Chanel brand marketing report by meganpassey

CHANEL BRAND MARKETING REPORT FASHION MARKETING AND MANAGEMENT 1 MEGAN PASSEY

CONTENTS EXECUTIVE SUMMARY

Nº4

BRAND HISTORY

Nº6

BRAND EQUITY & VISUAL IDENTITY

Nº12

MARKETING MIX

CONSUMER SEGMENTATION

Nº14

Nº16

PESTEL

SWOT ANALYSIS

RECOMMENDATIONS

Nº22

Nº26

Nº28

COMPETITOR ANALYSIS

Nº20

Chanel is a world-renowned luxury goods brand that offers unique products all across the globe. Started by Gabrielle Chanel in the early 1900s the Chanel brand has been the name of some of fashions greatest revelations, removing corsets, shortening hemlines and introducing the colour black into everyday wear. Being the pioneer of elegance and simplicity Chanel has created iconic pieces like

EXECUTIVE 4

the Chanel suit, the little black dress and the perfume Chanel No.5. This brand report seeks to analyse Chanelâ&#x20AC;&#x2122;s performance in different markets and what they have done to achieve such an elusive brand. I will also provide recommendations as to how they could improve and further expand Chanel.

summary 5

BRAND HISTORY The infamous Chanel brand that is known all across the world for its high quality, unique products that range from perfumes to clothing all started from a young, passionate Leo, Gabrielle Bonheur Chanel, born 19th August 1883. After learning how to sew whilst living in the orphanage of the Catholic monastery of Aubazine. Before opening her first store in Paris’s, Rue Chambon in 1910 Chanel had a brief career as a cabaret singer in front of groups of cavalrymen, gaining the nickname “Coco” as she often sang the song “Who’s seen, Coco?” (Chanel, 2013). In her early twenties, Chanel became involved with French socialite Etienne Balsan, who helped finance her millinery store in Paris, a hobby she picked up whilst living in Balsan’s chateau, living the elite lifestyle as she struggled to find designs she herself would wear. (Jones, 2015) She then invented new styles of hats, made up of fewer feathers and flowers stripping them back to a simple and sophisticated accessory. In 1908, Chanel met one of Balsan’s friends Captain Arthur “Boy” Capel, an English aristocrat and fell deeply in love. Later leaving Balsan and moving back to Paris with Capel (Jones, 2015). Chanel opened her millinery store in 1910 at 21 Rue Cambon. After a couple of years with her millinery business, Chanel venture into fashion. Chanel revolutionised fashion as she removed corsets, shortened hemlines and used jersey material to create a new look. In 1918, she opened her first couture house at 31 Rue Cambon, Paris. “In 1920,

Coco became Mademoiselle” (Chanel, 2013). After Boy Capel’s death, Chanel moves to Venice after her new style of comfort had been favoured by most of Europe. In 1921, Chanel is introduced to Ernest Beaux who helps create the informs Chanel No. 5 that goes on to be the best-selling perfume in England for 25 years. 5 years later the iconic little black dress was born. As black was strictly reserved for servants and times of mourning it made a bold statement to the world of fashion and was accessible to all. During the Second World War, Gabrielle Chanel closes her store at Rue Cambon and retires to Switzerland. However, in 1953, at 70 years old Gabrielle Chanel makes a return to fashion to fight against the male designers who wanted to put women back in corsets and full skirts. Once regaining her influence upon the world Chanel created the Chanel suit an iconic piece of mastery, the jacket inspired by military uniforms, braided tweed, buttons like jewels that fit perfectly due to the concealed chain in the hem of the jacket so it hung just right. This Classic was worn by all kinds of women across the world such as Grace Kelly, Liz Taylor and more. Chanel worked tirelessly until her death attending fittings and making alterations to the clothes that encapsulated the essence of Gabrielle Chanel herself. In 1983, Karl Lagerfeld joined the Chanel label who has kept the unique spirit and legacy of Chanel whilst reinventing what we see as fashion to this day (Chanel, 2014).

"A woman who doesn't wear perfume has no future" -Coco Chanel

brand equity “Brand equity is the added value endowed with products and services. It can be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the price, market share, and profitability the brand commands for the firm.” (Srivastava, 2015) A brands visual identity is the visible elements of a brand, like the colours, shapes, forms, logos which captures the meaning of the brand without using words (Business Dictionary, n.d)

products are made and whether they are local or global. Chanel makes their handbags in a workshop in France and Italy.

BRAND IDENTITY

The perspective brand as person consists of the brand’s personality and relationship with the consumer. Chanel’s personality is sophisticated, classic, and luxurious. Chanel uses celebrity endorsement in their advertising as their elegance and class makes the consumer believe that if they too have this product they will have the same lifestyle and prowess of the celebrities.

The brand as an organisation comprises of locations that

The last of the 4 main perspectives under brand identity is the brand as a symbol which consists of visual imagery, metaphorical symbols and brand heritage. Chanel has a very iconic visual, most obvious the interlocking double C’s. There is also the pure white Camellia flower that Chanel herself chose as her flower of choice as it was scentless so did not mask the smell of her famous No. 5 perfume (Modaselle, 2017). Another symbol associated with the Chanel brand is the lion. This symbol derives from Gabrielle Chanel’s own birthday as her zodiac sign is a Leo being born on the 19th August. Both the camellia and the lion are used widely in Chanel’s jewellery lines.

Aaker’s model divides ‘Brand identity’ into 4 main perspectives: The first perspective is brand as a product. This consists of the brand’s product scope, for Chanel this involves their accessories, shoes, clothing, and jewellery collection. It’s also the quality of their products which Chanel is renowned for producing some of the highest quality in the world across a range of different markets. Chanel is well known for their suit which has amazing details, such as the hidden chain in the hem to ensure a perfect fit. One of Chanel’s most signature products is the No. 5 perfume, the bottle which has not changed since its invention.

visual identitiy VALUE PROPOSITION: When somebody owns a

Chanel item it is a form of self-expression, sometimes people show it through the colour or pattern of the item or even just the possession on of the exclusive brand is expressing the image of themselves they intend to portray. BRAND POSITION: The selection of items that you would find near a bottle of Chanel No. 5 may include, a designer watch, expensive jewellery, high-end makeup and skin products. EXECUTION: Chanel’s communication routes are very small. To buy their more expensive items such as bags, shoes and clothing you have to visit one of their boutiques or exclusive stores. On the other hand, many department stores stock their cosmetic and fragrance lines. CONSISTENCY OVER TIME: Over time Chanel has been very consistent from the colours they use; black, white, gold and red. To their logo that has been the same since Gabrielle created it. The brand’s coherency has also stayed through the addition of Karl Lagerfeld, who has experimented with the brand’s image never strayed too far. BRAND LEVERAGE: Chanel’s brand leverage is large. They started with clothing, then not long after launching their fragrances. Later in the brands lifetime a cosmetics range was launched, the two-toned shoes and bags. TRACKING BRAND EQUITY: Chanel has had many celebrity endorsements used in their advertisements, especially the Chanel No. 5 adverts which star actors such as, Nicole Kidman, Keira Knightly, Brad Pitt, Lily-Rose Depp just to name a few. BRAND RESPONSIBILITY: Chanel has a large brand responsibility as it has been around for 100 years and is classed as one of the top luxury goods brands in the world. Therefore, have a reputation for high quality especially for the prices they offer.

BRAND INVESTMENT: Chanel often reinvests into

themselves and their Fashion week shows as they are a costly expense but the coverage and attention they receive exceed the cost.

MARKETING MIX PRODUCT

PRICE

Chanel is a high end, luxury brand, that are pioneers in the haute couture industry as well as the top end of ready to wear. This and their reputation for elegance, exclusivity and timelessness means that the pricing strategy used is premium pricing (Phillipson, 2012). This eludes that the higher price means higher quality and exclusivity. However, not all of Chanel’s products come under the same pricing strategy. In 2015, Chanel announced they were to globally harmonise the pricing structure for 3 signature bags, including the Boy bag, 11.12 and the 2.55 due to the changing market subsequently causing Europe’s prices to rise and Asia’s to drop. Bruno Pavlovsky, Chanel’s president of fashion, said that the shift in pricing is a “better way to ensure the relationship we want to build with our customers” as it will balance the brand’s prices across fluctuations in currencies (Pathak, 2016).

All of Chanel’s products are meticulously designed and executed to live up to the personality and essence the brand exudes. One way in which products are categorised is through the BCG Matrix. This model is based on a products life cycle and designed to assist in long-term strategic planning by helping a brand to see their growth opportunities by reviewing its product portfolio to decide the best area to invest, discontinue or develop (Hanlon, 2017). BCG matrix is split into 4 categories based on market growth and relative market share, named stars, question marks, cash cows and dogs. Stars are products in high growth markets with a high market share like Chanel’s accessories. Often the primary place in which companies mainly invest as they are likely to become cash cows, generating a positive cash flow (Jurevicius, 2013). Question marks are products in a high growth market with a low market share e.g. Chanel’s jewellery and watch collections. These are question marks as there is a large amount of competition in these markets and could either become stars by gaining market share or dogs if they struggle to get market share. Cash cows are products in low growth markets with a high market share like Chanel’s perfume and cosmetic ranges. These are deemed the most profitable as they provide the most cash to a brand and the cash made by the cows is often invested I the stars to aid their future growth. Dogs are products with low market share operating in a slow-growing market e.g. Chanel haute couture. Daywear, Haute Couture, Jewellery, Bags, Watches, Cosmetics- makeup and skincare, Perfume, Shoes, and Eyewear.

PROMOTION

PLACE

There are only 310 Chanel boutiques worldwide, which makes the exclusivity of the brand play a role in their premium prices. Their main consumers are wealthy people in high powered jobs. Thus, the locations of these stores are in coherence with the locations populated by the consumers. Areas such as London and Manchester in England, Japan’s high-class area of the Ginza District. Other stores are located in famous airports like Hong Kong International Airport as they attract holiday goers with a large amount of spending money, with time to kill whilst awaiting a flight (Bhasin, 2018). Each Chanel stores outer appearance is sleek, minimal, with just the brand name on display, no advertisements in the windows just one or two mannequins and accessories. The inside of stores is very minimal with the focus on the products.

The main form of advertising used is in the high end, popular magazines like Marie Claire and Vogue that cater to the needs of Chanel’s target audience, wealthy and influential individuals. Publishing in these types of magazines is expensive racking a total of $112 million spent on measured media in the US between January and November 2012, with $71 million going into magazines. However, the sales they get from these greatly out way the costs. (Bruell, 2013) Their advertisements reflect Chanel’s exclusivity by using celebrities to endorse the products, specifically their perfumes. Nicole Kidman, Keira Knightly, Gisele Bundchen, Brad Pitt and Lily Rose Deep have all been major brand endorsers for Chanel by being the face of adverts for Chanel No.5, Coco Mademoiselle, and No.5 L’eau. Depp also made her catwalk debut at Chanel’s Spring/Summer 2017 Paris fashion week, with the honour of the ‘Chanel bride’. Using celebrity endorsement to project the heritage and lineage of the brand it speaks out to the consumers saying that you will become like them if you buy Chanel in a sense. In 2017, according to WWD, Chanel was “one of the top leading brands on social media along with a competitor, Louis Vuitton”. Chanel is the leading luxury brand on all platforms, bar Facebook, with over 57 million followers globally (Aliferis, 2017). To gain this title Chanel worked hard on their social media by formulating a strategy for videos and content. Their main focus on social media was videos, they uploaded on both YouTube and Facebook. One key to Chanel’s success in this area was the quantity of videos they produced. They uploaded more than double the industry average of 289 videos to YouTube posting 642 videos which received over 200 million more views than the industry average and their Facebook videos gaining nearly 4 times the industry average of views. (source: theloup.co Luxury Social Video Index, July 2017).

CONSUMER SEGMENTATION just middle-aged women. The designs will have needed to be modernised and be able to keep up with new trends quicker. In reference to Maslow’s Hierarchy of needs, Chanel fits into the top category, selfactualisation. This level is where people seek personal growth and fulfilment and creativity (McLeod, 2007). Chanel consumers fit perfectly into this category as there is not a need for their products it is a desire for style, materials and quality.

“Consumer behaviour is the study of how individuals, groups and organisations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants “(Kotler and Keller, 2006). Chanel’s key demographic is typically women aged 18-50 years old with an annual income of around £50,000 or more. Their psychographic is that Chanel products represent power and status (Lin, 2013). Women believe that the bold interlocking C’s stamped on either their bag or shoes symbolises their wealth and class. Over the last couple of decades, Chanel’s consumers’ needs have changed. They have changed as the target audience has dropped to young adults, not

An emerging market is a country that has similar characteristics of a developed market but is not fully there. Emerging markets are good places for companies to look into to sell their products as the competition is usually smaller, therefore a bigger market share is available. In 2018, it was the first time that over half of apparel and footwear sales originated from outside America and Europe. Some of the main sources of growth amongst emerging markets are countries across Latin America and AsiaPacific (Amed & Berg, 2017).

competitor Chanel is one of the top luxury brands in the world. However, they do have strong competition, the main two being Louis Vuitton and Gucci. Many customers that can afford to buy Chanel often have a large range of designer products going through the whole designer brand spectrum. Louis Vuitton was founded in Paris, 1854. Like Chanel, Vuitton also sells a range of different product lines like shoes, bags, accessories, clothing and jewellery making it one of the most valuable luxury brands in the world (Holborow, 2012). Vuitton is infamous for their travel bags that range from trunks to suitcases and holdalls. With the iconic LV logo wrapping them. A very different design approach to Chanel’s simplistic style. Gucci was founded in Florence, 1921. Many of Gucci’s products adorn the green and red stripe that like Chanel’s double C’s is an instant correlation with the brand. Gucci is also famous for their floral and insect-based designs, giving a new, fresh garden feel. Gucci and Chanel are quite different in styles as Gucci produce more patterned, bright items which are the polar opposite of Chanel. However, they both sit near the top of the luxury fashion market.

High price

analysis

High quality

Low price

Low quality

Microenvironmental factors are internal and controllable. The actors in the company’s immediate environment that affects its capability to operate effectively in its chosen market. These include suppliers, customers, intermediaries and competitors. Macro-environmental factors are external and uncontrollable. The board forces that affect not only the company but also the other actors in the microenvironment. The analysis of forces is PESTEL: Political, economic, social, technological, environmental and legal.

For Chanel’s SS15 show they emulated a feminist protest, chanting empowering words and large signs with “Ladies First”. This show shows how opulent politics can be in fashion (Waters, 2015).

pensive jewellery, watches, bags, shoes and clothing has risen to nearly double the rate of global GDP (Exclusivity for everybody, 2014).

Political factors are a large influence on fashion brands.

One of the economic factors for Chanel is the increase in purchasing power in the developing world which leads to a rise in the desire for luxury goods and the disposable income to buy in countries in Africa and some of Asia. The luxury goods market has also grown over the past 20 years with the number of customers tripled. The spending on ex-

The main social factors for Chanel is the exclusivity of their products as they are only accessible to the super rich that live close by to one of their boutiques for the more elite products. Conversely, the brand identity that Chanel has portrayed to the world has made it appealing to all classes economic incomes. One way they have accommodated the lower and middle classes they sell their fragranc-

T es, makeup and skin care in most department store across the world. A technological factor that has influenced Chanel is the rise in online shopping and how easy it has become to buy offline. Chanel has a good website that shows you all of its product range however you are unable to buy everything from the website. This could put Chanel at a loss as not all customers might have access to one of their stores. Chanel is also investing in the research and development of their fragrance formulas to make them more sustainable, moving away

E from the synthetic chemicals they use (Cooper, 2014). Chanel is not known for sustainability in the sense that Stella McCartney is. However, this does not mean they ignore the major issue faced today and by the new generations that are significantly more aware of the environment and the damages that the fashion industry has on it. For example, it takes 1800 gallons of water to produce one pair of jeans. One way that Chanel is thinking about the environment is through packaging. In 2009, Chanel teamed up with Evea to create Winted, a software

L that helps companies produce sustainable, eco packaging. Chanel made this software free for the cosmetics industry, to get everyone to move forward and think about the effects on the planet (Chervil, n.d) One of Chanelâ&#x20AC;&#x2122;s biggest battles is against counterfeit products. In June of 2017 Chanel won a trademark infringement lawsuit against Amazon the online retailer as around 30 of their sellers were offering counterfeits. From this action, Chanel won around $3 million, collectively from all the sellers (Hays, 2017).

•Strong online presence- very active on twitter, Instagram and good website •Signature style- tweed, simplistic, •Wide product range- perfumes, clothing, cosmetics, jewellery •Rich brand heritage •Strong brand identity •High quality- beauty in the detail, “never a button without a button hole”

•High prices, limits customer base •Cannot buy everything online only fragrance, makeup, skincare and sunglasses. •Limited geographical coverageboutiques only in limited areas only 310 stores worldwide whereas louis Vuitton has 460 stores, Gucci has 425

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•Emerging markets: Latin America, Asia-Pacific •Capturing younger generations •Use brand recognition to boost innovation •Use modern technology for maybe making a new fabric or method, increase marketing on social media

•Intense competition- could minimise Chanel’s market share (louis Vuitton, Gucci) •Counterfeits, difficult to control and distinguish •Other cheaper brands copying styles, selling for less

RECOMMENDATION In conclusion, I believe that the ways Chanel could develop themselves as a brand are to venture into the sustainability movement. As they are a well-respected brand and already have a large customer base, the transition into looking at sustainable materials and methods of making garments will not negatively affect their customer base it will increase it as sustainability is a large focus for the new generations. A second development Chanel should look to take is improving their online platform for sales. Currently, only some items are available to buy off their official website. However, we are living in a technology-driven era with online shopping at the forefront.

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