Coach Inc.'s profit and sales fell over the holidays, and Wall Street is concerned the retailer's plan to improve its performance by going upmarket may not work out. Analysts worried that in pushing prices higher Coach was allowing itself to be undercut by Michael Kors, who has taken market share by creating must-have bags like the Selma Messenger that are mostly priced in the $200 to $300 range. Analysts also voiced concern over Coach's continued expansion of factory stores, which can dilute a brand's appeal and make selling items at full price harder.
Describe the different options that Coach presently faces, and explain the tradeoffs of each option. What would you do?