Ch. 12-Services and Nonprofit Organization Marketing

Chanel, it is not only well know for the goods they sell in stores but also for an amazing service they offer to the clients. Services involve a deed, a performance, or an effort that cannot be physically possessed. Chanel is on the top of their game with providing best quality experience. Customers love to feel special and unique and that’s how they feel shopping at Chanel stores. All sales people are well trained to provide the best experience for customers. For example in Purseblog.com in the post “Chanel Customer Service Did Not Disappoint: My Chanel Bag is Fixed” you can read a story of great customer service.

“I can happily report that my bag is completely fixed. In fact, I experienced the best customer service I’ve ever received. Chanel’s customer service team read my story and reached out to me via email. The representative emailed to let me know they’d like to help me fix my bag and asked for my number to talk it over with me.  I explained my predicament and he told me he would take my bag to the back to see if they had the screws and they would try to fix it on the spot. He came back out about two minutes later and let me know that they didn’t have the exact screws that my bag originally had, but they had similar ones that they could put in now as placeholders while they ordered the right screws for me. I loved this solution because it meant I didn’t need to send my bag out; I got to take my bag home, and the store fixed it so I could use it right away.

I was so thankful that the sales associate came up with a plan for me that let me use my bag and eventually still correct the screws as well. I thought it would take a while, but last night, I got a call letting me know that the boutique had the proper screws. Chanel then asked if I’d like to have them schedule a pickup with FedEx so I didn’t need to go down to the store–talk about going above and beyond.” (http://www.purseblog.com/chanel/chanel-customer-service-disappoint-chanel-bag-fixed/)

That’s only one of the stories about how great services are provided by Chanel all around the world. They build and maintain relationships with customers, by taking really good care of them and providing with the best customer service.

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.

Ch. 10 - Product Concepts

Chanel has been a part of the fashion industry for approximately 107 years. The company started in Paris and is now recognized around the world. The product offering, is an important element of an organization’s marketing program, is generally the foundation when constructing a marketing mix. The product consists of everything, favorable and unfavorable, that a person receives in an exchange. Chanel products are consumer products that are bought to satisfy an individual’s personal wants. Depending on how much effort customer used to shop, we can classify for different types of products: convenience products, shopping products, specialty products, and unsought products. Chanel perfumes, cosmetic products and glasses are part of Shopping Products, which requires comparison-shopping. Those products are more expensive than the convenience products and customer can only find them in Chanel retail store or big department stores.

All ready to wear, shoes, watches, handbags, perfumes are Speciality Products because customers have to search for them extensively as well as those products are a symbol of their identity. Chanel’s new products fall into the category of unsought products until Chanel advertise and promote them.

Over time, firm change product items, lines and mixes to take advantage of new technical or products developments. Chanel was originally designed to for the comfort of women, so they'd feel comfortable and fashionable in classic tailored style. Chanel has various signature looks in their ready to wear line, such as tweed suits, the classic quilted two-chain bag, and also well known the little black dress. Chanel designs many clothing lines such as, ready to wear, haute couture and cruise wear.  And using a different variation of fabrics and colors using the original shapes. Chanel product mix is broad, as I mention they offer numbers of product lines, clothing, shoes, jewellery, watches, fragrances, cosmetic products, handbags and glasses.

Chanel has deep product line; for example, the fragrance: No.5, No.19, Eau Premiere, Cristalle, Allure Eau Sensuelle, Chance, Coco, Coco Mademoiselle, Poudre and etc. An example of product modification is Chanel’s reinvention of the sister perfume to No.5 named, No.19.  This perfume is named after Gabrielle Coco Chanel’s birthday, which is August 19th. Created in 1970 by Chanel’s in-house perfumer Henri Robert. The bottle used to look identical to Chanel No. 5 but the reinvented fragrance has a light green color and a slightly different bottle.

Ch. 17 - Personal Selling and Sales Management

Personal selling offers several advantages over other forms of promotion. However is more expensive than other tools of promotion. Chanel provides customers with excellently trained customer service. Their stuff sells assistants provide all kind of help and information for each customer. To help them choose the right products for them.  Most of the Chanel ready to wear products as well as leather goods and watches are only available at the boutiques. Other beauty products, perfumes and sunglasses customers can purchase through online or big departments stores like Macy's, Saks at Fifth Ave, Bloomingdales, and others.

Relationship selling is a sale practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnership. A Chanel personnel takes really good care of their customers. They listen and provide all information that customers is looking for, most of the time they create the relationship which will last for a long time. After every purchase client will receive a “thank you” via email, and become a member of Chanel. They will also remember of their customer’s birthdays. They make sure to make every single customer experience special.

Chanel is one of the most recognizable luxury brands in the world. Customers feel privileged to be able to be a part of “Chanel family.” Usually, it is never one-time purchase, because of the good quality of the luxury products most of the customers created those long-term relationships and are loyal to the brand. They come back every season to look for something “ what they have to have”- the new trend.

Customer relationship management is the ultimate goal of a new trend in marketing that focuses on understanding customers as individuals instead of as part of a group. Chanel does not offer sales. In contrast to a lot of other designers, it is impossible to get Chanel products on sales. A lot of their products are timeless and have been around for decades. However, Chanel is also making sure to not disappoint the new generation customers and to create a variation of products to satisfy the wider group of fashion lovers. Customers are able to try new perfumes of cosmetic by receiving little samples of those products.

Ch. 16 - Advertising, Public Relations and Sales Promotion

Chanel is world known company. The brand is exclusive and has strong equity and loyalty. To advertise their products, they take advantage of the most of the multimedia platforms like Internet, magazines, billboards, department stores, social media, and commercials. Chanel’s history is a big point of the advertising, they do not produce a new product every two days like a lot of other brands. Chanel spends millions on advertising media. They use a lot of celebrities and models for these advertising such as Marilyn Monroe, Suzy Parker, Ali McGraw, Catherine Deneuve, Carole Bouquet, Kate Moss,

Brad Pitt, Nicole Kidman, Gisele Bundchen, and many others. In the article by Alle Connell for Style Caster we can read:

“2012: Brad Pitt is Inevitable. The needle swung back to simple, minimalist ads as Brad Pitt became the first man to front a No. 5 campaign. Stark in black and white, with the bottle in color, the perfume—and, therefore, the woman who wears it—is positioned as the star here, with Brad as the gorgeous accessory. This is underlined further in the oft-joked about television commercial; the story is about the Chanel No. 5 woman and the romantic, adventurous feelings she inspires in the object of her affection, rather than about Brad Pitt himself.”

“2014: Gisele. Supermodel Gisele became the face of No. 5 in this simple, yet utterly iconic ad. Reclining in a lit-up number 5 wearing a simple black dress and lots of diamonds, Gisele is naturally beautiful, confident and glamorous—the perfect No. 5 woman for the decade. Mademoiselle Chanel would no doubt approve.”

The public relations is the element in the promotional mix that evaluates public attitudes, identifies issues that may elicit public concern and executes programs to gain public understanding and acceptance. Chanel has done many donations and has been sponsors frequently. Chanel was created by a most remarkable woman, Coco Chanel. Through her own philanthropic endeavours founded a heritage of charitable interest at the company that continues today. The support of The Society of Memorial Sloan-Kettering's Cancer Center continues the tradition, a tradition that forms the foundation of good corporate citizenship. Also, they are part of a lot of different charities and help to raise money for good causes.

Chanel is exclusive brand and expensive and its does not offer many sales for the public. Sometimes there are private sales for certain collection and it is only for VIP guests. However, Chanel’s fragrances and makeup usually are sold by big departments stores, and depending on those stores as well as the time of the year, customers might be an offer, for example, some Christmas sales. Chanel also produces some limited edition products, which will motivate the customers to buy their favourite products immediately. Like The Monsieur de Chanel: Chanel's First Dedicated Men's Watch, which will be available this June. It will be limited edition of 300 pieces, $34,500- $36,000.

Ch. 14 - Marketing Channels and Retailing

Chanel has their stores all around the world. They put a lot of effort and time to make the experience for the customers unique and special.  Chanel uses the direct channel to distribute clothing, leather luxury good, and jewellery directly to their consumers. Chanel also uses dual distribution selling glasses, fragrances and cosmetic products, which are available at their own stores and other retailers like Macy’s and Bloomingdale’s. They adopt both direct and retailer channels. Chanel has their stores in NYC in three locations. Two of stores are located uptown, at a prosperous location. Fifth Avenue is a major through fare in the centre of the Manhattan where most of the upscale stores located As well as Soho, which is also famous shopping neighbourhood.

Let’s have a look at the 57th street store. The entrance to the store is through a glass and steel portal, modelled after the lines of the NO.5 box. The original inspiration for the interior was Coco Chanel’s own Paris apartment. The work was done by architect Peter Marino who also worked on Chanel stores in: Beverly Hills, Ginza, Lee Gardens, Los Angeles, New Bond Street London, Osaka, Place Vandome, Prince’s Building, Rue Cambon, Soho As well as other luxury brands like Dior, Bulgari, Ermenegildo Zegna, Fendi and Luis Vuitton.

That’s the fragment of an article by Philip Nobel for Architectural Digest.

““We wanted to be modern, but that is sometimes synonymous with stark and cold," says Barbara Cirkva, Chanel's executive vice president of fashion. "But Chanel is such a feminine brand." Peter Marino also cites tempering modernist norms as a central challenge: "Our brief was to make something modern architecturally but that feels like a woman's store. That was great, because if I blew through with modernism, I could then soften it with accents—draperies or camellias." The camellias, blown up into a photographic wallcovering, decorate the elevator cab. The draperies, many of which slide to permit alterations to the sales floors, billow throughout. Varying the space to continually entice regulars was another aim of the redesign. "I think it's important to build change into a modern retail space," Marino says. "Now merchandise comes in every two weeks—it's not the old days of fashion with a fall and spring collection.””

The store’s layouts present a feeling of simple and dignity by using white and black colours. Everything is organised, different sections for leather goods, sunglasses, watches, shoes, ready-to-wear, jewellery, fragrance, and cosmetic products. Their products are pretty expensive in order to maintain the image of exclusivity. They have multiple sofas to make customers feel comfortable, almost like home most of the time offer them a glass of champagne at the same time. There is a person who will welcome and open the door for you. Chanel offers high levels of their customer service. They provide alteration, consulting, personal shopping and almost anything you can think of to make your shopping experience great.

Chapter 6: Consumer Decision Making

Most of the businesses are concerned that their customers are happy with their purchase. I think it is the main concern of marketing, there are a number of outcomes of decision-making that impact marketers. If customers buy a product, either happy or unhappy they may tell others about their purchase experience, what is called “word of mouth.” That is why Chanel is a trustworthy brand; the consumers trust them and keep coming back for more products. They know that for they money the pay, they will receive luxury, quality, and style. A lot of customers make the decision of buying Chanel’s product is also based off the popularity and fame.

Chanel is a well-recognized brand, due to an amazing advertisement in most of the fashion magazines, and commercials. They use celebrities and media to exposure their products, however, the history of the brand has a huge impact on the decision of the customers. Because of the high prices, most of the working class is not able to afford those products, what makes customers want them even more, what makes them feel unique and special. The whole shopping experience in the stores is also special. The store assistants make the woman feel like a princess. They will help customers, not rush them and make them feel like they are exactly where they deserve to be. Welcoming them with a glass of champagne in a beautiful waiting room.

Being in the fashion industry, almost every model dreams of owning Chanel bag. Most of them will save money to get one, for the image. When they go to castings, to show clients they work well and they are able to afford this luxury product.  Purchase of Chanel bag is also some kind of investment. Some people buy art other buys Chanel bag. The value of those products is continuously increasing.  Those items are timeless; customers do not have to worry about Chanel going out of style.

Chapter 5: Developing a Global Vision

Chanel’s global vision is Coco Chanel’s philosophy and attitude. In 1910 Gabriele Chanel opens her first shop at 21rue Cambon in Paris, creating hats under the name “CHANEL MODES.” Her designs help to establish her reputation. In 1915, she opens her first couture house in Biarritz, France. The brand just kept growing and growing.  After the death of Coco, brand faced important period during which workers like Kitty D’Alessio, who was hired in 1980, later she became the key person of Chanel. She was the person that let Karl Lagerfeld exert his talent to give the brand Chanel a total face-lift. Karl Lagerfeld took Coco’s place as the creative director in 1983. He has become the late Mademoiselle Coco’s replacement and he himself has become an icon in the fashion world.

Of all the luxury fashion brands in the world, Chanel is perhaps the most famous, as well as the most secretive. In the article by Imran Amed for “Business of fashion” with Bruno Pavlovsky, wrote: “Nobody outside the company knows exactly how big the Chanel business is. The fragrance and beauty business alone has been estimated to turn over more than $1 billion a year, powered by the world’s first and most famous modern fragrance, Chanel No. 5. There is also a growing jewelry business and the company’s crown jewel, the ready-to-wear and haute couture businesses on which the codes of the house are based. All told, Chanel could very well be doing over $3 billion in sales revenue per year”

There are over 200 Chanel stores located worldwide. Chanel skin care, cosmetics, and fragrance products can as well be found in some department stores and airports.

Chanel has the highest brand awareness among luxury Chinese consumers. As the article” Chanel is the hottest luxury brand in China “by Sophia says

“It's also the most-purchased luxury brand among wealthy Chinese -- 41% of whom say they've bought a Chanel product in the last year, compared to 32% for Dior. Forty-six percent of those surveyed said they hope to buy more Chanel goodies in the coming year. And in a country where gift-giving is very important, Chanel is the present of choice for wealthy consumers. But what makes Chanel more appealing than its competitors? The high-end fashion house has "invested very seriously in advertising and retail," said Brian Buchwald of Bomoda. Chanel is courting Chinese consumers through "websites, with strong social media ... they're leveraging Chinese celebrities [and] Western celebrities who are well-known to the Chinese."

Ch. 4 - The Marketing Environment

For successful marketing strategies it is important to understand the External Environment. To understand current customers, what drives their decisions. To identify valuable customers and understand their needs as well as understand the competition. Chanel is an internationally established company that has been around for over a century. Chanel is known to serve wealthy customers, who appreciate luxury goods and can afford to purchase them.  Its target both men and women from 21-65 years of age. Chanel’s products are suitable for both generation y and generation x. The target group, who identifies themselves with the values that Chanel represents. Values like: elegance, simplicity, modern, and class. 

For a long time the French luxury company was keeping a big price different between Asian and European market. The price of a bag was about 60% higher in China. I was always surprised to see most of the time Asian customers in the luxury stores in Paris.

Price is an important part of its identity, as it is for all luxury goods. So this big differential between countries can be problematic. Chanel’s president of fashion, Bruno Pavlovsky, told WWD that aligning the prices ensures that customers are “seduced by the brand and by the products and not just led by these price differentials.”  In the 2014-2015, with the euro’s weakness it has stretched traditional price differential between Europe and China even further. Chanel’s announcement in March that it would increase prices in Europe by 20 percent and drop them a similar amount in China. Korea, Vietnam, Thailand and Russia also saw prices drop, while prices remained stable in Japan, the U.K., U.S. and Canada. According to a Fortune Character Institute report on the Chinese luxury industry in 2014, Chinese people consumed 46 percent of the world's luxury goods; a value of $106 billion, but 76 percent of the spending took place abroad. As a result, designer stores in China have come to serve as mere showrooms. The brand also wanted to avoid the overseas shoppers, who purchase abroad and resell in China. 

That’s why it is really important to understand changing environment and understand customers. Another example it can be when Chanel show took place in Shanghai in 2009. The show starts with a short film directed by Karl Lagerfeld, “Paris Shanghai: a fantasy” in which he imagines Coco Chanel travelling to the city in her dreams, and swapping her couture jacket for a Chairman Mao jacket in the 1960s. As Justine Picaride describes in the UK Telegraph “ Thus the cultural references for the collection that follows are clearly delineated: little red dresses and little red bags (Chanel’s take on Mao’s Little Red Book); black transparent chiffon frocks glittering with red sequins (ready-to-wear for cocktails aboard the Shanghai Express); reinvented Chanel tweed jackets and suits in jade-green or Chinese red, accessorized with thigh-high boots, shiny as Oriental lacquer.”  Less than 48 hours after the opening, the boutique sold out the limited edition of red handbags that Karl Lagerfeld created for Shanghai.  The interesting fact is that the price was 28,800 yuan – about £3,000 where the average monthly wage is 2,000 yuan. The Shanghai boutique wasn’t the first one in China. Chanel opened up in Beijing more than ten years before that. However, Shanghai was christened the “Paris of the East”.