Which Stage, Coach?

What a brilliant ride Coach is having.

According to Reuters, Coach Inc. reported better-than-expected quarterly earnings on Tuesday, helped by higher full-priced sales of its handbags during the holiday season, and raised its full-year earnings and sales outlook.

Coach, which sells its signature leather handbags, accessories, shoes and jewelry in department stores and its own stores, said net income for the fiscal second quarter, ended Dec. 30, rose 30.6 percent to $227.5 million, or 61 cents per share, from $174.2 million, or 45 cents per share, in the year-ago period. Analysts, on average, had been expecting 58 cents per share, according to Reuters Estimates.

Lew Frankfort, Coach's chairman and chief executive officer, said the latest results were helped by better conversion, meaning that more of its store's visitors bought merchandise. Together with more customer traffic and higher average transaction prices, quarterly sales jumped 29 percent to $836.4 million. Analysts were expecting sales of $800.1 million.

Check out that wonderful statement on better conversation: more store visitors bought merchandise. Why? Let's break down the components because this Coach is riding with a team of great horses:

- Range of price points

- Excellent design

- Line extensions using different, less costly materials combined with great design supporting that range of price points

- Expanded distribution through new retail stores.

Just think of that -- less costly materials, wider range of price points, more items, and still Coach maintained the integrity of its name.

Contrast that with Tiffany's, which has seen a deterioration in its financial situation because it has been pulling back on its cheaper silver jewelry (you know those bracelets and necklaces that every 14-year-old fashionista had to have) to protect its name and to better serve that truly upmarket customer.

Coach has truly steered itself down the right path. Kudos to management.

But this is the same ride, the same reins, that everyone uses. Why did Coach do it better?

Because they weren't afraid when it came to design. They didn't fear pay-for-lower price materials. They smartly managed line extensions, discontinuing skus when they reached their sell-by date. And they made leaps in their innovations.

That's a road that really successful marketers travel down.