1) 1. What are the defining characteristics of the luxury goods industry? What is the industry like?
A luxury brand may have profound influence on an overall product strategy since its position may determine how the company is going to make its next step. A luxury brand like Coach epitomizes elegance and combines classic beauty with modern design. According to John E. Gamble, not only has Coach become one of the most respected and known brand names in the ladies’ handbags and leather accessories luxury brand industry, it is also one of the most best-selling luxury brand companies in the world, with net sales reaching 2.1 billion in 2006 (Gamble). When a company like Coach decides to set up a product strategy for the next season, the
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Coach, Inc. selects the highest quality materials to produce its products in order to maintain its reputation of exceptional quality. Under the manager’s marketing team, Coach launches new collections every month to attract customers to return and browse its product selection. On the other hand, customers can find their favorite handbags and accessories in factory stores at discounted prices. Coach has become the best-selling brand of women’s luxury handbags and leather accessories in the United States, with a 25% market share. Moreover, Coach is the second best-selling brand of those products in Japan, with an 8% market share. With its successful global business strategy, Coach, Inc. has rapidly grown in the last six years after its initial IPO in 2000 (Paul. 283). It attracts mostly middle-income consumers, who purchase its products rather than those of other name brands on the same price level. The growing desire for luxury goods in middleclass consumers is thought to be a result of a wide range of factors, including effective advertising and TV programming that glorifies conspicuous consumption. On the other hand, the demanding daily rigor of two-income households is thought to be another suggested factor. Additional factor are the rising sales of luxury goods and the growth of big box discounters, such as Wal-Mart and Target (Gamble). Therefore, in the contemporary market environment, should the company want to build its business successfully, the key points