Euporia Knight Strategic Management Coach Case1
Euporia Knight
Strategic Management
Coach Case
1) What are the defining characteristics of the luxury goods industry? What is the industry like?
Defining characteristic of the luxury goods industry are the market size and growth rate, scope of rivalry presence of forward/backward vertical integration Consumer characteristics Degree of product differentiation. The global luxury goods industry was expected to grow by 7% during 2006 to reach $112 billion. The scope of rivalry in the industry was global with Italian luxury goods companies accounting for 27% of industry sales in 2005, French luxury goods companies controlling 22% of the industry, Swiss companies holding a combined market share of 19%, and U.S. companies accounting for 14% of industry revenues. Most luxury goods manufacturers were vertically integrated into the operation of retail stores. Signature like Armani, Versace, and other designers were handcrafted under the supervision of the designer. Coach products and diffusion lines offered by other luxury companies were produced by low-cost contract manufacturers. Traditional luxury consumers in the U.S. ranked in the top 1% of wage earners with household incomes of $300,000 or better, a growing percentage of luxury goods consumers earned substantially less, but still aspired to own products with higher levels of quality and styling. Manufacturers of the finest luxury goods sought to exploit middle-income consumers’ desire for such products by launching “diffusion lines” that offered “affordable” or “accessible” luxury . Key differentiating features include product quality, image and reputation, customer service, styling, and store ambiance.
2) What is competition like in the luxury goods industry? What competitive forces seem to have the greatest effect on industry attractiveness? What are the competitive weapons that rivals are using to try to outmaneuver one another in the marketplace? Is the pace of rivalry quickening and becoming more
Strategic Management
Coach Case
1) What are the defining characteristics of the luxury goods industry? What is the industry like?
Defining characteristic of the luxury goods industry are the market size and growth rate, scope of rivalry presence of forward/backward vertical integration Consumer characteristics Degree of product differentiation. The global luxury goods industry was expected to grow by 7% during 2006 to reach $112 billion. The scope of rivalry in the industry was global with Italian luxury goods companies accounting for 27% of industry sales in 2005, French luxury goods companies controlling 22% of the industry, Swiss companies holding a combined market share of 19%, and U.S. companies accounting for 14% of industry revenues. Most luxury goods manufacturers were vertically integrated into the operation of retail stores. Signature like Armani, Versace, and other designers were handcrafted under the supervision of the designer. Coach products and diffusion lines offered by other luxury companies were produced by low-cost contract manufacturers. Traditional luxury consumers in the U.S. ranked in the top 1% of wage earners with household incomes of $300,000 or better, a growing percentage of luxury goods consumers earned substantially less, but still aspired to own products with higher levels of quality and styling. Manufacturers of the finest luxury goods sought to exploit middle-income consumers’ desire for such products by launching “diffusion lines” that offered “affordable” or “accessible” luxury . Key differentiating features include product quality, image and reputation, customer service, styling, and store ambiance.
2) What is competition like in the luxury goods industry? What competitive forces seem to have the greatest effect on industry attractiveness? What are the competitive weapons that rivals are using to try to outmaneuver one another in the marketplace? Is the pace of rivalry quickening and becoming more