Ch. 7 - Business Marketing

Chanel, S.A. is a privately-held fashion house based in Neuilly-sur-Seine, France. Founded by Gabrielle "Coco" Chanel in 1909, Chanel, S.A. is an established name in haute couture and Chanel revenues are generated from its specializing in luxury goods, ready-to-wear clothing, handbags, perfumery, and cosmetics. The company manufactures and retails its own products through department stores and specialty stores, as well as online. Chanel S.A. has headquartered in Neuilly sur Seine, France with additional offices in Piscataway, New Jersey.  Chanel, S.A. has operations spread across the United States, United Kingdom, Asia, Australia, and New Zealand.  Chanel also generates significant high-margin revenue licensing the Chanel brand to third parties for accessories, sunglasses, fragrances, and other consumer products.  The company is owned by the Wertheimer family. In 2005, Chanel, S.A.'s division, Paraffection acquired Goossens, a manufacturer of women's jewelry, perfume, clothes and accessories. Thanks to the efforts of Alain Wertheimer (the owner of the company) in the 1980s and 1990s, Chanel’s performance improved remarkably. Not only was Chanel the global leader in the fragrance industry, it was also considered the top innovator in fragrance advertising and marketing in the 1990s. Chanel continued to invest more money on advertising than any other perfume company and attained the highest profit margins in the industry. Such success helped further develop the product lines that included watches, shoes, high-end clothing, cosmetics and accessories.

The trend toward vertical integration – control from the raw material to the shop shelf – gives luxury brands a competitive advantage, raises barriers to entry and helps them defend the high-quality image they want associated with their products. Chanel has been buying up partners to guarantee long-term supplies and control quality, from plant growers for its Chanel No.5 perfume to embroiderers such as Lesage for its couture collections. Bodin-Joyeux is the first tannery Chanel acquired, employing 100 people in central France. It is one of its main suppliers of supple lamb leather, known for its silky feel and used to make the brand’s popular 1,500-euro quilt leather bags. Bruno Pavlovsky, chairman of Chanel’s fashion business, said the brand had been working with the tannery for 30 years and would continue to supply rivals as other Chanel suppliers already do. Chanel, which started buying up partners in the late 1980s, today owns several niche fashion suppliers including Lesage, the feather specialist Lemarie, the hat maker Maison Michel and the glove-maker Causse. Last year, it acquired the Scottish cashmere company Barrie Knitwear. Chanel builds strong relationships with consumers, and are extremely accommodating to the needs of customer's by keeping up with their personal requests. This may be another factor in why the company has been so successful for over a century with, a estimated amount of $3 billion yearly.

Ch. 8 - Segmenting and Targeting Markets

Chanel has a very broad market in general due to their many market segmentation.  This well rounded company has been expanded a significant amount since it was established in the 1920’s. Gabrielle Coco Chanel opened her first store selling hats and few accessories. People mostly know Chanel for their fragrances, clothing and bags. Chanel's product mix has made them successful because they are specially targeted to women. The market segments for Chanel are mostly women (21 and older), they have knowledge about the brand and they know that they have good quality products. These product lines are targeted to different markets and it helps the company expand even more.   Chanel's geographic segmentation is limited since this brand is expensive and exclusive, their products cannot be afford and available to everyone. Retail Stores are mostly located in main cities such as: New York, Beverly Hills, Miami, Madrid, Russia, Tokyo, Paris, etc. Chanel is a brand that offers more than just clothes, it has become a brand that sells everything women need but now they are showing their new lines which will be for men and children.  

Although Chanel was extended greatly throughout the 1990’s, with the launch of a men’s version of perfume, its first skin care line, PRÉCISION (1999) as well as a new travel collection and fabulous line of sunglasses (under a license contract with Luxottica), there still remains scope for Chanel as a master brand to extend itself into other luxury products and services. An extension into Furniture would be successful because it is clear to envision sophisticated sofas which hold within them Chanel brand values of being classy, fabulous and authentic. The brand could also be leveraged to provide a range of products (perhaps a range of hats to start with; because of course they war Coco’s first product line) in the mid-price market, in order to provide a Chanel experience to those who are not extraneously wealthy, as this would spread the Chanel Universe and promote inter-wealth connections between people. However, this would have to be a one-off product offering so as to not ruin the overall image of Chanel. Chanel Candy sold at all Chanel counters, concessions, stores and booths would be a great success would be another idea of how to extend the brand. In essence, every touch point displays this. Brand expression is clear consistently and the brand identity is maintained to a high standard to ensure the fashion business maintains its personality and lives in the way in which its founder would have wanted it to.

Ch. 11 - Developing and Managing Products

Chanel has traditionally focused its efforts on designing, developing and producing products for the market. Today, global competition, outsourcing and legislation commend that companies take greater responsibility of their products. In the luxury brands industry, consistency is extremely important, in order to generate profit by creating brand value and customer value. A company needs to draw on the history and tradition of its own brand, which arc the foundation of product-making and resulting techniques, and showcase the philosophy of its own brand. Unless this is done in a consistent manner, the company cannot retain customers for long. The goal when developing a brand is to create value. Chanel do that by emulating the characteristics and values that its customers desire. Branding is present throughout everything Chanel's company touches—it is not just a logo.

 Nobody in marketing needs to be told about the importance of product consistency. Consistency is all, and while this bit of branding wisdom applies most commonly to products, savvier companies have extended it to retail design, customer service and, to advertising imagery. In 1922 Chanel introduced a perfume, Chanel No. 5, which quickly became popular, and remains a profitable product of the Chanel organization. Now in its 90th year of production, Chanel No. 5 is the best-selling fragrance of all time, and one with a long trail of print ads behind it. But whether the ad comes from 1968, there's a good chance you'll encounter the same stylistic elements therein, to wit: the bottle. Sure, beautiful models have come and gone, but the signature modernist flacon is the centerpiece. And that's no accident. "Chanel has always kept a certain kind of minimalized brand identity," noted Tilar Mazzeo, author of The Secret of Chanel No. 5. "It's all about the form and the line of the bottle."

"Chanel is clearly at that point where everyone is highly focused and is working together in a way that has created a terrific business," said Arie Kopelman, president and chief operating officer of Chanel Inc. The foundation of creativity is the codes of the brand. The team of innovators create, collection after collection, inventing the Chanel story again. The company's strong to devotion to fine materials, technology, and to the brand's philosophy have contributed to number of product lines that have excelled. The last several seasons have produced innovative items such as frayed tweeds, sleek sport looks, quilted bags in bright colors and unconventional shapes, as well as candy-colored costume jewelry.

Ch. 18 -Social Media and Marketing

Social media, whether it’s Twitter, Facebook, viral video, or mobile check-ins, can help a luxury brand solidify and personalize its exclusive image, as well as provide a way for brand enthusiasts to communicate and interact with each other and the brand. Chanel uses different channels, such as YouTube, Facebook, LinkedIn, Web site and etc. Facebook is a great platform for show casting visual content, so what better social network could there be for a famous fashion house? Chanel has been a leader in couture for many years, sparking many revolutions in women’s clothing and fragrances — little black dress, anyone? Now the company is making a statement as a leader in social media as well. Images are certainly a strong component Chanel’s Facebook presence; the Page has a very well-curated selection of photographs. Through all of the eye candy, however, it’s clear that this company has worked hard to bring its long history to life in this contemporary medium. Here are some of the great and stylish things Chanel is making happen on Facebook. Many of the new photos and advertisements feature the current spokeswomen for Chanel, but one of the fashion house’s great advantages is its treasure trove of historical photos. Instead of using Timeline’s Milestones feature just to share important dates for the company, Chanel’s Facebook Page also chronicles the life of pioneering designer and founder Gabrielle Chanel. From her birth in 1883 to the release of her classic Chanel No. 5 perfume, the life of Gabrielle Chanel is closely tied to the development of her fashion house. These updates are usually accompanied by vintage photos of Chanel herself. It’s a great way for the brand to recognize its wonderful heritage and history. Because the designer’s name is so frequently used for names of the company’s products, it was a smart choice to make Chanel a more prominent and relatable figure for fans to identify with.

 Chanel has also taken the next step in visual presentation by adding videos to its Page. Its video content ranges from trailers for the brand’s Little Black Jacket Exhibition, to filming behind the scenes at photo shoots, to advertising spots promoting its products. Video provides an extra dimension and allure to the label’s accessories and fragrances. It also gets Facebook fans closer to the haute couture brand than a still photo in a magazine ever could. Another staple of fashion magazines is how-to articles, which Chanel has worked into its Facebook Page as well. Makeup artist Lisa Eldridge has partnered with the brand’s Makeup Confidential site, and she has provided several cosmetics tutorials for Chanel’s Facebook Page. It’s a great way for the company to present a new angle for its products and get fans engaged. The Chanel name, in all-caps black and white text, as well as the two interlocking capital C’s, are well-known logos for the fashion house. The iconic branding is a key part of how Chanel presents itself on Facebook. It’s important to maintain that level of brand consistency when moving into the world of social media. Unified branding helps make a stronger statement, and can tie together a wide range of content on a network like Facebook.

Ch. 10 - Product Concepts

The founding of Chanel goes back to the year 1910 when Gabrielle "Coco" Chanel opened her first shop under the sign "Chanel Modes" in Paris. Since than it has grown to be one of the world’s most prestigious luxury brands for fashion, fragrances, beauty and skincare and was reported to have an estimated sales figure of nearly $ 2 billion in 1995. The brand Chanel is profoundly associated with its famous founder and her audacious femininity. World class designer Karl Lagerfeld helps keeping up the haute-couture- image. The brand Chanel is perceived as a brand of luxury, perfection and uniqueness. It is a concept to many people today. They are designed by intelligent, creative, and fantastic people. One of those designs is “Chanel”. Without a shadow of a doubt the single most influential female fashion designer of the 20th century, Coco remains to this day adored. She basically revolutionized the fashion industry, changing women from the tight corsets of the Edwardian era. What Miss Chanel did was reshape our concept of “elegance“. And in doing all these things, she basically achieved something precious for the women, freedom. As she said “Fashion fades, only style remains the same” became reality. Chanel's product concept is much like the company's mission statement and global vision as a whole. The brand has stayed true to the early vision of Chanel, to be timeless and sophisticated. The products that Chanel sells are a reflection of Coco Chanel herself, and what the brand has impacted on the world today. Chanel items tend to have underlining sex appeal and appear in lavish fabrics with many embellishments. Which always applies to one of Coco Chanel’s famous quotes “A girl should be two things: classy and fabulous.”  Consequently is very appropriate seeing that is the total quintessence of the label today even a century later.

 

Ch. 17 - Personal Selling

Personal selling is far more expensive on a per-unit basis than the other major tools of promotion: advertising, sales promotion and public relations. Personal selling is the most important way for selling products for Chanel because Chanel’s perfumes, bags, clothes, shoes, etc are not cheap. Actually it's too expensive. Customers are willing to buy fancy products when they are satisfied with a good advice and services. Also it will become relationship selling (consultative selling). Chanel service is great. The salesperson in Chanel will look for a potential customer who has the ability to purchase and explain the detail and some information about the product to the consumer. The salesperson in the Chanel department stores always demonstrate how to use the foundation and let the customer test the sample of the makeup foundation product. Chanel products are sold in big department stores such as: Macy's, Saks at Fifth Ave and more. Macy's offers great deals on Chanel's perfumes since their customers get a greater value; they tend to shop Chanel's cosmetics or perfumes at this department store. Chanel has good quality products which allow a good relationship with customer (brand loyalty); their clothing is beautiful and gives the customer the feeling that they can feel great wearing their brand. Chanel in relationship selling is motivating its customers to come back, again and again, by developing long-term relationship. In addition, mobile applications are available for purchase on itunes. These applications can be uploaded to the iphone or to ipods. On Facebook alone there are also over 500 groups that are based upon Chanel. Users are treated as a part of brand and their vision for company are evaluated.

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Ch. 16-Advertising, Public Relations and Sales Promotion

Chanel use a variety of multimedia platforms, including the Internet, social media, print, billboards, in-mall digital screens and retail Web links. The campaign was created to entice consumers back to the pleasures of fragrance. The culture (such as Vogue) in which Chanel is promoted reflects its prestige and positioning in society. Chanel is a brand for socialites, for the wealthy and the aristocrats. It reaches its target audience through advertising Chanel society and culture in places where people who exist within the culture will reach out to be a part of the Coco Chanel legacy. Chanel introduces a new fragrance every 10 years, not every three minutes like many competitors. They don’t want to confuse the consumer. With Chanel, people know what to expect and they keep coming back to them at all ages. Somewhat surprisingly, celebrity fragrances, which seemed to be a fad a decade ago, are now an established segment of the fine fragrance market. The power of celebrities knows no bounds. The public has an insatiable appetite for new celebrity fragrances, and continues to welcome these launches. Chanel spends millions on advertising each year. The company uses various celebrities and models for these advertising such as Brad Pitt, Nicole Kidman, Keira Knightley and many others. Brad Pitt is the first male face of Chanel No.5, the French fashion house's signature fragrance. Chanel is the first female scent to be advertised by a male. The ad's main message is possibly the finest example of reverse psychology that ever lived. "Wherever I go, there you are," says Brad, at which point we can help imagining a roomful of women, all wearing the same scent. Chanel also uses advertising appeal when it comes to, cosmetics and skin care line, showing the consumer with buying certain products it will improve their skin or denounce flaws in facial features.

  

Chanel has a way of sales promotion which is private sales for certain collection. Through holding private shows, special catalogs and special invite, only VIP events in order to retain a close following of those who remain true advocates to the House of Chanel. Chanel is exclusive brand and expensive and its does not offer many sales for the public. The price of clothing usually is lowered after one or two seasons later because of it is “out” of season. Chanel’s fragrances and make up usually have a gift with purchase. Chanel has many events when they launch their line or open a new store and they give the guests Chanel products, which lets them know what the new product is. This allows the guests to test the products and take samples home. In addition, if the guest buys for example perfume Chanel Chance he can get a small perfume and a body lotion. In terms of public relations Chanel has many different techniques. Chanel has regular merchandise demonstration for publishing new products that invite media to report. This kind of meeting can also function as a means of product placement. Chanel often has parties for celebrities like models, movie stars who are invited to join as to enhance Chanel’s popularity. Chanel also offers exhibition for media and public. “The Little Black Jacket” is one of the most recent exhibitions which have influenced today’s fashion. This exhibition was seen all over the world.