The scope of the report is to explore the internationalization marketing strategies of Coach Incorporation. For more than a decade, Coach Incorporation has consistently expanded and asserted its market position as a global retailer in the fashion market in fulfillment of its mission. Among the notable brands retailed by Coach, Incorporation includes evening and leisurewear, clothing, complementary accessories, and sportswear.
This report aims to explore marketing capabilities in terms of effectiveness and reliability. Coach Incorporation has enhanced its brand through strategic licensing of its distribution network for its product charter, especially for products such as fragrances, cosmetics, watches, footwear, and eyewear. The main competitors of Coach Incorporation are Kate Spade LLC, Michael Kors, and Dooney & Bourke.
Coach utilized retail distribution in the recent past to further expand its presence in markets like Japan, China, and Europe. It applied a product differentiation strategy to expand and position itself as a fashion house. Based on market share and annual growth, the company is positioned to quickly expand its market presence and strategically improve product visibility, especially in the emerging markets in Asia and Africa.
The rationale for selecting Coach Incorporation was informed by its expansive market coverage, global presence, and effective marketing over the years. Coach has applied a series of grand strategies such as concentration, market development, product development, vertical integration, market penetration, and retail distribution strategies to expose its numerous products across the globe as the most competitive brand. Coach’s product reliability and innovation remain successful to ensure that its brands are unique and visible in the market. The strategies are achieved through the provision of high quality and stylistic designer products, attractive display, and efficient management of its supply chain from a centralized location.
Data was collected from the company’s website through observation. The data were analyzed using SPSS to establish the level of marketing competency. The findings revealed that Coach’s operational scope is characterized by retailing various fashion apparel to target customers of all sexes, gender, and income. Despite the success of these strategies, competition remains a key threat to the company’s expansionary strategies within the expansive fashion industry. For instance, Kate Spade LLC, Michael Kors, and Dooney & Bourke threaten to reverse the gains that Coach has made in the fashion industry.
Therefore, to remain competitive, the company should implement a focused product differentiation strategy by applying concentration, market development, product development, vertical integration, market penetration, and retail distribution as grand strategies.
Scope, Aim, and Topic
Coach Incorporation, a fashion firm based in New York, specializes in high-end and customized luxury and fashion apparel. It has 723 stores across the globe. The company has effectively integrated retail distribution, flexible sourcing, and strategic product differentiation to penetrate its targeted market and establish a strong niche. As a result, the company has managed to maintain positive revenue growth in the last six years, that is, from 2010 to 2016. On average, the annual growth rate has been 20%. Specifically, the revenues grew from $555 million in 2011 to $4.2 billion in 2016 (Coach Incorporation 2018).
Coach has created renowned brands for several commodities like female handbags and cosmetics. For instance, Coach has managed to expand its markets outside North America besides launching a series of new products such as sunglasses and fragrances.
Coach Incorporation has strategic capabilities that have catalyzed its growth over the years. For instance, to establish a sustainable business model, the company has employed the centric focused marketing strategy through specific market targeting and expansion of the product line. Moreover, Coach Incorporation has a competitive pricing mechanism for its products which are bundled for ease of purchase.
The business also has the latest state of art stores that are attractive to any shopper in addition to a luxurious display of its wider variety of apparel (Suma & Lesha 2013). Coach Incorporation’s value chain is complex and streamlined to accommodate all aspects of product development at production units. Moreover, the system is automated for efficiency and optimal production for every bundle of inputs.
The current internationalization marketing strategies are focused on appropriate market selection, competitive pricing, and innovation to minimize the impact of competition. Moreover, the business functions on the creativity and making of fashion statements to appeal to its customer segments (Oakland 2014). Under this strategic issue, Coach currently faces the dilemmas of how to effectively focus on the desirable market, potentials threats of entering the stratified European market, the potential of regrinding its current luxury brands, and the ideal approaches to optimizing ambiance without being perceived as copying from its competitors (Solomon 2013). Therefore, this report examines the best strategies that Coach should focus on to survive competition in the dynamic fashion industry.
International Business Selection
The global luxury goods industry is characterized by steady expansion and growth in the number of clients in the last two decades as many customers accept renowned brands such as Coach Incorporation, Nike, and Addidas among others. The global fashion industry has an estimated market value of over $700 billion (Coach Incorporation 2018). The US and Europe represent 30% of the market share.
Despite the economic swing of 2007-2008 financial years, the players in this industry have managed to recover and are currently experiencing an average growth of 20% annually. At the moment, it is estimated that the fashion industry accounts for more than six percent of the accumulated purchases across the world. This market share is anticipated to further grow by 10% to about 16% by the end of 2030 (Coach Incorporation 2018).
The fashion industry at present is controlled by Kate Spade LLC, Michael Kors, Dooney & Bourke, and Coach Incoperation. These businesses have consistently created strong brands that appeal to most households within the fashion industry. Moreover, the strategic marketing initiatives created by these companies have catalyzed the growth of the fashion industry across the globe (Wilkinson & Redman 2013). Moreover, the continuous integration of reliable and efficient adoption of efficient technology and reliable technology in the promotion of these products positively skewed the market to the advantage of these retail giants (Vanhala & Stavrou 2013). The findings of this report will assist Coach Incorporation to comprehend the market strengths and weaknesses to improve its marketing capabilities.
Data Collection Sources and Analytical Method
Data was collected from the company website on its marketing capabilities. Data collection involved research, observation, and recording of the marketing strategies. This data source is relevant to the selected topic since it presents a picture of Coach Incorporation’s marketing capabilities. The rationale for using this source was that it is authentic from the company website (see table 1). The researcher then used the SPSS package and cross-tabulation to analyze and interpret results.
Table 1: Data source and rationale.
|Coach Company website||Authentic since prepared by the company|
|Journal articles||Provide an overview of updated literature on the topic|
Industry competitiveness analysis using Porter’s 5 forces model
Although the Coach Incorporation has created a strong brand image within the expansive fashion industry, the store does not have an equally expanded portfolio, especially in the international markets, especially for the fashion accessories (Vecchi & Brennan 2014). The limited expansion in the portfolio has made it difficult for the company to gain an excessive competitive advantage that can minimize the impacts of competition.
Although the company has remained profitable over the years, its market share is dwindling with the emergence of new businesses and the expansion of other existing companies. To address this setback, Coach has come up with a portfolio balance and diversification mechanism to manage the turbulences brought about by competition and other unpredictable market dynamics. As a result, the company was able to quickly recover from the global financial meltdown of 2009. These challenges are explained below.
Threat of Entry
It is very difficult for a new entrant in the fashion industry to successfully create a strong brand that can challenge the dominance of Coach and Louis Vuitton among others. A new entrant has to have excessive capital since this industry is capital intensive. Therefore, a new entrant may face difficulty in increasing brand visibility and cutting a piece of the market share (Sostrin 2013). Since the fashion industry is characterized by the ability to produce high-quality brands, a new entrant will have to build a following from scratch. This requires a lot of resources.
Threat of Substitutes
In the premium bags segment within the fashion industry, the threat of possible substitutes is very strong since most of the luxury bags are customized, thus, rarely have substitutes. Kate Spade LLC, Michael Kors, and Dooney & Bourke companies have the intrinsic capacity to provide perfect substitute services and products to any client in need of fashion apparel as products within Coach Incorporation’s charter.
This means that any unsatisfied customer has perfect alternatives if he or she is not satisfied with what is offered at Coach (Sampson 2016). However, imitations may threaten the market new or current players. When the counterfeits flood the market, the revenues of genuine companies will decline. As a strategy for maintaining relevance, Coach Incorporation has come up with mechanisms for establishing a unique market by tailoring its product line and customizing every fashion sub-brand.
Suppliers’ Bargaining Power
In the fashion industry, the influence of the suppliers is highest when large volumes of apparel are purchased by a fashion store. When the influence is high, the profitability of fashion stores is low. Since suppliers within the fashion industry operate and local and international levels, their influence differs. For instance, China, India, and Italy suppliers the largest volume of leather that Coach uses to make premium bags. Gucci, Coach, and other industry players have more than 100 suppliers. The partnerships between independent manufacturers and vendors reduce the power of the suppliers in this industry (Oakland 2014). Coach Incorporation has consistently employed its deep financial and marketing networks to balance the forces of the suppliers to create a hybrid system for managing its supply chain across the globe.
Buyers’ Bargaining Power
There is a strong power in the fragmented retail segments which are indirect and direct to customers. Even though these fashion stores have very strong brand names, the buyers in this sector have the power to influence the prices for premium bags and other apparel. The power of the buyers is high since this industry is characterized by high competition. Therefore, each store considers the perception of its customers before setting prices to survive competition (Zhang 2015). Fortunately, Coach has been consistent in maintaining their prices at half of the average prices of other brands.
There are many fashion brands within the expansive fashion industry dealing in more or less similar products and service lines. Players in the industry must be careful to survive any aggressive move by a competitor through creating a flexible brand name and constant product diversification (Vecchi & Brennan 2014). For instance, Dooney & Bourke is currently the strongest competitor of Coach Incorporation as a result of its expansive marketing network and market share, especially in the emerging markets in Asia and Africa. To balance the effects of this competitor, Coach Incorporation has concentrated on guaranteeing value in products through quality assurance and control from production and retail.
Most of the players in the fashion industry have put up controls for attracting more clients to effectively expand their market presence through the creation of a smooth supply chain, diversification, and brand positioning (Singh & Singh 2014). For instance, Coach Incorporation’s New York branch is the biggest and busiest fashion store.
Strengths of the External Analysis
Strong Brand Image
Coach Incorporation has created a stable and strong brand image that has facilitated the attraction of more customers to its stores (Vecchi & Brennan 2014). Moreover, the company has learned from its mistakes over the two decades of operations and made the necessary adjustments. A new entrant might not match its business acumen and market experience, even if such an entity has a massive capital investment in the fashion industry.
Commitment to Quality
Coach Incorporation has a steady commitment towards quality control and assurance in its product line to ensure that customers gain the right experience in the stores. To achieve this, the company has recruited the most qualified personnel who are paid competitive wages to motivate them to support Coach’s vision. Moreover, the company often organizes practical training sessions to the employees to equip them with the necessary skills to understand customer demands (Sostrin 2013). Also, the company has structured periodic marketing research after which reports are generated to track changing customer demands and perceptions towards its brands.
Expansive Market Network
Coach Incorporation has a presence across the local market in the US and all the other continents. In the last five years, the company has increased its market presence in emerging markets such as Japan, China, and the Middle East. As a result, Coach’s revenues have nearly doubled with an impressive annual growth of 20% (Rashid & Naeem 2017).
With more than three decades of active market presence in the fashion industry, Coach Incorporation has accumulated adequate experience to understand the dynamics of this market and effectively compete with other companies. Over the years, the company has tried and tested its short- and long-term marketing management strategies and created the ideal mechanism for optimizing output for every bundle of inputs (Simha 2014). Moreover, Coach has put sizable investment in technological innovation to remain competitive in line with the changing needs of its clients.
ANOVA analysis was carried out from the company data to establish the effectiveness of its marketing strategies using the variables of focus, flexible, scientific, and freestyle. As capture in Tables 2 and 3, the findings revealed that focus is the leading influencer of the company’s marketing approach.
Table 2. Prevalence of Coach’s marketing approaches.
|Organizational culture||Mean||Standard deviation||Rank|
Table 3: t-test results.
|t||df||Sig. (2-tailed)||Mean Difference||Std. Error Difference|
Equal variances assumed
|Equal variances not assumed||-.812||33.476||.422||-.100||.123|
Equal variances assumed
|Equal variances not assumed||.382||44.646||.704||.025||.065|
Equal variances assumed
|Equal variances not assumed||.382||44.646||.704||.025||.065|
Equal variances assumed
|Equal variances not assumed||.538||37.286||.594||.075||.139|
Internal Environment Analysis
The stable and management team comprising of directors and several managers has remained instrumental in guiding the operations and management strategies of the company in the last three decades. This team often consists of experienced professionals with wide experience in the management of fashion products. As a result, the company has been able to consistently attract, retain, and sustain its customer markets despite emerging competition.
For instance, Coach has managed to attract more clients in regions where the company is yet to reach full potential. Besides, the numerous branches have improved the visibility and accessibility of its products (Sampson 2016). Moreover, through expanded customer proximities, Coach Incorporation has consistently increased its profits and general sales by segmenting and differentiating its sub-brands. Also, the internationalization marketing approach has expanded the company’s business model into a well established international fashion brand retailer (Shende 2014).
Coach has successfully expanded its business interests in international markets such as Europe, especially the western parts. These expansionary strategies have been created to integrate localized business drivers through focused distribution and modified brand image. The attractive presentation of the company’s product line could be attributed to its rapid expansion in the international markets. At present, Coach’s products are differentiated by quality and positive perception by clients to further strengthen this global retailer’s positive image (Osterwalder & Pigneur 2013). For instance, Coach does free handbag repairs and have customized services for a customer interested in a specific product that is not currently available in the store.
Coach Incorporation has more presence in the US than in other parts of the globe. Specifically, unlike its main competitors, Coach Incorporation has few branches outside the US. This means that Coach is limited in terms of substantive demand in the markets it is yet to penetrate. Besides, the focus of Coach Incorporation is more on customized fashion brands and products (Nisula & Kianto 2016).
This strategy is often counterproductive in targeting the small business segments and private individuals who cannot operate in the customized fashion platform. Besides, Coach has high inventory costs since it has many stores across the US. Managing these stores may not be sustainable in the long run if the annual turnover reduces (Obeidat, Masadeh & Abdallah 2014). As a result of these weaknesses, Coach Incorporation has not been able to efficiently penetrate the small business segment in the US within its Business-to-Business model of operation.
The excessive focus on quality in product lines has limited the Coach’s capacity to integrate the perception of some of the clients on what should be released in the market. For instance, a section of the client base is convinced that the company should produce more affordable products that target the low-income customer segment. However, due to focused business modeling, most of these suggestions are ignored in preference for the high and middle-income segments.
The Coach Incorporation has an opportunity to expand its opportunity to cater for expanded fashion apparel since its asset base is strong enough to sustain this market. Specifically, this opportunity has the potential of increasing the company’s revenues and current market position in the local and international markets (Nasrinsulthana & Hyder 2015). Therefore, by increasing its online sales via the Coach website, it would be easy to offer customized services to customers. As a result, Coach Incorporation will be in a position to double its current revenues and increase the customer base.
The current strong market performance and relative presence in the global market is an indication that Coach has the potential for further expansion of its customer base (Myerson 2015). These opportunities might present the basis for an organized and periodic entry into the emerging markets. Therefore, collaborative efforts with localized companies in the emerging markets might facilitate smooth entry and quick penetration.
The main threat to the survival of the Coach Incorporation is the competition from counterfeit products that may act as direct substitutes to its brands. Thus, the expansion and market penetration strategies that Coach Incorporation proposes are likely to face opposition if these fake products are expanding their market share (Muthuraman & Mohandoss 2016). Coach Incorporation is facing strong competitive forces from other established rivals.
The company should come up with vigilant strategies to overcome these forces. Moreover, the increase in demand for different raw materials used by Coach in production has resulted in increased cost of production, thus, reduced profitability (Oakland 2014). Political instability in some emerging markets such as North Africa and some parts of the Middle East is a threat to the company’s international expansion strategies. Besides, excessive government interference in the operational frameworks in some markets has slowed down Coach’s market penetration schemes. For instance, doing business in China is challenging for the company.
Table 4: SWOT summary.
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Although Coach Incorporation has remained relatively stable over the four decades of active market presence, its operational efficiency in the international markets remains wanting. The company has over-concentrated in the local market at the expense of other international markets, despite being a global brand. To improve on the performance of the international markets, Coach Incorporation may integrate product concentration, vertical integration, product innovation, continuous product development, market development, and concentric diversification (Mangan, Lalwani & Lalwani 2016). These suggestions are borrowed from the best practices of its competitors and professional reports.
The Coach Incorporation should ponder concentrating its products in regions with a stable political environment and functional legal systems to avoid being a victim of restrictive laws and government interference. For instance, although the market survey might present opportunities for product sales in Libya, the opportunity cost of immature entry in such a region might result in massive losses from the destruction of stores due to political violence. Moreover, the company might consider reducing its marketing activities in regions with excessive government interference such as China (Martelo, Barroso & Cepeda 2013).
This will help in protecting Coach’s brand while ensuring that it targets specific market segments (Kotler & Keller 2016). The preface of product concentration needs to guarantee that the targeted markets, especially in Europe, have customized apparel that is unique to that region (Monks & Minow 2014). The key performance indicator will be increased revenue in the European market by 6% in the first year of implementation and 10% thereafter. Therefore, product concentration will position Coach Incorporation as a strong incumbent brand in the global fashion goods industry (Kotler & Keller 2016).
The Coach Incorporation should consider a strategic partnership with localized retail businesses in the targeted markets to ensure that its products are accepted with minimal resistance. The above objective can be achieved through created in-house production, supply chain, and marketing strategies (Lohdi & Naz 2016). When properly implemented, the company is likely to counter the strategy of its competitors, of reaching the customers through proxy retailers.
The choice of vertical integration is driven by the need to create that perception of reduced inventory costs. The key performance indicator will be reduced inventory cost by 10% in the first year of application since costs related to running the business are expected to drop (Kraft 2013). Although Coach might have to invest in the integration process, the benefits are long term besides creating a permanent barrier for competitors.
Coach Incorporation should consider integrating a cost leadership strategy to survive the competition and quickly enter or penetrate the emerging markets. The company may penetrate the African and Asian markets further through the introduction of customized apparel that targets different market segments such as direct customers, retailers, and fashion agents through an innovative approach (Kajalo & Lindblom 2015).
The objective is to adopt the market leadership strategy to improve Coach’s product quality and appearance. The above objective is achievable through the creation of different high-quality products and distinctive brands (Homburg, Jozic & Kuehnl 2017). This means that Coach will be able to develop optimal performance from cumulative experience and product availability through the application of alternative technology and human skills (Merchant 2017). The key performance indicator for this strategy is the ability to create a new product, thus increased the number of customer ratings by 3% after the first year of implementation.
Continued Product Development
The coach should continue to invest more resources in product development to remain competitive and quickly gain market share in the international markets. For instance, an active brand knowledge network might create a stable research and development operations that guarantee the creation of acceptable product lines (Harrison & Wicks 2013). Therefore, the company should concentrate on promoting the growth of its brand through the creation of an ideal store image for ease of identification in the international markets (Guiso, Sapienza & Zingales 2015). As a result, retail stores will be more visible to potential clients (Kiran 2016). Therefore, this recommendation will be instrumental in achieving focused product differentiation.
(Elder & Krishna 2013). (Harrison 2017). (Dasgupta, Suar & Singh 2013). The performance indicator for this strategy will be the successful introduction of a new product line within the first 36 months after implementation.
From the brand personality analysis, it is apparent that Coach Company does not have the ideal and strategic image branding (Fill 2013). Therefore, the company should focus on expanding its market through the use of proxies (Daft & Marcic 2016). These independent agents could be established in localized businesses that understand their markets (Searcy & Buslovich 2014). As a result, Coach will be able to understand the new markets and smoothly enter (Cravens & Piercy 2013). When the brand image is increased, the visibility of the Coach’s products will also increase (Cottrell 2013). The performance indicator for this strategy would be the ability to successfully increase the current sales volume by 5%.
An improved approach to product management through diversification will improve the visibility of the Coach brands. The buyer will make an effort to learn the Coach’s values, vision, challenges, and operating environment. A spirit of collaboration established will offer a positive contribution to the partnering businesses when different products are launched. Such cooperation will turn new brands into a competitive advantage instead of a cost (Clow & Baack 2014). Towards implementing marketing function, the product diversification strategy should constantly employ elements effective market mix for optimal results to promote positive perception (Cole 2015). The key performance indicator for this strategy would be increased sales by 3% as a result of improved product brands.
Generally, Coach Incorporation is a successful fashion retailer with an active presence in the US market and across the globe. The company has been able to survive market turbulence for more than 40 years of existence. The internal and external environment assessment indicates that the company is geared towards further market expansion, especially in the international markets. Despite stiff competition and changing customer preference, the company has remained a profitable venture with annual positive growth in revenues of 20%. Moreover, Coach has a strong brand image and diverse product line.
Although the company is relatively stable, there is an urgent need for revaluation of its international marketing strategies to gain market share in the external markets. To achieve this, Coach should consider implementing suggestions such as product diversification, vertical integration, concentric development, and marketing management among others. It is expected that these recommendations will make it easy for the company to enter and penetrate the international markets at minimal risk levels. Generally, these recommendations should be practiced flexibly since Coach Incorporation’s business environment is unstable.
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