1.
1. Executive SummaryExecutive Summary
Chanel is an established luxury fashion and beauty company in France, Chanel is an established luxury fashion and beauty company in France, founded by the stylish Coco Chanel, famous for revolutionizing womenʼs
founded by the stylish Coco Chanel, famous for revolutionizing womenʼs fashion and introducing timeless elegance and style.
fashion and introducing timeless elegance and style.
Apart from a long history, Chanelʼs strength also lies in cult
Apart from a long history, Chanelʼs strength also lies in cult designer Karldesigner Karl Lagerfeld who never fails to interest consumers and a management team that Lagerfeld who never fails to interest consumers and a management team that is highly effective in preserving and promoting the brand image and a
is highly effective in preserving and promoting the brand image and attuned tottuned to consumerʼs needs and market trends.
consumerʼs needs and market trends.
Chanel will no doubt retain her powerful market positioning by continuing the Chanel will no doubt retain her powerful market positioning by continuing the excellent job she is doing. To expand her market share, she can increase excellent job she is doing. To expand her market share, she can increase emphasis on new media marketing and consider e-commerce, something that emphasis on new media marketing and consider e-commerce, something that competitors are already venturing into.
competitors are already venturing into. This paper seeks to analyze
This paper seeks to analyze Chanelʼs performance, and pr Chanelʼs performance, and pr ovides recommendations for whatovides recommendations for what can be improved to further
can be improved to further expand Chanelʼs global power.expand Chanelʼs global power.
2. Company Background and History 2. Company Background and History
Chanel is a Parisian fashion house founded by Gabrielle "Coco" Chanel, Chanel is a Parisian fashion house founded by Gabrielle "Coco" Chanel, recognized as one of the most established in haute couture, specializing in recognized as one of the most established in haute couture, specializing in luxury goods. Chanel has always specialized in items such as simple suits, luxury goods. Chanel has always specialized in items such as simple suits, dresses, women's pants, and costume jewelry. Coco Chanel's designs and dresses, women's pants, and costume jewelry. Coco Chanel's designs and creations are timeless, considering the basic silhouettes have remained creations are timeless, considering the basic silhouettes have remained consistent from generation to generation.
consistent from generation to generation.
According to Forbes, the privately held House of Chanel is jointly owned by According to Forbes, the privately held House of Chanel is jointly owned by Alain Wertheimer and Gerard Wertheimer. They are the grandsons of the Alain Wertheimer and Gerard Wertheimer. They are the grandsons of the
early Chanel partner Pierre Wertheimer.
Chanel S.A.S. designs, manufactures, and retails fashion and beauty
products, and other accessories. Chanel S.A.S. was founded in 1909 and is headquartered in Neuilly sur Seine, France with over 200 boutiques
worldwide.
3. Industry Analysis
Target Audience
Chanel customers are women who want to identify with what Chanel represents which is; elegance, simplicity, modernity, and class. Chanel cosmetics are
targeted at a younger consumer but they still retain the “classic” market, which is their forte. Since 2002, with the launch of Chance perfume, Chanel is targeting women between the age 18 – 39.
Market Positioning
Chanel has a strong market positioning within the luxury fashion goods sector. Drawing on an audit by Swiss and Cayman Islands tax services, financial
experts estimate that Chanel has approximately one-third share of Franceʼs
fashion and luxury goods sector in 2008, with a $10.3 billion estimate value of the sectorʼs $35 billion.
Market Sector
Chanel is enjoying an established presence in the designer and haute couture sector. This is the companyʼs outlook, supported by the high end pricing of the products and a strong brand image which consumers perceive.
Competitor Analysis
Louis Vuitton, established since 1854, is one of the main divisions of LVMH. The brand produces and retails luggage, handbags, other leather goods,
shoes, clothing, jewelry and watches. There are more than 390 shops worldwide. Gucci, an Italian company based in Netherlands. The brand produces and retails handbags, other leather goods, shoes, ready-to-wear clothing,
Louis Vuitton and Gucci are strong competitors because like Chanel, they have a very strong brand image conveyed by the easily recognizable logos. They compete keenly with Chanel in terms of sales of handbags and
accessories. However they specialized in leather while Chanel did not. According to the Brandz valuation 2010, the top three luxury brands - Louis Vuitton, Hermes and Gucci - all enjoyed significant increases in brand equity. But Chanel, at number four, lost 11% of its brand value over the past 12
months. Much of Chanelʼs lost brand value can perhaps be explained by the companyʼs reluctance to enter China. In terms of cosmetics market,
Chanelʼs notable competitors would include LʼOrealʼs Lancome, who hold the largest share in luxury cosmetics,Estee Lauder and LVMHʼs Christian Dior.
4. SWOT: Micro economical analysis
Strength
1. Strong brand image: The story of stylish Coco Chanel, who famously said “fashion passes; style remains", conveys a very strong message of Chanelʼs timeless elegance style.
2. High-quality: Beauty is in the details. Chanel is famous for her tweed fabric, embroidery, chain and button.
3.Cult Designer Karl Lagerfeld: Always reinventing Chanel, he is known to
have changed nothing yet everything about Chanel. Always daring to try something different for each show, keeping the consumerʼs interest in Chanel.
4. Excellent Management: Training for Chanelʼs associates is critical, to differentiate them with their service. Consultants are sent to Paris to understand the heritage of the house and gathered for a conference for updates, acknowledgement and training for new products.
Weakness
1. Website: Does not provide prices. Customers will need to make calls or personal trip to store to find out prices.
2. Limited geographic coverage: Chanel boutiques are known to be exclusive and large-scale however they are missing out on expanding in many critical places in Asia, like China.
Opportunities
1. Expanding deeper to the Asian market: There is huge economic growth in Asia, specifically China and India. Chanel can consider opening up more flagship stores to meet the increasing demands for luxury goods.
2. Tap on technology: Youths embrace social media and blogs. Chanel must consider increasing marketing in this area in order not to be obsolete.
Threats
1. Counterfeit goods: A prevalent issue that can be difficult to distinguish and control.
5. Product Developments and Collections
In the hands of Alain Wertheimer, Chanel has undergone a veritable industrial revolution. The quaint and romantic artisanal fabrication has been replaced by
state-of-the-art production methods carried out in modern factories in Compiègne, Pantin and Saint-Chamant. Each operation is controlled down to
the minutest detail. With its own plants, Chanel can ensure that no outside manufacturer will omit some small but vital step and jeopardize the quality of the goods.
Chanel is famous for The Suit, The Camellia, Jewelry, Fragrance & Beauty and The Black Dress.
6. Types and Range of Merchandise In-store
The company feels it must remain a myth to ensure its mystique. Nothing must alter the image of Chanel. Wertheimer has faithfully maintained the
opulent image of Chanel despite the trend toward democratizing luxury goods. The company has no plans to launch a second line.
Chanel offers the classic items in their stores throughout the year whilst introducing new, trendy products with each fashion season. Range of
merchandise includes fashion apparels and shoes, accessories, fragrance, make up, skincare, fine jewelry and watches.
7. Timeline of Product Development Process
For Chanelʼs fashion apparels, its product development process can be tracked to about every 2 months, with 6 collections produced by Karl
Lagerfeld each year.
8. Prices and Seasons
Chanel’s product prices reflect the opulent image of Chanel. And because Chanel finds discussion of costs “crude”, high-end prices of products are not reflected on their website and only available upon requests by calls or inshop. A little research reveals a classic (Reissue 2.55) Chanel bag varies
between SGD$2301 to SGD $3,199.40 Exclusive and “Ultra Luxe” items like Alligator bag can cost up to $26,000.41 More recently, two Marina Bay Sands
boutique in Singapore Chanel exclusive flap with chain and charms costs SGD$6280 and SGD$6980 respectively.
9. Recommendations
1. Invest in the emerging markets, open more stores: There is an increase in income for the people living in the emerging markets such as China and India and this leads to more demand for luxury goods. Chanel should leverage on this by opening more stores in these emerging markets.
2. Pay more attention to the counterfeit and possible invest in
technology to prevent it: Chanel can possibly work with government boards to clamp down on counterfeit goods at cross-border checkpoints.
3. Increase emphasize on new media technology: To remain relevant in a technology-savvy society and particularly to attract younger consumers,
Chanel can increase new media marketing and consider going into ecommerce, which many competitors have done.
10. Conclusion
Chanel has many strengths that makes it the multi-billion company strongly established within the elusive designer and haute couture market. The
strength of an established brand started by Coco Chanel, carried forward by talented and creative Karl Lagerfeld and an amazing marketing and
management team that has proved Chanelʼs ability to attract young
consumers since late 90ʼs till today. To prepare for an even brighter future ahead, Chanel can consider investing into emerging market by opening more stores abroad and tapping onto new media marketing. Chanelʼs success is truly a result of the houseʼs decision to remain true to Chanel, always desiring to be a style, for
“ ”.
11. References
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for the future : a compilation of discussion papers, case studies and
methodologies from ESOMAR . John Wiley & Sons Ltd.
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