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Coach Inc. is a company that is involved in designing, producing and marketing of classic leather accessories and apparels (Coach). This paper will do an analysis of Coach Inc. environment using Porter’s five-force model.
Porter’s Five Force Model
Currently there is limited competition and no major competitor is of Coach’s size. Coach has over 22% of the entire apparel and accessories industry. Coach has already established its brand to consumers enabling it to constantly attract new customers and retailing the old ones. Despite an increase in consumer prices, customers say they are concerned with price but product quality. However, Coach’s products can be said to be relatively affordable as compared to some competitors like Louie Vuitton.
Threat of New Entrants
Competition from new entrants will cause an average risk to Coach because of its brand image giving it an edge over new companies. Its ‘affordable luxury’ will even be an added advantage because consumers will trust a product they are familiar with. Coach’s marketing strategy has helped it hold off new entrants because it continues to market to old consumers.
Threat of Substitute Products
Threat of substitute products to Coach is high or low depending from which point it is taken from. Substitute products that can cause threats are alternative brands and counterfeits. But again looking it from the brand name, Coach is an established brand and cannot be easily threatened by other brand names.
Bargaining Power of Buyers
Effect of consumers on purchase of Coach’s products is low due to its low price sensitivity. This means that consumers buy Coach’s goods because of its brand image known for its quality. This has been kept possible due to Coach’s ability to increase sales and consumer base while raising price at the same time. Coach’s buyers have a low bargaining power due to a wide range of products at different prices.
Bargaining power of suppliers
Coach’s suppliers have a limited negotiating power and this is a big advantage to Coach. Main raw material for coach is leather and this is available from several suppliers around the world thus giving it a good opportunity for a bargain. Coach also buuys manufactured products from several countries including China, Costa Rica, Mexico, Hungary and others and thus have a higher negotiating power with several suppliers around the world.