Ch. 6 - Consumer Decision Making

In reading through chapter 6 I think the most important part of the chapter is the Consumer Decision Making Process. The process consist of the following 5 steps;

1) Need recognition
2) Information Search
3) Evaluation of alternatives
4) Purchase
5) Post Purchase Behavior

I never thought about this process until I read it...even though this is the process I take when buying things all time...quite interesting.

The need recognition is when a consumer realizes that they have a need to make a purchase. It is the first step that triggers the consumer decision making process, and as a girl it is my favorite.

The second step is the information search. This is the process we as consumers take to investigate the item we want to buy. For example, I just purchased a new refrigerator, but before I picked out the perfect one I went online to check my local stores and found ads that advertised the different brands and models on sale. I was able to get all the information I needed about my new fridge without even going to the store - of course you could also do your information search at the actual stores but looking online is probably the easiest and most convenient way to get the most information you need without actually heading out. The downside to doing your information search online is that you don't have the luxury of being able to "feel" your item.

The third step is the evaluation of alternatives. Now, I don't think that every consumer uses this step, for example, I did use this step when I was doing an information search for my new refrigerator. Before I made my purchase I wanted to see all the different brands and models and I wanted to compare them in quality and price. But when it comes to my company, Coach I don't think that consumers are looking for the alternatives to a Coach bag or wallet. Most of Coach's consumers already know the products, the quality of the products and the price. If your happy with your Coach purchase then chances are you don't need to evaluate alternatives when deciding it's time for a new bag.

The fourth step is the Purchase step. In the case of my company I believe that as a consumer either your buying it or your not. If you've done your information search and determined that the Coach quality and price are right for you then your purchase is pretty simple. You won't go through the "to buy or not to buy" process and internal struggles that other purchases may put you through.

The final step in the Consumer Decision Making Process is the Post Purchase Behavior. If you purchase a product from Coach and end up happy with it then chances are your expectations have been met. You will probably end up returning to a Coach store to purchase other items in the future. If it turns out your not happy with your products then most likely you will either return your item for a refund or exchange or you'll never return to Coach again. Post Purchase Behavior is very important to a business because most businesses count on repeat costumers. They build their business on the loyal customer who loves their brand and products. I think most businesses understand that you can probably sell your products easily but what matters is whether the costumer is happy enough with your product to come back for more...when you have that as a business, your golden.

Ch. 5 - Developing a Global Vision

So, why does a company decide to go global? Well, simply put - to grow their business, to have access to cheaper labor and materials, and to capitalize on new market opportunities.

Growing the business:

Since it's inception in the 1940's Coach spent years building it's brand and business locally though out the United States. As the business grew it opened boutique stores and outlet stores in Denver and Seattle and opened stores in malls throughout New Jersey, Texas, and California. At the same time it introduced new bags in new shapes to target the new customer base. The new product lines were designed to target the women who lived in the South and West were warmer weather made lightweight handbags more desirable. The new line featured handbags in smaller sizes and in lighter spring colors. This new line quickly came to make up 15% of the company's overall sales.

In 1988 Coach began it's international push into global markets opening boutique stores in England, Tokyo and Japan. Coach executives noticed that a large number of it's customers from their New York stores were tourist and knew that international expansion was a must. After 4 years the number of company stores grew to 40 and sales reached $100 million.

In 2011 Coach began a new venture to capitalise on men's products in China. Coach's chairman and chief executive, Lew Frankfort told ft.com the company was eager to capitalise on men's untapped enthusiasm for its products in China, where they account for nearly half of all spending on handbags and accessories.

Expanding Coach's business into global markets have produced new designer lines and a new customer base which has proven lucrative for Coach.

Access to cheap labor and materials:

In China today, small towns have been known to build and staff whole, working factories almost overnight. When factories are up and running, female workers show up to work in them - accepting little pay to provide for their most basic needs like food and clothing. The Chinese government sees these factory towns as money makers but tend not to provide public services like schools, hospitals, or libraries to the people who live and work in them. Although the standards in which factories are run in China have improved in most recent years most people would not believe the continued deplorable working conditions. Most women working in these factories experience a decline in their standard of living and overall health due to the high intensity and adverse environment of these factories. In June 2011 a China-based factory that makes handbags for several accessory brands like Burberry, Michael Kors, and Coach had factory employees strike over complaints about low pay and aggressive and verbally abusive behaviour by factory management. Some employees were forced to work 60 hours per week often sleeping in corner spots in the middle of miscellaneous accessories ready to be assembled just to meet the high demand of output.

In the US, factories are monitored by both the government and independent labor rights organizations which ensure employees have amongst other rights, a decent living wage, safe working environment and bans on forced overtime.

No wonder why Coach and other luxury brands decide to outsource their manufacturing to China and other countries...they don't pay high wages, they make their workers work unfathomable hours and they get away with it because these people need the work and do it with very little resistance. It might make more sense to me as a consumer if the savings were trickled down the pike but that's not the case. Seems like Coach is making bigger profits on the backs of the most desperate Chinese workers. It angers me more to know that most products in the US are MADE IN CHINA, that said, you probably could NEVER go without buying a MADE IN CHINA item.

New Market Opportunities:

The Japanese have long been known for their love of designer bags and accessories - and it looks like Coach has taken advantage of this market. Coach is currently competing in the Global Market with Louis Vuitton and it looks like Coach is catching up. One of their strategies seems to be "pricing"; in China and Japan a small Coach bag starts at around $275 - Louis Vuitton bags average about $870. Coach seems to have won over shoppers with it's new styles and competitive pricing and it's now reaping the rewards with more than 20% of it's global revenue coming from Japan. As of 2011 Coach has 344 retail and 134 factory stores in North America, 174 stores in Japan and 55 in China.