Chao Internate

5180754

Phatdanai Masman 5180676

Widya Hapsari

5480289

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.

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.

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.

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”

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

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.

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.

Coach Poppy Collection

Louis Vuitton Murakami’Monogram

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

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

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

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

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

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

Thank You