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16/05/2020 03:00:49 PM

A marketing casestudy

As consumer shopping patterns began to shift during a slowing economy in late 2007, executives at Coach, Inc., were paying at- tention. Through ongoing research, they determined that a new “normal” was emerging—one in which more frugal consumers shopped less and spent less when they did shop. At that time, the

average price of a Coach handbag was about $330. Coach knew it had to become more innovative, relevant, and value oriented without cheapening the brand’s image. Coach’s managers went to work to find new sources of materials, renegotiate terms with suppliers, and develop new products. As the result of a yearlong effort, Coach unveiled a new line of products called “Poppy.” With the average price of a Poppy handbag at $260, the line is designed to be more affordable without compromising the brand’s image. Unlike most luxury brands, Coach’s revenue has maintained moderate but steady growth over the past four years. And although profit growth wavered somewhat, the company has remained

in the black. Perhaps that’s why during the most recent 18 months, its stock price is up 167 percent. Coach really does seem to understand the new “normal.”

1. Explain how a $260 purse can be viewed as a good value in the context of the Coach brand.

2. Is Coach safe or will the new “normal” still catch up with the company’s financial performance?

3. What suggestions would you make to Coach management for future product development?

Phạm Thị Thùy Miên