Coach Essay

1596 Words 7 Pages
Memo To:
Date: 10/01/14
Class: Management Policy
Topic: Assessment of Coach
What are the dominant economic characteristics of the luxury goods market? Does it appear that the industry’s prospects for growth and attractive profits are good?
There are a couple of dominant economic characteristics when it comes to a luxury good. First off, any luxury good is going to have a very high elasticity within the market. The better the economy is doing will result in more sales in any luxury market. However, the opposite is also true. If an economy is tanking, luxury products such as coach will usually be hit hard as far as sales go. Another major characteristic is globalization. Globalization for a luxury goods market is key to
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The reason is branding, for new entrants into the market, it would be absurd for a consumer to pay (x) more amount of money for a brand that just came into the market. Coach is able to grow their profit margin just by putting there name on a purse it is now worth (x) amount more money to the consumer. Even if a new entrant were able to sell their products with the same margins as coach, they would need a huge start up capital just to cover the quality of supplies needed and the distribution channels in order to even compete. This for most people is too much of a financial risk and therefore the risk of a new entrant is very low.
Buyers know what they want when it comes to spending a large amount of money on a product. If a consumer wants a coach purse they will only buy a coach purse. The biggest competitive force for coach I believe is the counterfeit market. To the naked eye it looks like a coach purse. Since most people just buy luxury goods for the symbol of public status, this can be a very appealing alternative. A consumer can literally save thousands of dollars for a product that looks and feels like that of coaches, people will only know the difference if it is closely inspected. Since people generally only see the purse, they will think it’s a Coach, and the consumer will still withhold that “luxury” public status even though it’s a fake.
What key factors will determine a company’s success in the accessible

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