Ch. 11- Developing and Managing Products

A lot of companies spend a considerable amount of money developing new products. They are important for the growth of the company and their profits. Chanel offers the classic product items in their boutiques throughout the year while introducing new products with each fashion season. There are six categories of new products; Chanel established their products in some of them.

-New Product Lines- Chanel was known for the little black dress and the perfume No. 5, later expanded with watches, jewellery, eyewear, cosmetic products and luxury handbags.

-Addition to Existing Product Lines- Every season there is a new addition to a ready-to-wear established line. Also, a big addition to the bag line was the boyfriend bag.

-Improvements Or Revisions of Existing Products- the improvement of the packaging of the lipstick released in 2006. A lipstick is usually opened with two hands. With the Rouge Allures, the lipstick pops up by just one click.

-Repositioned Products- I think the best example is the famous Chanel suits and the Chanel No.5. They were both target to attract older women. However, the way of the advertising in last years, it targets also much younger customers, who want to be not only classy but also sexy.

After Coco Chanel, Karl Lagerfeld is the one responsible for the success of developing new products. He has never disappointed Chanel customers. The long history of the company is something that gives a big advantage in developing new products over new established competitive companies. Karl also uses his models, to create something special and original, which each customer will desire. The company uses the finest materials and manufactures. Chanel is one of the most successful fashion brands in the world.

Ch. 8 - Segmenting and Targeting Markets

A market segment is a subgroup of people or organization sharing one or more characteristics that cause them to purchase similar products. Market segmentation is a process of dividing a market into similar groups or segments. In the world we live in, everyone has different needs. Most of the companies do their best to meet needs of one or more specific segments. In 1909, Chanel was targeted towards a woman who wanted be classy and fabulous. It started with little black dress and characteristic Chanel suits. 

Chanel’s products are targeted to different markets because of the diversity of their products. There is something available for everyone Chanel offers different product lines which are the target to different markets: Haute Couture Line, Resort line, Ready to wear line, Children’s and men’s collection. Skin care, make-up, Accessories, Jewellery, Footwear, and Fragrances. There are three important reasons why marketers segment markets. First is to identify those groups, analyse them and their buying behaviors. Second, segmentation provides them with information to help them design products specifically matched with their desires. Third, segmentation is consistent with marketing concept of satisfying customers while meeting organizations objectives.

 The article for From the CNN Wire Staff on November 8, 2012, states:

“Chanel has opened just three boutiques in Shanghai -- one of the world's most populous cities. Pavlovsky told CNN: ‘We try to get the best three boutiques in Shanghai instead of having 10 boutiques.’

That, he said, is the "number one" priority. ‘We try to bring through the boutiques the best value of the brand... our idea is not to open lots of boutiques but be able to give, through the existing one, the best value and the best service to our customers.’

China -- with a population of approximately 1.3 billion people -- is a focus for luxury brands due to its expanding middle classes. Its growth comes as consumer spending in Europe and the U.S. dwindles.

Pavlovsky said customers in China are ‘experts of the fashion world, they know everything, every detail and at the end of the day what they want is the same product that we are selling here in Paris or London.’”

Geographic segmentation: Chanel has over 200 stores around the world. In those stores, you will be able to find different products, specifically in different countries. People in Russia like a lot of crystals, and shiny products, while people in Asia keep simpler and prefer black or nothing abstract.

Demographic Segmentation- Chanel targets both genders in age between 20 and 80 years of age, who are wealthy and are able to afford their products. However, there are more products targeting women.

Psychographic Segmentation- Chanel identifies its target market by target’s lifestyle and motives. Most of Chanel’s customers purchase its products because they are symbols of luxury, elegance, and class. Chanel uses a lot of famous models to appeals to their customers with image relatives motives. In countries like Russia or China wearing Chanel is important for people to show their social status.

Ch. 15- Marketing Communications

Chanel uses advertising, public relations, personal selling and social media as a promotional strategy. Over hundred years they are able to convince target customers that the goods and services offered provide a competitive advantage over the competition. The products have unique futures like the timeless designs, excellent customer service, and high products quality. Because of the history of the brand, they have earned prestige on the world level, where almost everybody desires their products.

Promotional strategy is closely related to the process of communication. In this process meanings are exchanged or shared through a common set of symbols. For example, when Chanel develops a new product or changes an old one they have to communicate with their clients. They use both: Interpersonal communication and mass communication. The first one is more direct, for example when a sells person communicates with a specific customer at the store, they are able to see they reaction immediately, they also can send them an email or give a call when products they looking for arrived in the store. The mass communication involves a large audience. Chanel uses, in that case, social media, fashion shows, and advertising.

They are several goals of promotion Chanel uses all of them. Informative promotion, stimulate interest in new products. Persuasive promotion, stimulate customers to purchase products. Reminder promotion is used to keep their products and their brand in the public’s mind. Connecting promotion helps forms relationships with customers; in that case, social media platforms are the best for it.  A classic model for reaching promotional goals is called AIDA concept. It is important to first gain attention, after that to build interest; next step is to focus on building desire. That is, you want the potential customers thinking, “ I really want and need this product.” You conclude with a specific call to action that potential customer can take to purchase the product.

I think a great way Chanel uses advertising is for example through those little short movies with famous actors and models. They really build the desire to be one like one of them and to wear the same perfume like did Nicole Kidman in “Her kiss, her smile, her perfume” She represents luxury, beauty, feminist and is well known by all woman.