Driving Success Factors Brand building skills. If

Driving Forces

Bargaining power of customers. The bargaining power of customers is a driving force for the industry as it forces companies to invent new product lines and designs to remain competitive as well as implement new strategies and trainings to gain more appropriate skills. Moreover, shifts in customers’ preferences can be observed when a company loses its leading positions in the industry or is not able to sustain its competitive advantage over its rivals.

New entries. The threat of new entries that may potentially become competitive can be considered another driving force that forces companies that operate within the industry to move further in terms of new technologies implementation, new strategies applied to the company’s management, research, and development. In this respect, the development of the industry happens due to threats of new entries and changes in bargaining power of customers. Intensity of competitive rivalry. The intensity of competitive rivalry as well as threat of new entries and increasing bargaining power of customers are the major driving forces for the industry of luxurious goods because companies that operate within it have to make adequate decisions to change their strategies with regard to changing technologies, customers’ preferences and needs, and other threats that may alter the longitudinal plans of the company for the next 1-3 years.

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Key Success Factors

Brand building skills. If a company that operates in the market of luxurious goods is not capable of implementing training and developing core competencies necessary for building of brand, this company would not remain competitive for a long period of time because the brand building skills can be considered one of the key success factors for this industry and every company that wants to succeed in it should develop those skills.

Competitive design. Competitive and recognizable design of goods manufactured under a certain brand should be used to promote this brand as well as goods manufactured under it to succeed in the industry. In other words, new designs should be aimed at gaining acknowledgement and preference of customers. Moreover, designs should help customers to differentiate between goods manufactured by this and that brand and make distinctions easier with regard to certain cues used by each brand to remain unique.

Convenient retail locations. Convenient location of retail stores is another key success factor for the industry of luxurious goods because all categories that were planned to be addressed can be addressed via retail stores such as company-owned stores and factory stores in case of Coach Inc, a manufacturer of luxurious goods. Moreover, stores owned by the company can develop customer’s loyalty due to the attractiveness of their stores (Gamble, 2008, p. 311); besides, this a common success factor for all companies that operate in the industry.


Strategic problem. How long will the coach Inc company be able to address the needs of its customers via implementation of low cost competencies and remain a brand whose customers have changing bargaining powers and are not able to remain loyal to the brand? In other words, the period when the company had to launch new designs once a year has passed while the company should remain competitive and launch new designs every month.

Strategic recommendation.

Focus on product differentiation. As the product differentiation can be considered one of the most effective strategies implemented by Coach Inc into operation, the further direction can coincide with the current one due to the proven success of this strategy implementation.

Moreover, the company can expand into international market more actively via agreements made with manufacturers of luxurious goods in other countries to make and distribute goods under the Coach Inc brand. Expand product offerings. This strategy is sure to contribute greatly to the overall success of the company and be beneficial for its further expansion into the international market including other countries than those with which the company has been successfully building partnership.

As the company will expand product offerings it will gain new customers in other areas. For instance, use of leather in combination with other materials can be really beneficial. Develop customer loyalty and brand recognition. Though this is one of the current strategies, it proved to be really effective and can be used in future to build relations of trust and loyalty with the company’s customers. As the intensity of rivalry competition and threat of new entries is high, the company should be extremely recognizable in terms of specific style, design, and attitude to customers.

Objectives. The company should expand its product line by five items that can be manufactured according to agreement by other companies under the brand of Coach Inc. The company should double the number of retail stores in the United States by the end of the 2007 and increase the number of retail stores in Japan in the same period by 70 items. Introduction of new styles during each month of the 2007 should be aimed at increasing of gross revenue and customer loyalty.


Gamble, J. E. (2008).

Coach Inc.: Is its advantage in luxury handbags sustainable? In J. E.

Gamble & A. A. Thompson (Eds.). Essentials of strategic management: The quest for competitive advantage (pp. 303-316).

New York: McGraw-Hill Irwin.


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