of footwear for men and women, but they could expand better markets by including a childrens line by merchandising strategies to create better product awareness. It would be beneficial to Coach Inc. to start targeting emerging markets through Europe and Asia to obtain a better geographic distribution of their revenue. Instead of doubling the retail stores in North America, Coach inc. can triple the number of retail stores overseas, which would include children apparel, to secure the market share. 6

Competition
Coach Inc. has a total of 16 competitors, which includes their top competitors as Dooney & Bourke, Kate Spade, and Michael Kors. These companies have been in existence for at least 20 years, their brands are similar to Coach in pricing, prices ranging from $200$400 dollars. Coach Inc. has such a distinctive brand, that it differentiates their products from their competitors, which gives Coach Inc. the title of The strongest brand in affordable luxury. Coach is the leading retailer of premier leather goods for both men and women, within the United States. Even though Coach Inc products may be expensive and its competitors are Gucci, Louis Vuitton, Fendi, and many other prestigious designers, Coach Brand is well known and distinguishable by its quality and classic style. I believe expanding into childrens apparel will continue give them the title as The strongest brand in affordable luxury.

Strengths, Weakness, Opportunities, and Threats (SWOT)

Strengths Matching key luxury rivals on high quality leather and innovative styling Beating competitors price by 50% or more High level of customer service Monthly introductions of kid friendly fresh new handbag designs Strategic alliance to bring kid friendly coach handbags into luxury categories

Weakness Childrens accessories only account for 2% sales Children apparel only account for 2% of sales Coach Inc. not making suitable profit from the children line

Opportunities 8

 Threats

Growing demand of children luxury goods in emerging global markets Increased wealth of consumers in global market reaching children apparel Expanding into a unique line of kid friendly products

French and Italian designers brands expanding their products into childrens line Counterfeiting the children lines sold in countries throughout the world Designers not offering kid friendly products Childrens line not reaching target audience

Macro Environmental Analysis

The typical luxury goods consumers rank 1% in the U.S. , but in the recent years a larger percentage of middle class consumers have been attracted to the market. It would be in the best interest of Coach Inc. to market their children line to middle class consumers. Targeting the middle class consumers could launch affordable and accessible luxury items. Coach Inc. could market the children line between 20-50% less than the full price items. The children line could be introduced at the factory store as a test, to see if the sales increase Coach Inc. profit. Leading brands such as Dolce & Gabbana and Giorgia Amani have developed these practices, by offering products in affordable department stores.

Market Segmentation
Coach Inc, company operates in two segments: Direct-to-consumer and indirect. The companys segments represents channel of distribution that offer similar marketing strategies, similar merchandise and services. Direct-to-consumer segment includes company oriented retail and factory stores, catalogs, and online. Indirect segment includes sales of Coach Products to retailers and sales through Coach Japan. In order for Coach Inc. to expand into the children line, they would need to operate under the Directto-consumer segment. By doing this, they can introduce the line in the catalog for the upcoming season or introduce the line in the factory stores.

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References
Lemon, D., Gavin, T. (2005) Coach Inc., Intro to E-Marketing Business & Company Resource Center: Coach Inc. Company Profile Cotton, C., Butts, J. ,Stevens, H., Kosarak, R., March, M. (2005) Analysis of Coach Inc., Tech Investment Research Group Berneard, R., McGovern, D., Ayala, A., Pierre-Louis, M., (2008) Coach Inc., Is Its Advantage in Luxury Handbags Sustainable?

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