2. Background of the company
Founded in 1941 as a partnership called “The Gail
Manufacturing Company”
In 1946 Miles and Lillian Cahn join the company.
Provide luxury leather goods and most well known for its
ladies handbags.
3. Summary of the case
Coach successfully expanded to Japan, by 2008 Coach
has second largest market share for ladies handbags.
Coach has decided to replicate its Japanese success in
China, which is to focus on emerging female middle
class.
Coach tend to priced it's product lower to make them
more price competitive.
4. 1. Will Coach be able to replicate its Japanese success
story in China? Why was the company successful in
Japan?
Coach can become success in the Chinese market
because the number of Chinese middle-class is
increasing.
Coach’s targets are middle-class , college educated,
women underage of 35.
6. 1. Will Coach be able to replicate its Japanese success
story in China? Why was the company successful in
Japan?
Success in Japan because of its clear target
segmentation, which is identifiable and sizable.
Position itself as an “affordable luxury” hence, avoided
direct competition to luxury European brands.
Mr. Luis president of Coach Japan said "One of the keys is
our accessible luxury position”
7. 1. Will Coach be able to replicate its Japanese success
story in China? Why was the company successful in
Japan?
Brand 2000 2008
Louis Vuitton 33% 27%
Coach 2% 12%
Prada 10% 10%
Gucci 10% 10%
Source: “Coach bets Chinese open the purse strings” Wall Street Journal
8. 2. Reflect on Coach’s targeting strategy. Coach
decided to focus on the emerging middle class. Do you
agree with this strategy? What are the alternatives?
Agree, as the world’s emerging middle class are on
the rising at a rapid pace.
According to the World Bank report, the world
middle class in developing countries and the
number is expected to reach 93 percent by 2030.
9. 2. Reflect on Coach’s targeting strategy. Coach
decided to focus on the emerging middle class. Do you
agree with this strategy? What are the alternatives?
As an alternative, Coach could focus on young
adults consumer.
With Coach's positioning as an affordable luxury and their
price competitive advantage.
In China parents giving their child pocket money is very
common because of the one child policy.
As a result, young adults have fair amount of purchasing
power and young adults tends to be easily exposed to
fashion trends.
12. 3. Around the time that Coach announced its Asia expansion
drive the global economy entered into a deep recession. To
what extent would this affect Coach’s strategy in Asia (Japan
and China)? Would Coach need to revisit its plans? If so, how?
Global Recession
Every country around the world is affected by this crisis
United States accounted of 70% percent of Coach
worldwide sales
Coach need to focus on increasing it sales outside of
the country
13. 3. Around the time that Coach announced its Asia expansion
drive the global economy entered into a deep recession. To
what extent would this affect Coach’s strategy in Asia (Japan
and China)? Would Coach need to revisit its plans? If so, how?
China
Growth rate has slowdown, as export drop
High demand for domestic consumption
High capital reserve
Various trade partners
Two third of the global luxury
brands have entered into
Chinese market
14. 3. Around the time that Coach announced its Asia expansion
drive the global economy entered into a deep recession. To
what extent would this affect Coach’s strategy in Asia (Japan
and China)? Would Coach need to revisit its plans? If so, how?
Demand for luxury products in China
Source: McKinsey Insight China
15. 3. Around the time that Coach announced its Asia expansion
drive the global economy entered into a deep recession. To
what extent would this affect Coach’s strategy in Asia (Japan
and China)? Would Coach need to revisit its plans? If so, how?
Japan
Fall in demand in manufacturing products such
as cars, information technology, and machineries
Car export fall by two third, as 12% of the nation real GDP fall in last
quarter of 2008
Source:IMF Report
16. 3. Around the time that Coach announced its Asia expansion
drive the global economy entered into a deep recession. To
what extent would this affect Coach’s strategy in Asia (Japan
and China)? Would Coach need to revisit its plans? If so, how?
Japan
Shift in the global demand
Decline the high-end specialize products toward the
in-expensive goods
17. 3. Around the time that Coach announced its Asia expansion
drive the global economy entered into a deep recession. To
what extent would this affect Coach’s strategy in Asia (Japan
and China)? Would Coach need to revisit its plans? If so, how?
Change in domestic buying behavior in Japan
Versace announced a close down
of three of its last boutiques in Japan
LVMH has closed down its flagship
store Ginza
