Ch. 2 Strategic Planning & Competitive Advantage

Michael Kors has a unique product (handbags) that is distinguishable from other's in their market. MK has a really strong brand name, loyal customers and their affordable prices accommodates their wide customer base. All of these things also enable MK to charge higher prices they wanted to because they know their consumers place value into their brand. This value is show by the increase in the 52% increase in total net revenue. However, a weakness that MK possesses is a lack of diversification.  MK is doing really well right now, they have surpassed Coach in sales which is a giant in the retail accessories market. How long will this rise last before a new younger company enters the market? To stay relevant Michael joined the reality contest show Project Runway as a judge. This created more exposure for his line and expanded his business to a wider audience. These opportunities allowed MK to open up hundreds of stores on several continents (74 to be exact). He not only opened Michael Kors stores, he partnered with retail chains like Macy's, Nordstrom and Sak's.  With all of the strengths and opportunities also comes it's threats. The accessories or handbag market is very difficult to be in. There are many international competitors that have an advantage over MK that are hard to fight. One major task is the price wars. Customer's tastes change frequently, so if you charge too much they will look for a substitute product. If you charge too little your brad is looked upon as not a luxury item. You want t appeal to both everyday consumers and the luxury consumers. Finding that balance while still trying to be competitive can be very hard to do, but MK seems to have found their niche...and taken it all the way to the bank.

        Another thing that has helped Michael Kors is that he is an awarded designer, he personally lead his design team when creating the products. Having this knowledge gave him competitive advantage over his competitors. Another thing that offered him an advantage was he used celebrities to expand his consumer base. Everyone watches what stars are wearing so what better way to gain exposure than to offer products to celebrities. This strategy worked well because they targeted generation x and y which are men and women born in the early 1960's thru the early 1980's and the 1980's thru the early 2000's respectively. That audience paid attention to actresses and singers and what they wore/carried. In today's market you have to be innovative and be able to adapt to change. Michael Kors is doing that and he is doing it quite well.