When I bring up the Coach brand in a given conversation, I usually receive excited giggles and squeals. Yes, Coach does have that effect on people. With its colourful, fashionable, and accessible brand DNA, Coach knows how to attract consumers in large numbers, women and men alike. In fact, the Coach brand stands for quality, authenticity and value and has a truly aspirational, distinctive American style. But how does an ever-popular brand like Coach weather an economic recession? In the following blog post, we will take a look at a few key Marketing tactics that deemed successful for Coach, Inc.
History & Presence
Coach was founded in 1941 in New York as a family-run workshop. Now a greatly expanded and established brand worldwide, Coach continues to maintain the highest standards for materials, workmanship and fashionism. In America, Coach is renowned as a designer, producer, and marketer of fine accessories and gifts for women and men including handbags, business cases, luggage and travel accessories, wallets, outerwear, eyewear, gloves, scarves, fragrance and fine jewelry. There are currently over 400 Coach stores in the US and Canada. Coach leather goods are also available at over 940 department store locations in the US and at 182 international department stores. Coach aficionados can also purchase goods on the corporate website www.coach.com. Business was great until until December 2007 rolled around…
Dark Economic Times
According to the U.S. National Bureau of Economic Research, the recession began in December 2007. This financial crisis was linked to reckless lending practices by financial institutions and the growing trend of securitization of real estate mortgages in the U.S. A global recession resulted in a sharp drop in international trade, rising unemployment and declining commodity prices. For the retail industry, this dark moment in U.S. economy caused record-breaking declines in sales, inventories, consumer confidence, and stock prices. Companies such as Coach needed an action plan, and fast.
This is what Coach, Inc. Chairman and CEO Lew Frankfort had to say in 2009 about the recession and its impact on retailers: “For over a year, we have been addressing the very weak retail climate in the U.S. and abroad. We have adapted our pricing and product strategies to be successful in what will become the ‘new normal’. Consumers will have less credit than normal, will be saving systematically and will be overall more cautious.” Consumers became pessimistic about the future, they were visiting stores at a lower rate, and during their visits, they were purchasing less frequently. This required retailers to be more innovative, creative, and more value oriented.
Coach, Inc. Chairman and CEO Lew Frankfort
Coach’s Recovery Plan
In 2009, in order to respond to the ‘new normal’ when it came to consumer behaviour, Coach modified the range of its retail pricing and product mix to make its leather goods more accessible. After all, the recession brought about a phenomenon beaconed as the Lipstick Effect. The Lipstick Effect, is the theory that when facing an economic crisis, consumers will be more willing to buy less costly luxury goods. The important thing to take away here is that consumers are still willing to spend on accessible luxury goods during a recession. Consumers still have a need to pamper themselves, though in a much more sensible way.
Coach cleverly introduced in July of 2009, Poppy, a lower-priced line of handbags, shoes and other accessories. The Poppy collection is an accessible luxury line which ranges in price between $38 and $600. Poppy, often coined as Coach’s luxury line for recessionary times, required some product fine-tuning. The company’s corporate team wanted to explore new leather treatments, ones that would require the materials to be thinner, lighter, softer, and drapier. The team also wanted the brand name to look like it had been written in graffiti. Ironically, with the effects of the economic downturn, Coach benefited from a 15% drop in the price of leather. The Poppy design team considered 25 different materials and 15 Coach tags to hang on the purses. After a Manhattan based qualitative focus group comprised of young women was conducted, results explicitly showed that the Poppy DNA resonated with the young female demographic.
During its introductory period, the main Poppy collection was being tested in nine Coach stores and 23 department stores. For the first time, Coach let people make online purchases through Facebook. Coach also significantly changed its Marketing tactics to incorporate digital platforms on a greater scale. The brand became very active on Facebook and Twitter and partnered with several blogs. The company went as far as showing bloggers a preview of its new products and let them talk about them on their blogs. That most definitely created a buzz within the Gen Y consumer base. Prior to 2009, Coach had a history of sticking to print and outdoor advertising. “We’ve always been focused on traditional media,” said Mike Tucci, president North American retail for Coach. “What we’re really concentrated on is a diversified multimarketing campaign. We’re using new media as a platform, fashion blogs and in-store events. We really wanted to take a much more aggressive approach to Marketing (with Poppy).”
Poppy Goes Social
On July 1st 2009, Coach launch the “Are You a Poppy Girl” campaign on Coach.com. The program focused on viral Marketing and user-generated content with options such as designing a custom Poppy scrapbook page. Coach also redesigned its Facebook page, launched Twitter and launched a campaign on Yahoo.com. Coach also created a Poppy microsite, coach.com/poppy to kick off its e-commerce platform. To close the loop, the company also created a New York stunt where double decker buses were wrapped in Poppy signage.
Poppy Saves the Day
It goes without saying that Coach’s Poppy introduction was a timely one. Its clever price point, positioning, and advertising mix perfectly targeted the young gen Y user that still needed an affordable luxury fix during a tough economic climate. Coach Inc. successfully weathered the economic storm. In fact, the Coach stock was one of the most talked about stocks during this dark period, leading corporations to closely analyze Coach, Inc.’s strategies. You’ll notice on the chart below that the Coach stock plummeted at the start of the recession but regained stamina once the Poppy advertising and marketing campaigns were launched in July 2009.
COH - Coach, Inc. Stock 5 Year Trend
Coach lovers, I bet you enjoy the brand even more now that you know it has your back even when economic times are tough. I’d love to hear your Coach stories. What’s the latest Coach item you’ve purchased? What do you appreciate the most about the Coach brand? Share your comments below!
~ J.
According to the Burberry Group, the brand is defined by:
And the business is driven by:
This is what I call a fully integrated campaign! Burberry definitely has the right Marketing mix in mind, leveraging television, print and outdoor to tell a brand story and social media to engage with consumers by offering them an irresistible fragrance sample that not only appeals to one of our 6 senses, but also is delivered with express rapidity and with a side of pampering. That my friends, is Customer Relationship Management at its best.
