Coach 2010 Annual Report Download - page 11

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TABLE OF CONTENTS
MARKETING
Coach’s marketing strategy is to deliver a consistent message each time the consumer comes in contact with the Coach brand through
our communications and visual merchandising. The Coach image is created internally and executed by the creative marketing, visual
merchandising and public relations teams. Coach also has a sophisticated consumer and market research capability, which helps us assess
consumer attitudes and trends and gauge the likelihood of a product’s success in the marketplace prior to its introduction.
In conjunction with promoting a consistent global image, Coach uses its extensive customer database and consumer knowledge to target
specific products and communications to specific consumers to efficiently stimulate sales across all distribution channels.
Coach engages in several consumer communication initiatives, including direct marketing activities and national, regional and local
advertising. In fiscal 2011, consumer contacts increased 52% to over 625 million primarily driven by increased email communications.
The Company continues to leverage marketing expenses by refining our marketing programs to increase productivity and optimize
distribution. Total expenses related to consumer communications in fiscal 2011 were $75.0 million, representing less than 2% of net sales.
Coach’s wide range of direct marketing activities includes email contacts, catalogs and brochures targeted to promote sales to consumers
in their preferred shopping venue. In addition to building brand awareness, the coach.com and reedkrakoff.com websites and the Coach
catalog serve as effective brand communications vehicles by providing a showcase environment where consumers can browse through a
strategic offering of the latest styles and colors, which drive store traffic.
As part of Coach’s direct marketing strategy, the Company uses its database consisting of approximately 19 million active households
in North America and 4.2 million active households in Japan. Email contacts and catalogs are Coach’s principal means of communication
and are sent to selected households to stimulate consumer purchases and build brand awareness. During fiscal 2011, the Company sent
approximately 480 million emails to strategically selected customers as we continue to evolve our internet outreach to maximize productivity
while streamlining distribution. In fiscal 2011, the Company distributed approximately a million catalogs in Coach stores in Japan, Hong
Kong, Macau and mainland China. The growing number of visitors to the coach.com websites in the U.S., Canada and Japan provides an
opportunity to increase the size of these databases.
In fiscal 2011, Coach had informational websites in Australia, Bahrain, China, France, Malaysia, Mexico, Portugal, Singapore, South
Korea, Spain, Taiwan, Thailand, UAE and United Kingdom. In addition, the Company utilizes and continues to explore new technologies
such as blogs and social networking websites, including Twitter and Facebook, as a cost effective consumer communication opportunity to
increase on-line and store sales and build brand awareness.
The Company also runs national, regional and local advertising campaigns in support of its major selling seasons.
MANUFACTURING
While all of our products are manufactured by independent manufacturers, we nevertheless maintain control of the supply chain
process from design through manufacture. We are able to do this by qualifying raw material suppliers and by maintaining sourcing and
product development offices in Hong Kong, China, South Korea, India, Italy and Vietnam that work closely with our independent
manufacturers. This broad-based, global manufacturing strategy is designed to optimize the mix of cost, lead times and construction
capabilities. Over the last several years, we have increased the presence of our senior management at our manufacturers’ facilities to enhance
control over decision making and ensure the speed with which we bring new product to market is maximized.
These independent manufacturers support a broad mix of product types, materials and a seasonal influx of new, fashion oriented styles,
which allows us to meet shifts in marketplace demand and changes in consumer preferences. During fiscal 2011, approximately 84% of
Coach’s total net sales were generated from
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