Ch. 2 - Strategic Planning for Competitive Advantage

The business mission statement of the company Chanel is "To be the Ultimate House of Luxury, defining style and creating desire, now and forever." The mission of Chanel's "look" has always portrayed an image of elegance, grace and style from the beginning of the brand up until to modern times. The visionary of the company is for fashion to be functional. The mission of the Chanel Company and Chanel retail stores is designed to ensure the defining style of its founding designer Coco Chanel far into the future.

SWOT Analysis

Strengths: Chanel is the market leaders in this segment. Chanel us highly established brand worldwide since many years and strong brand equity and loyalty. They have about 1300 employees. Chanel S.A. operates some 310 Chanel boutiques; 90+ shops in Asia, 70+ shops in Europe,  128 shops in North America, 2 shops in South America, and shops in Oceania & Middle East. Classic and timeless designs are a major part of their collection.

Weaknesses: Stiff competition from other premium brands means market share is limited. Despite good brand visibility, brand switching is high.

Opportunity: Online sale and E-marketing gaining a lot of importance. The company could emerge markets and various expansions, and acquisitions abroad. Product innovation and takeovers.

Threats: Competitors in the same business providing similar kind of clothes and accessories. Economic slowdown and downturn also has an effect on production. Counterfeits and price wars are also a viable threat. Other company has cheaper and lower brands trying to copy their timeless styles and selling at many affordable rates.

Competitive Advantage

To stay competitive, it is often harder for established brands to reinvent while they remain true to the vision. As Chanel peers down the barrel it’s not all boom and bust.  Chanel has the opportunity to potentially use their longevity for a new advantage. However, in order to increase market share, emphasis on mass media and e-commerce would be effective which the competitors are already practicing. Chanel has a fashion show four times a year to show each season's newest looks. Chanel’s competitive advantage lies in promotion, quality, and benefits of use and design features. Also, Chanel sells their cosmetic and skin care line separately in stores from the ready to wear clothing and accessories, and each consultant working in a Chanel boutique has had previous training in Paris to learn the history of the brand.

 Strategic direction

In 1922 Chanel introduced a perfume, Chanel No. 5, which quickly became popular, and remains a profitable product of the Chanel organization. In addition, to supplying Chanel provide their design services and handmade goods to other design firm and wealthy individuals. Recognized for its elegant style and superior quality, Chanel has been insuring the reputation of its noteworthy name through its Parrafection division. The artisans division consists of gold and silversmith Robert Goossens (which create Coco Chanel’s popular Byzantine-style crosses), milliner A. Michel, button maker Desrues, fabric flower artisan Maison Guillet, ornamental feather designer Lemorie, embroiderer Lesage, and shoemaker Massaro. 

Target Market

The target of Chanel, the French fashion and Fragrance Company, is youth and women.

Product:

Chanel's two brands of fragrance, the Coco Mademoiselle and Chanel N°5-, are the number one and number three brand in the U.S. respectively.  Sales of Chanel's skincare products were down in the specialty stores but doing well in department stores.

Place:

Luxury brand Chanel established base of wealthy customer sand growing popularity in China, Russia, and Japan and other emerging markets.

Promotion:

The company Chanel invests a lot in promotion through different channels. It implements a series of advertisements on TV, magazines and posters. Many famous people advertises product Chanel such as perfume, clothes and so on.

Price:

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 avalible upon requests by calls or inshop.

Effective strategic planning

To prepare for an even brighter future ahead, Chanel can consider investing into emerging market by opening more stores abroad and tapping onto media marketing. Chanel’s success is truly a result of the house’s decision to remain true to Chanel always desiring to be a style, for “Fashion fades, but style remains’.