This report is going to be an in-depth study into how the chosen brand Chanel can effectively develop and grow further in the luxury brand sector. This will be supported by using the framework of the 7Ps of marketing, SWOT analysis, BCG analysis, the five personality brand dimension model and the identity prism model. Moreover, an important event will be analysed, a summary of the factors critical for the success of the brand will also be presented and strategies for growth shall be recommended.
Introduction to the brand:
Chanel is a Parisian-based fashion house, and a privately owned company : Chanel S.A. It was originally founded by Gabrielle Coco Chanel in 1909. Chanel originally begun with selling hats and later diversified into different product categories. The brand is famous in the lifestyle and retail sector and known as a leader in the haute-couture and ready to wear clothing. It is well known for selling luxury products in the apparel and accessories sector, cosmetics and skincare, and shoes and handbags.
The logo of Chanel is “keep it classy”, which suggests for the elegant and sophisticated agenda behind the brand. The success of the company started with the introduction of Chanel No.5 perfume, which is now still the most famous perfume in the world, after which the company was diversified in designing clothes and accessories. Chanel's target audience is mainly women the age of 30-40 years, and recently men, but the original idea of Coco stands for femininity.
Since the death of Coco Chanel in 1971, director became Karl Lagerfeld in 1983, a German world-famous fashion designer and director of Chanel fashion-house, Fendi fashion-house and his own brand. Nowadays Chanel is estimated to be worth $7.2 billion, generating approximately $5.2 billion in sales and ranked as the 80th most valuable brand in the world (Forbes, 2017).
Brand personality, brand identity and brand image:
Brand personality refers to the human characteristics that a brand enhances as opposed to brand identity which is defined as the way people see and enhance a brand. (Business Dictionary). Having a strong brand identity befriends a strong brand personality. There are two models that will be used to analyse the brand identity and brand personality of Chanel.
The five personality brand dimensions is a model that helps identify the emotional personality of the brand and is measured in different dimensions and levels. (Appendix 1 and 2). These revolve around the scope of tradition, elitism, opulence, eccentricity and sensuality (Concept of Luxury Brands). Chanel is created by Coco Chanel a significant figure in popularising the brand personality and enhancing its strength. It still carries her name and her designs, which suggests it is highly traditional and although they come up with new products roughly 6 times per year, the image of Coco always stands behind. The brand would be considered as very elite due to its high exclusivity, low accessibility and luxury status that it presents on the market. There is a high level of opulence in Chanel, as the brand does not try to hide the glamour and wealth that it carries. It is designed to attract the high-end spenders as seen by the rich and beautiful people who advertise it (Appendix 3). The spirit of Chanel is communicated through their minimalist and simple style which shows elegancy and sophistication. This enhances the image in such a way that gives woman (the target consumers) the feel of freedom and high quality way of life. Sensuality comes in the sense of how feminine is the brand and how emotionally attached consumers are, and there is nothing else that says femininity like Chanel does.
For analysing the brand identity of Chanel, has been used the “brand identity prism model” (Appendix 4).
Brand image is defined as the impression perceived by the total look of the brand (Business Dictionary). Behind Chanel's strong brand image, stands its remarkable creator - Coco Chanel. The current success and ongoing popularity of the image is greatly reliant on its innovative director - Karl Lagerfeld and the figures behind its advertising (e.g. Natalie Portman, Brad Pitt, etc.).
Chanel is a long existing brand, easily recognisable and memorable
Superior in quality and reliability - they provide exceptionally high quality of craftsmanship
Chanel has a well-established, strong relationship with customers
Large chain of 300 boutiques in most developed countries and have their own network of 80 privately owned stores around the world
The website does not provide prices and they only sell fragrance and cosmetics online
High competition in the fragrance sector
Limited locations - they need to start investing into opening stores in developing countries
High and increasing prices of products: The current price of a medium sized Boy bag is $4,700 (USD) compared to last year when the price for the same product was $4,200 (USD).
Embrace sustainability - customers with social values are looking to live a sustainable lifestyle and are devoted to know from where and how the product comes.
E-commerce - start selling more products online and to many locations.
Collaboration with other brands of the same level in order to attract more customers or aim to younger generation.
No records of being sustainable : Chanel is an E-category brand (Appendix 5).
- Copycats and replica products all over the world hinting Chanel's exclusive image.
Price wars - Chanel never decrease their prices in comparison to competitors.
Recommended strategies for growth:
Invest in opening stores in developing countries where there are also clients with high spending power to target. For example there are only 2 stores in Turkey and no record of stores in countries such as Greece, Bulgaria, Croatia, etc. where there are many customers interested in the brand who have little or no access to it in those locations.
Although it is debatable that opening more stores would hinder the exclusivity of Chanel, increasing the customer base by doing so, is not going to harm the reputation of the brand. The loyalty of existing clients would not be affected as the brand itself would not intend to be on every corner, but it would be able to provide more for its desired target group.
Becoming sustainable in the supply chain is a huge step towards growth for international well-known brands, like Chanel. The high customer awareness of environmental issues nowadays has encouraged cautiousness about how brands make their products, how do they process them, and are they being sustainable after all?
A good strategy for going “green”, would be to minimise greenhouse gas emissions, fuel and energy emissions to a low level to reduce environmental contamination. Investing in appropriate technology to make sure that 100% of the raw materials are being used in order to reduce waste. Recycling textiles, promoting sustainable designs and fabrics would be a key drive for Chanel to become a more sustainable businesses.
Another recommended strategy would be to invest into technology that would keep away the counterfeit goods, which are becoming a huge problem for the authenticity and heritage of the brand. Chanel could fight this with the help of governing bodies by doing checks at customs and boarders. They could act with private enforcement to the production factories and use the law to prevent their products being sold for 100 times less than what they are worth.
At the moment Chanel is only selling fragrance and skincare products online, so going full into E-commerce is another strategy for growth that the brand must consider the same way its competitors have done. Although this goes against their value of it all being about the shopping experience, in order to remain competitive they must be in trend with the technological up-movement. This is bound to strengthen the brand, increase profits and encourage the flow of younger, wealthy clients, who as of 2016 study, represent an annual of $200 billion in the luxury fashion sector (Intersect Retail, 2016).
International event support growth (launching a new collection):
Chanel is world famous for their incredible fashion shows, dinners, runaways, parties and events, however this section is going to talk about their newest launch, which turned out to be the event of the year for the brand.
“Gabrielle” is the newest addition to Chanel's handbag family that everyone is talking about. (Appendix 6).
It is the most sensational bag to come out since the debut of “Le Boy” in 2011 (Harpers Bazaar.com, 2017). The bag is unique for bringing out a unisex vibe to the fashion world, where barriers between men and woman no longer exist, as suggested by Chanel's designer Karl Lagerfeld. This statement is supported by the advertising campaign of the product, where in numerous videos, Pharrell Williams, a famous singer and very well-known fashion icon, is seen wearing the “Gabrielle” bag and jewellery of Chanel. For the first time Chanel is “stepping aside” from the so-known feminine look with launching Gabrielle, which is a very chilled, street, hobo kind of style and perfect for a young girl. The success of this new product is in-doubtful, as the bag has already become the biggest hit of the spring, a “must have” and the “it bag” of the year.
The advertisement campaign which debuted in April this year dedicated to the event launching of the bag and its designer, has been absolutely huge. Chanel went crazy with shooting a short set of films in support of the campaign where they featured stars and famous icons Pharrell Williams, Cara Delevingne and Kristen Stewart. Each one of them have been a muse behind the creation of this bag and the personality of Gabrielle, and in each video of the “starry campaign” they try to give a closer look to what Gabrielle Chanel life was.This campaign was created in aim to suggest exactly the mysteriousness that Chanel likes to hint to their fans and the magical aura that they manage to embody to their products. And they succeeded. Everyone was talking about “Gabrielle”: on social media, in magazines, the TV, on the streets and fashion events. Chanel went viral in Instagram where their videos managed to reach over 400,000 each.
The newest collection was introduced during the Ready-to-wear runway show in Spring-Summer 2017 and is dedicated to pay a special “tribute” to its designer - Gabrielle Chanel. It was officially presented in celebration of the anniversary of her 132nd birthday, which took place in Paris this year. The celebration around the bag is expected to continue for the whole year and is even named as :“ The year of Gabrielle”. Chanel has also celebrated with a big party in Hollywood, US, where all fashion icons came for the occasion. (Appendix 7).
Chanel also launched a fragrance perfume named “Gabrielle” in support of the collection. The perfume starts at the price of £50 for 35ml and is pretty much available for everyone to purchase. Although this may hinder the exclusivity of the brand, it does allow customers of the lower and middle class to enjoy the newest collection.
Brand stretching refers to when a brand stretches into new product categories. It allows the brand to explore and capture new segments of the market. Chanel started as an haute-couture brand, but have now extended to selling jewellery and watches. The brand's early extensions started back in 1960 when they began introducing perfumes, one of which is still the most sold out and famous – Chanel No. 5. Chanel nowadays diversify into new products such as sunglasses, gloves, phone cases and other accessories of high quality, that continue to capture the attention of the purchasers. (Appendix 8)
Key success factors:
Being different: as said by Coco herself “in order to be irreplaceable one must always be different”. Their recent launch of “Gabrielle” supports this view, as this item is being the first Chanel bag in the last 3 seasons that managed to be a rivalry of ‘Le Boy', in terms of popularity, sales and customer interest.
Continuously reinventing the brand. Karl Lagerfeld being innovative and developing new products, such as the new collection “Gabrielle”, manages to revive the brand each year, which has proven to be a success factor in keeping the strong brand image and heritage of Chanel.
Heritage - Coco Chanel herself. Her ideas are being still used and incorporated into every product that Chanel sells nowadays, e.g. “Gabrielle”. The bag is another storytelling about the life of Coco, where they do not stray from being classy or elegant, but on top of that they manage to pass on a message to the younger audience and to the male audience, that they have never really addressed before. Although Karl Lagerfeld has been taking over the designs in the past 30+ years, the life of Coco has been always in the roots of inspiration.
Consistency. Chanel is famous for having long-lasting products involving a high degree of craftsmanship and quality, and this is what they do well and what their loyal clients rely on. Customers buy the products because they never outdate; in fact the vintage bags and clothes of Chanel are the most desired ones among the brand's customers. For the 2.55 most iconic handbag, the prices can reach up to US $40,000. Although their styles may vary from season to season, Chanel has always manage to incorporate well their brand image into their products.
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