Coach Case Study
In 1941, Coach Inc. was founded in a loft located in Manhattan, New York. Inspired by the baseball glove, it was the driver behind the soft, yet strong and durable leather. Not until the 1960s did Coach start manufacturing handbags when they introduced their first collection which consisted of 12 different styled bags. Then in 1985, the company was acquired by Sara Lee Corporation. Following this acquisition fifteen years later, Sara Lee Corporation decided to spin off Coach through an initial public offering in 2000 to focus on its food and beverage industry (Wikinvest, 2008).
1. What are the defining characteristics of the luxury goods industry? What is the industry like? The definition of a luxury good is a product that gives great ease and comfort. It adds pleasure or comfort, but is not absolutely necessary (Merriam-Webster, 2008). Some characteristics of the industry include superior quality, brand recognition, and is said to have high income elasticity of demand. As people become wealthier, they tend to buy more luxurious items. However, this also means that as the wealth declines, as does the demand for these items.
The luxury industry can also be looked at as a status symbol. Conspicuous consumption leads to increasing demands for luxury good items and it is a growing industry with the global luxury goods market growing 9% per year (Business Wire, 2007). Advertising has a lot to do with it, especially Americans who are being constantly bombarded with advertisements on a daily basis. While finding exactly how many advertisements American see a day is nearly impossible, some studies have shown the number to be between 150 and 3,000 (Mortar, 2006). This leads to more consumers being exposed to or being told which items or brands are luxury goods, but unlike the definition for luxury goods, these conspicuous consumers buy their products for satisfy their self-esteem issues rather than for ease or comfort. Although an argument can be made is
1. What are the defining characteristics of the luxury goods industry? What is the industry like? The definition of a luxury good is a product that gives great ease and comfort. It adds pleasure or comfort, but is not absolutely necessary (Merriam-Webster, 2008). Some characteristics of the industry include superior quality, brand recognition, and is said to have high income elasticity of demand. As people become wealthier, they tend to buy more luxurious items. However, this also means that as the wealth declines, as does the demand for these items.
The luxury industry can also be looked at as a status symbol. Conspicuous consumption leads to increasing demands for luxury good items and it is a growing industry with the global luxury goods market growing 9% per year (Business Wire, 2007). Advertising has a lot to do with it, especially Americans who are being constantly bombarded with advertisements on a daily basis. While finding exactly how many advertisements American see a day is nearly impossible, some studies have shown the number to be between 150 and 3,000 (Mortar, 2006). This leads to more consumers being exposed to or being told which items or brands are luxury goods, but unlike the definition for luxury goods, these conspicuous consumers buy their products for satisfy their self-esteem issues rather than for ease or comfort. Although an argument can be made is
References: 1. Alacra Store, (2008). Coach, Inc. - Company Snapshot - AlacraStore.com. Retrieved October 18, 2008, from The Alacra Store Web site: http://www.alacrastore.com/company-snapshot/Coach_Inc-1032972 2. Armour, S (2005, November 8) 5. Business Wire, (2004, December 27). GMI World Poll: Half of European Consumers Distrust American Companies. Retrieved October 18, 2008, from Bnet Web site: http://findarticles.com/p/articles/mi_m0EIN/is_/ai_n8584342 6. Business Wire, (2005, April 6) 9. Coach, (2008). Coach Offical Site - Security/Privacy. Retrieved October 18, 2008, from Coach Offical Site Web site: http://www.coach.com/about/Privacy.aspx 10. infoplease, (2007) 11. International Directory of Company History, (2002). Coach, Inc. – Company History. Retrieved October 18, 2008, from Funding Universe Web site: http://www.fundinguniverse.com/company-histories/Coach-Inc-Company- History.html 12. LoveToKnow, (2008) 15. Market Wire, (2006, June). Growing Middle Class in China, India Pushes Demand for Gold. Retrieved October 18, 2008, from Bnet Web site: http://findarticles.com/p/articles/mi_pwwi/is_/ai_n16487562 16. Merriam-Webster, (2008) 17. Mortar, (2006, July 27). How many ads do we see every day? . Retrieved October 18, 2008, from MortarBlog Web site: http://mortar.typepad.com/my_weblog/2006/07/average_america.html 18. Seeking Alpha, (2006, April 25) 19. Style.com, (2008). Luxury website: SHOPPING Message Board. Retrieved October 18, 2008, from STYLE.COM/ Web site: http://boards.style.com/message.jspa?messageID=60049 20. Takahara, K (2008, September 18) 21. The Economist, (2008, August 14). The end of the dream? . Retrieved October 18, 2008, from Economist.com Web site: http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=1 1920735 22. The Economist, (2008, September 18) 23. Timberlake, C (2007, April 26). Luxury-goods industry sharpens focus on service. Retrieved October 18, 2008, from International Herald Tribune Web site: http://www.iht.com/articles/2007/04/25/business/bxlux.php 24. Wikinvest, (2008) 25. Wikipedia, (2008). Millionaire - Wikipedia, the free encyclopedia. Retrieved October 18, 2008, from Wikipedia Web site: http://en.wikipedia.org/wiki/Millionaire 26. Wikipedia, (2008)