Segmentation and Target Market

MKT 571

Jason Leonard

7/27/2015

Victoria Holmes

Introduction

Coach, founded as a small family company was established in 1941. They are well knows for their leather handbags and accessories. As time grew they became a prominent luxury household name supplying customers with premium leather goods with superior styles. In the 1980’s they opened up their retail stores but then sold to Sara Lee in 1985. This created the expansion Coach needed to become more exclusive with their clientele. Even as Coach was expanding rapidly, the bran was falling behind its competitors as they were only offering the same classic bags. It wasn’t until Reed Krakoff took over the design in 1996 when Coach began to see an increase in sales.

Segmentation

Coach is operating in two different segments: indirect and direct to customer. The Direct to customer segments includes sales through Coach named stores that operate in North America, Japan and others. The indirect segment is the wholesale stores that Coach products are being sold in. These include department stores as well as ecommerce websites as well. All licensed companies that sell Coach; coach earns royalties on these products. Coach focuses on multi channel distribution, which helps their success and does not depend on one cultural or demographic area.

Target Market

In the beginning, the target market for Coach was the working class woman. But as time went on a studies have emerged, the target market has moved to females between 18-40 as well as males. This has been broken down into three different segments: schooling females, working women and males. Within this breakdown the most common reasons why Coach is so popular with its consumers are: Price, quality and brand. Coach is the most commonly owned luxury handbag brand (16.67%) compared to its counter parts. This is due to the fact that Coach is the most affordable brand.

Demographic

The luxury markets is made up of the working person making $30,000 or more in income. Coach taps into this demographic by not having their bags so overly priced. This way even the young student making minimum wage can purchase a small bag without breaking the bank. Surveying consumers have helped Coach understand why they are still one of the top brands being purchased over their competitors. To tap into the younger market, Coach created a line just for them and called it Poppy. This line is filled with vibrant colors and prints, book bags and messenger bags to carry books as well as purses. This was an instant hit with teenagers and young adults as well as with some in the older crowd, as it was something different that Coach began to offer. It however became overwhelming and nothing was left for the older women in the classic stages to purchase.

They also went through a monogram phase as to keep up with Louis Vuitton and Gucci but that faded as well. The loyal customers were looking for the classic leather bags they originally fell in love with, no branding, no pops of color. In 2005, they have found their happy medium catering to everyone with a bit of everything to offer overtime. Coach also wanted its consumers to have a bit of exclusivity, so they began making limited quantities of bags. This way, once a collection was over, you can no longer purchase them in any outlet or department store.

Global Market

“Coach seeks to be the leading brand of quality lifestyle accessories offering classic, modern American styling” (Coach, 2015). Their strategy is defined in the following values: the brand, customer satisfaction, integrity, innovation and collaboration. Its success is based on their original American attitude and design as well as the heritage of fine leather goods. The Coach brand represents quality and authenticity. Customer satisfaction it the main thing an as Coach seeks to create long-term relationships with every customer they have. They provide excellent service making sure that the needs are met. Coach’s commitment to honesty and fairness to each person has greatly contributed to its success. They treat everyone as if they are living the luxurious life and stands behind their products and quality. Challenging as it may be, Coach reinvents itself with every new line that they introduce to the public. This helps keep the trendy up to date as well as reinvents the classics in new ways.

Distribution

“As of June 30, 2012, there are more than 500 Coach stores in the United States and Canada and over 300 directly operated locations in Japan, China, Singapore and Taiwan, with more retail locations in Malaysia and South Korea.” (Coach, 2015) Coach also has a strong presence in the global market being sold in boutiques and selected retail sores. In 1999, the website was first launched, being able to reach anyone with access to the Internet and it offers products online in the U.S, Canada and Japan.

Coach has 3 distribution centers, one in Florida, one in Shanghai and in Japan. These distributions make it possible for Coach to have products readily available in each region they sell in, and also have warehouse stock for online shipments as well. With the multi-channel distribution levels: retail stress, factory outlet stores, department stores and online home website and other ecommerce sites, Coach is able to effectively market to multiple segments that may not be reached by their competitors.

Conclusion

Coach is the most affordable “feel good” luxury brand. With its brand being the most sought after product, they stand in front of the competition even when other brands have taking strides ahead of them. They have learned to remarket and reinvent their brand each year making sure that they are appealing to every market. With men becoming the more sought after moment right now, stylish brief cases and overnight bags appealing to the man of luxury. Coach has expanded in the market that connects with everyone in different price points, locations and status. The hope is that Coach will reach other countries like Singapore on a much larger scale.

References

General Findings: Retrieved from, HYPERLINK “http://www.coach.com” www.coach.com 2015

Global Business Strategy: Retrieved from, HYPERLINK “http://www.coach.com” www.coach.com 2015

Segment Analysis: Retrieved from, HYPERLINK “http://www.coach.com” www.coach.com 2015