Coach_in_China

Will Coach be able to replicate its Japan success story in China' Why was the firm successful in Japan' Despite Coach’s success in Japan, it is very unlikely that Coach can replicate its success in the China market with the same strategy or Coach’s (then) current targeting strategy. Although both countries are in Asia, however, Coach neglected to realize there are huge cultural and economical differences in both countries. We are looking at two (or more) sets of different customers here. There are also difference in thinking, adapting, spending power, spending habit, life style…etc., and so on. The income distribution is more even in Japan, while in China, income distribution is very uneven; there are people in the higher end and lots of people in the lower end, and less people in the middle ground. Emerging from a communist society, people with higher income in China would tend to choose more luxurious, more expensive brands to show their status, while people in the lower end don’t have enough for basic needs and will not spend the money on luxury handbags. Coach, being in the middle price range, is not easily affordable by the working class, and is not desirable by the middle or upper classes. As most college graduated working class earns an average of about US$500 a month, although the living standard in China in not as high as in the US or Japan, but buying a Coach bag will still be an high expense for them. While the wealthy business people (and their families) are very powerful in spending power, and can easily afford luxury brands such as Louis Vuitton, Gucci, Burberry, Christian Dior, Prada…etc., they see carrying these brands as giving them a higher status, Coach would seem undesirable to them. Japanese customers are more aware of the western culture and western brands. Coach, has already has its name established in Japan, with brand awareness among consumers there. It was easier for Coach to break into the Japanese market, and at the same time, in Japan, their culture is more willing to adapt to new things than the Chinese. And with a more even distribution of income in Japan, there is a bigger market for Coach because it is affordable for the Japanese working class (since working class salary is much higher in Japan than in China). At the same time, it could also win some market share from the middle class as well, as the middle class can use it as an everyday bag. Also, even though the China market seems very big, but there are many counterfeit items in China. Japanese are more honest, and would feel ashamed when carrying a counterfeit bag. However, in China, there is a huge market for counterfeit bags. Although, Coach is not a really expensive bag, but the counterfeit situation might still affect its sales in China. It is not impossible for Coach to be successful in China, but they cannot do exactly what they did in Japan and expect the same results, they have to do more market research on the Chinese market, and come up with a different marketing strategy and marketing plan.