Coach Competitive Forces

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Q3. Like stated above, the competitive forces that were evident in the luxury goods industry are the competitiveness of rivals such as Gucci, Prada, Ferragamo and Dolce and Gabbana, to mention a few, the aggressiveness of substitutes to luxury goods who were catering to the many other customers who did not have enough income to purchase the high priced luxury goods, the threats of new entrants into the luxury goods market, not forgetting the bargaining power of both buyers and suppliers in the luxury goods industry. In the mid-1990’s consumer preferences began to change and veered strongly towards Coach’s rivals within the luxury goods industry such as Dolce and Gabbana, Versace, Ferragamo, Gucci and Prada among others. These well-known and…show more content…
Although there were emerging markets for luxury goods across the globe, majority of income earners could not afford the premium price tags of these luxury goods. In view of this, substitutes seemed to be the bet for most people. Since luxury goods are not necessities but rather possessions meant to indulge the desires and internal need for prestige of buyers, many people who could not afford the premium prices deemed it better opting for substitutes. In addition to the buyer preference of the majority, substitutes were in abundance and readily available to all for all categories of luxury…show more content…
Buyers seemed loyal to the brands they patronized, they seemed to love the goods they were being sold and had little to no say as to how production and pricing of the goods could be done. Buyers also bought infrequently and in small quantity due to the premium prices that were being charged. Although only 1% of wage earners in the United States were seen as the main consumers of luxury goods in their country, the remaining 99% of wage earners had the desire to purchase these luxury items as well and aspired them to reward themselves once in a while with these items. This led to the growing demand in the luxury goods industry, not only in the United States but in emerging markets such as Asia and Eastern Europe inclusive and hence, minimizing the overall bargaining power of buyers. In the case of suppliers, there seemed to be many suppliers of leather for the luxury goods industry. This made their bargaining power very weak. To add to this, luxury good manufacturers such as Prada, Louis Vuitton, and Armani among others had the resources and capabilities to easily integrate backwards and find means of supplying their own raw materials. Also, due to the high standard quality required by the manufacturers of luxury goods, suppliers seemed to be rather at the weaker end of the table, since they could easily switch among the many available suppliers to

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