Coach: Survival Does Not Depend On Luxury.

　　 Because the average gross profit margin of the luxury goods industry is around 60%, which is much higher than that of the general industry 20%-25%. In recent years, the luxury index of MSCI (Morgan Stanley Capital International) is much higher than that of the global stock index. Therefore, the operation of luxury goods has become the benchmark for every brand to envy and eager to learn. However, compared with the booming demand in China, Chinese enterprises rarely do anything in the global luxury industry. How to achieve brand upgrading and become among the luxury brands is a dream that many Chinese enterprises are eager to achieve.

This is because traditionally, those who stick to the brand. Pyramid At the top are usually pure European brands. Most of them have a glorious history of serving the royal family. Exquisite crafts are handed down from generation to generation. Experienced craftsmen and handcraftsmen have made their own products with labels of origin, which are both honourable and rare. These innate advantages, which are difficult to reproduce, allow the luxury industry to enjoy huge profits, but also set a natural barrier for the latecomers.

However, Coach has become a successful breakthrough. Luxury goods Special examples of industry stereotypes have written the most noteworthy brand upgrading legend in recent years. The experience of Coach is a story that every company who wants to achieve brand upgrading shouldn't miss.

More importantly, compared with the European luxury brands, which always represent the origin of pure blood, the success of Coach is more useful for Chinese enterprises based on local manufacturing. It is the only company in the world that claims to have completely outsourced production. The label "Made in China" does not affect the quality of its products, nor does it damage the brand image of Coach. Instead, it allows Coach to enjoy up to 70% of gross profit margin and become the world's top luxury product.

Change of old brand

In 1941, on the edge of an obscure brown building on the edge of the Manhattan garment industrial district, Meyers, founder of Coach, and Lili Ann. Mr. and Mrs. KangFu ( Miles &Lilian Cahn) discovered that the longer the glove used for baseball gloves was, the more flexible the cortex became, and applied it to other leather products, thus creating the Coach brand. Coach's good and durable properties are loved by American consumers. By the middle of 1990, Coach had become the first brand in the US market, and its turnover has reached US $500 million in 1995.

In the 90s of last century, the dressing styles of professional women changed, and the fashionable and casual style gradually replaced the traditional formal and serious suits. At that time, mainstream brands from Europe, such as LV and Gucci, have entered the US market. These luxury brands are stylish and bright, and they continue to launch new models in the coming quarter.

With the change of times and the intensification of competition, Coach's performance began to stagnate. "Business week" once said: "Coach is strong and durable, but conservative and rigid, is a brand that is out of fashion." The crisis of survival prompted Coach to change its mind, the chairman and CEO Liu, who took office in 1995. Frankfurt (Lew Frankfort) has decided to change.

In 1996, designer Reed. J Rakoff (Reed Krakoff) joined Coach as the Executive Creative Director of product design and vision, and led Coach to complete a series of remarkable product innovations. In order to better display their products to consumers, klakoff has also reformed the design style and display rules of Coach stores. Before 2000, Coach's stores looked like libraries. Kakoff changed the main color of the store to white, and had larger and brighter display space. Through the street windows, we could see the new products launched by Coach.

At the same time, in order to cooperate with every month's new goods shelves, all Coach stores will adjust their placement methods according to the requirements of the headquarters, matching new accessories with handbags, such as scarves, wallets, and even the music in the store.

In 2001, Coach's design team launched the double C printing with the logo of the first letter C as the logo, and used the bright color as the double C printing. It made the consumers feel that Coach is no longer a dull brand which will only produce the "mother bag" brand. Since then, the handbag Signature series, known as the Coach logo, has become the most popular design of Coach, and its sales have remained high, occupying 60% of its total turnover.

"Public luxury"

In 2000, the new Coach was listed on the NYSE, and Coach began to launch more fashion accessories products, including shoes, belts and sunglasses. This also meant that Coach was transformed from a leather bag manufacturing company to a fashion dealer.

Coach has always maintained the highest quality, durable and strong enough to become a luxury brand. But compared with the traditional luxury brands in Europe, the average selling price of Coach is less than half of that. With the unique insight of consumers, Coach has cut the new consumption trend that is popular in the consumption upgrading. Therefore, Coach has put forward a distinct and impressive brand positioning: "luxury goods at hand".

Michael, marketing expert of Boston consulting company. Silver Stan, after a global consumer survey, found that traditional market segmentation indicators such as purchasing power, risk awareness, culture and lifestyle habits, it is difficult to clearly describe consumer preferences. Because more and more consumers are willing to spend more money on certain products in exchange for better products or services, they are also willing to be frugal in some ways so as to save money and buy more high-end products in other categories. Fashion products are one of the categories that are becoming more expensive. More and more women prefer to spend more money on expensive and expensive handbags.

Under the trend of polarization of consumption, luxury consumption is no longer the prerogative of the top rich. Despite the fact that European luxury brands carry out brand positioning with high prices all over the world, low prices have not only made Coach's high-end brand image dull, but instead become a competitive advantage of Coach. For those who have both luxury consumption and not much disposable income, Coach just cut their demand for consumption upgrading, which makes Coach attract more consumers.

In the US market, European luxury brands such as LV lock on the top 3% of household income, while Coach can extend the scope of potential customers to the top 20% of households. In Japan, where luxury consumption is strong, Coach is known as the "brand entry kit" or "the first brand package".

That's precisely how the emerging market with a strong demand, coupled with a competitive business model, has enabled Coach to rise from $500 million to $3 billion 200 million in 2000. Moreover, even under the impact of the economic crisis of 2008, the gross profit margin of the brand is reduced, and it can still become one of the most profitable brands in the global luxury industry.

Breaking the iron rule of industry

Along with the changing trend of consumers, Coach not only cleverly positioned itself in a growing market space, but also dared to challenge the seemingly Unbreakable Rules in the luxury industry, forming its own unique brand operation rules.

In the fashion industry that has always attached importance to the replacement of new products, the new products will be introduced every quarter to define the prevailing trend of the season. This is a common practice. But this speed is still too slow for Coach. After statistics, Coach found that those old customers would visit Coach stores once in about 30 days. In order for them to have a surprise every time they return to the store, they can see fresh products and stimulate their desire to buy. Coach speeds up the update of new products. In Frankfurt's view, the monthly delivery rate of new products is precisely in line with the pace of life of consumers.

In this way, the new products launched in the month will always be placed in the most important position of Coach stores, so that each passing consumer can be attracted immediately. Moreover, as long as the season is over, products will no longer be sold. Compared to a European luxury brand that has been selling for a year in a handbag, Coach is "hard to recover" once it is missed, which is often an important reason for persuading them to buy.

Moreover, in order to persuade consumers to buy more products, Coach positioned the handbag as "twenty-first Century shoes". According to the survey, American women buy 6-8 pairs of shoes each year to match different clothes and occasions, but generally only two handbags. So Coach became the first luxury brand to bring different handbags on different occasions and seasons.

Later, Coach constantly introduced new products, and defined many new types of handbags, such as weekend bags, travel bags, banquet bags, short holiday packages, wrist bags and so on. One of the wrist bags has set a record of 100 thousand sales, which has opened up the market for young women.

Coach not only dare to challenge the rules of the industry at the speed of popularity, but also define the speed of shipping that is closer to consumer habits. In terms of channel strategy, Coach also challenges the most sensitive nerve in the industry, and forms a unique channel structure.

The location of Coach's direct store is very harsh. It must have a traffic flow of over 1 million and a high visibility street corner, and the storefront area should be over 150 square meters. It always chooses to gather in the European specialty stores, so as to share the passenger flow of these top brands. On the other hand, it is also easy to shape the impression of Coach on the same level with these European luxury brands in the minds of consumers.

For example, in Japan, Coach stores are always located next door to the top luxury LV, and Coach's expansion is basically following LV, appearing next to every LV store. Similarly, the flagship store opened recently in Nanjing Road, Shanghai, is also located at the intersection of two busy streets, opposite to LV and the upcoming Hermes.

In order to enable consumers to get access, Coach does not stick to the central business district of luxury brands, but develops different channel strategies according to different consumers. In recent years, Coach has opened flagship stores in busy commercial centers of various cities on the one hand, and has also expanded its brand discount stores in a big way. Many luxury brands are worried that discount stores will damage the brand image. Coach is so bold in "killing each other" because Coach finds that customers in the two channels are quite different in the consumer survey: the urban franchised stores are unmarried or newly married women under the age of 35, who are fond of fashionable dress and are willing to spend more money for handbags. Most of the consumers in the discount stores are married women who are over 45 years old. They only want to buy a handbag with superior cost performance at a lower price and serve as the basic accessories for the workplace.

What's more, in order not to damage the image of Coach, the products sold in discount stores are not sold in the exclusive stores. They are specially designed for discount stores or some old styles, so that different product lines can be flaged in different channels, which will not cause conflict among channels, but will contribute to the Coach's huge cash flow.

Listen to the voice of consumers.

Traditionally, luxury goods companies have declared the top fashion banner: consumers just buy their products, which is a sign of honor for themselves. These brands are the defining and guiding force of the trend. Fashion has the final say of brand. "Never ask customers what they want, tell them what they should have" is the pride rule pursued by the luxury industry.

But Coach did the opposite. Coach conducts large-scale consumer tracking research every year. It is the company that inputs the most time and money to conduct consumer research and analysis. Behind every important decision of Coach, there are detailed and abundant consumer research results to support it. Even Coach's design director, klakoff, relies heavily on Coach's consumer research. Consumers' preference for color, shape and material has become the important reference for his design.

Compared with European brands such as LV and Gucci with an average price of about $1200-1500, the average handbag price of Coach is about $300, and the gap is very large. Coach found in consumer research that women are willing to spend more money to buy high-end leather bags, which means that Coach also has an upward price space. Therefore, from 2000 to 2007, the price of Coach products has increased continuously, rising from an average of 200 US dollars to 300 US dollars, and even the Legacy series with an average selling price of 425 US dollars. {page_break}

However, a global economic crisis began in 2008, which has brought severe tests to Coach. Since the launch of the public offering in 2000, the growth rate of Coach sales has slowed down for the first time, while profit margins have declined while margins have also been shrinking. At the end of June 2009, Coach launched a brand new Poppy series, because the average price of this series of products is only 260 US dollars, which is 20% lower than that of traditional Coach handbags. It is not easy to return to the original parity route. This may be considered as a short-term behavior of Coach in response to the reduction of consumer income. But Coach research shows that consumption habits in the recession will still affect people's consumption patterns after the end of the recession.

Similarly, every time we enter a new market, the first step of Coach is to conduct a careful consumer survey. Before preparing to enter the Chinese market, Coach launched an extensive consumer survey. They found that Chinese consumers are beginning to explore the stage of luxury consumption, and their knowledge of luxury goods is relatively shallow. They are less preconceived in brand stereotypes and easy to be affected, so "for Coach brands, this is a good time to enter the market".

Because the consumers in the Chinese market are very different, no matter how much they are in the region, how much they earn or what they know about the international brand, they are very well aware of the Chinese consumers who can succeed in the Chinese market. As the Boston consulting firm's post market competition for wartime China luxury market shows, consumers do not have a high level of awareness of luxury brands. Many consumers mistakenly consider mid-range brands such as Miss Sixty and G-star as top luxury brands. In addition, although the top brands have invested a lot of effort to cultivate loyal customers, this loyalty is still extremely fragile. Over 60% of the respondents surveyed said they could find the right product to replace their favorite brand. Therefore, in the early stage of luxury consumption in China, the market is new, consumers are new, and all competition can start from scratch.

At present, the Greater China region has become the fastest growing market of Coach in the world. Coach regards China as the third major market in the world after the US and Japan. It is estimated that in the 2013 fiscal year, the market share of Hongkong, Macao and the mainland of China will increase from about 10% to 20% and surpass Japan, which will enable Coach to speed up its expansion in the Chinese market more actively. As of the third quarter of fiscal year 2010, Coach has 37 retail outlets in mainland China, Hongkong and Macao, and constantly opened new stores to enhance Coach brand visibility and enable them to reach out to women consumers with large discretionary income. These will be the main consumers supporting Coach's future growth.