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”.

Ch. 18- Social Media and Marketing

Chanel is one of the most recognized and respected companies in the world. The 105-year old brand, and clearly takes advantage when it comes to storytelling. The company uses their highly interactive website. In 2013 was launched “INSIDE CHANEL” –it is the history and the evolution of the company and its products with little videos in each of the ten chapters. The brand over the years used celebrities like Catherine Deneuve, Nicole Kidman, Marilyn Monroe and Brad Pitt to become real-life manifestation of the label. Chanel’s brand promise is one of luxury, sophistication and elite status.

Chanel also uses social media for the promotion. Their official Instagram account has 10,2 million followers, their Twitter account has 11,2 million followers and Facebook account boasting over 16 million followers, follows no one. As for the most visible brands on social media, Chanel wins, followed by Dior, Calvin Klein, Louis Vuitton, Ralph Lauren, Tiffany & Co., Burberry, and Gucci. They use the approach “ less is more” there is not much space for fans to leave feedback and comments. Both the layout and the videos, have a minimal and chic design – which well reflects the brand image. The social media platforms provide the audience accesses to valuable content of their products, while staying distant from the comments. What I think it should be changed in the future, to build better relationships and awareness.

Most of the social media platforms focus on the photos and short video clips of the newest events like fashion shows, which keep the customers interested. Sometimes give the feeling of being backstage at the haute couture shows. The other clips are used in the format of little make up tutorials, which I think it is a great way of presenting their products and to get people engaged.  

Ch. 2 - Strategic Planning for Competitive Advantage

Chanel is one of the biggest and most successful fashion leaders. What is it takes to get to this position? Well, a lot of different components. Strategic planning is the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities. Chanel sells products for thousands of dollars, all around the world. One of the most famous one is the “Chanel Classic Flap Bag”. It is a perfect example of market development, what means attracting new customers to existing products. New fabrics and a little changes of the classical bag designed, attracting new customers as well as additional sales among existing customers bringing in new buyers. Chanel has been a very well established company for about a century now, the business mission is "to be the ultimate house of luxury, defining style and creating desire, now and forever." Marketers must understand the current and potential environment in which the product or service will be marked.

Performing SWOT Analysis allows firms to identify their competitive advantage.

Strengths:

·      High Quality Products

·      The strong image if the brand

·      Karl Lagerfeld as the Chief Designer

·      Well-trained management

Weaknesses:

·      The high price of the products

·      Limited production on certain products

Opportunities:

·      Usage of technology, apps and also increase marketing in social media

·      Stores all around the world including North and South America, Europe, Asia, as well as Australia

·      Expending to the countries with economic growth like China and India

Threats:

·      Facing strong competitors like LV, Gucci, and Prada.

·      Counterfeit goods and illegal production of the double-C logo.

Chanel is famous for the classic and timeless designs, especially of bags. Unfortunately not everybody can afford to shop at Chanel, but that is also one of the reasons why people want those products. Because is not reachable for regular working class, is associated with luxury and money, this is why a lot of women love it. Competitive advantage is a set of unique features of a company and its products that are perceived by target market as significant and superior to those of the competition. The main competitions for Chanel in the market are long-standing fashion houses like Gucci, Hermès, Louis Vuitton, and Prada. For example one of Chanel’s marketing strategic methods is to sell the cloths, luxury accessories only in the store, but fragrances and cosmetics are available for online purchase. Chanel spends millions of dollars to put together ready to wear fashion shows, and haute couture, which takes place in different parts of the world. We can see Chanel adverts in all high fashion magazines, and TV commercials. Usually in those ads are used famous models or sometimes celebrities. Chanel has about five ads in Vogue alone, advertising different products. From make-up, ready to wear collections, footwear to handbags. Each consultant who works at Chanel boutique has had previous training in Paris to learn the history of the brand as well as the products. This way each consultant can easily help any customer. Chanel operates with 310 boutiques around the world. Usually the shops are located in wealthy neighborhoods, shopping districts, luxury malls or airports. All of the products are the highest quality, but also high prices. They do not offer any sales, because they have high standards. Luckily all the products are accompanied with great customer service in every location. Even after so many years of the company, those products are treated like an investments, the value did not drop down. Those Chanel Classic Flap Bags even used and vintage are still worth it a fortune. 

"Fashion is not something that exists in dresses only. Fashion is in the sky, in the street, fashion has to do with ideas, the way we live, what is happening". -Coco Chanel

Ch. 1 - Overview of Marketing (Brief History and Mission Statement)

Designer Gabrielle Bonheur Chanel founded Chanel in 1909 in Paris, France. Chanel is a high fashion brand that focuses mainly on haute couture, ready-to-wear clothes, luxury products, and fashion accessories. The first Chanel retail store was opened in Paris in 1910 and exclusively sold hats. Chanel's next two stores in France also sold clothing, which she designed and sewed herself. The Chanel brand is best known for its little black dress, tweed suit, quilted leather handbags with gold or metal chains, two-tone shoes and “the perfect red lipstick.” Chanel No.5 is credited as being the first perfume to be branded with a fashion designer’s name and is reportedly is still the best selling fragrance in history.

Coco Chanel died on January 10, 1971 at the age of 87, and Karl Lagerfeld took over leadership as chief designer of the Chanel business in 1983. More than 40 years after the death of Coco Chanel, the Chanel brand is one of the World's Most Valuable Retail Brands. Currently Chanel has international retail store locations in more than 120 countries, with separate Chanel retail stores for fashion and accessories, fine jewelry, beauty, and eyewear. The Chanel global headquarters are located where the Chanel brand had its beginnings, in Paris, France.

Staying true to the distinction of its past and its founder, Coco Chanel, the Chanel company mission statement maintains the legacy of the Chanel brand while successfully moving it into the future.

The Chanel company mission statement 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 company was shaped on Coco Chanel's term of reshaping femininity for women of her time.