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.