Strategic Marketing for Chanel

STRATEGIC MARKETING

Table of Contents
Introduction................................................................................................................................3
Overview of company................................................................................................................3
Product service...........................................................................................................................3
Past marketing activity...............................................................................................................7
Identification of competitors......................................................................................................7
Perception map...........................................................................................................................8
Marketing medium routes..........................................................................................................8
Marketing objectives................................................................................................................11
Marketing strategy....................................................................................................................13
Potential risks...........................................................................................................................15
Budget......................................................................................................................................17
Conclusion................................................................................................................................17
Reference list............................................................................................................................19
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Introduction
Strategic marketing is a process that includes planning, developing and implementation of
maneuvers, which helps in obtaining a competitive edge in the chosen market. Chanel is a
French private limited company that sells fashion and other luxury accessories. In this study,
different marketing medium, objectives and strategies are discussed.
Overview of company
Chanel is a privately held firm that has its headquarters located in Paris, France and London,
United Kingdom. This company was incorporated in 1910 in Paris, France. Moreover, they
have around 310 stores, which are located worldwide. Stores are located in South America,
Oceania, North America, Asia, and middle east. This firm has achieved a profit of $10 billion
in the year 2017 (Chanel.com, 2019). Chanel has been ranked as 23rd in Best global brands.
Moreover, in 2018, they ranked 87 in World’s most valuable brand. Main products of this
firm include fragrance, jewelry, skincare, and watches. Other products like sunglasses,
exquisite bags, and apparels for both genders. Chanel is a creatively driven brand that values
and invests heavily on raw materials for creation of products. They try to maintain
sustainability while acquiring these extremely rare raw materials. Chanel access and monitor
potential and actual risks in procuring raw materials and their impact on community
(Services.chanel.com, 2018). They govern relationship with supplier with the help of
responsible sourcing policy. Moreover, they have developed a risk-assessment methodology
that helps them to remediate environmental, government and social risks. This firm has
dedicated CSR teams and ambassadors that functions and represents collaboratively.
Main target of Chanel is women who belong to the age group of 15 to 40. This is because
these women are fond of fashionable products and accessories. Target customers of Chanel
belong to upper middle income and upper-income people. According to reports of 2018,
Chanel has around 20000 employees working in different stores and boutiques (Chanel.com,
2019). Moreover, they have distributors located in different countries that distribute products
like perfumes and apparels. Exquisite products of this firm are also available at supermarkets
like Asda. They have arranged a staged shop at this supermarket that has created a buzz
among customers. Merger and partnership help a firm to grow and manage future risks.
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Product service
● Market condition
Chanel has become an international brand and it is operating its business in various countries
of the world. At present, marketplace of fashion industry is maintaining sustainable growth.
For example, fashion industry of UK is contributing near about £32 billion to the economy of
this country. Competition is high in the UK fashion industry and reportedly, near about 80
designers are going to launch spring and summer collections in 2019 (Chanel.com, 2019).
Trends are changing over time and demand of customers are getting specific day by day. As
mentioned by Cravens and Piercy (2006), fashion industries of other countries are following
the same trend as the UK and it is becoming difficult for companies like Chanel to stay
competitive. Due to this reason, most of the fashion organizations are using digital marketing
strategies and AI technologies to beat rivals.
● Segmentation
Market segmentation has changed over time for Chanel. In 1990, this brand had targeted only
females, who wanted to be classy. However, this company has changed its market
segmentation strategy for distributing variety of products. According to Mcdonald (2016),
product diversity affects decision making regarding selection of potential market segment.
This company targets different market with respect to different product line. This company
has more than 200 worldwide and they are targeting customers of both genders from 20 to 80
years (Chanel.com, 2019). This company studies behavior and lifestyle of social groups
before selecting appropriate market segment to be covered. Most of their products are for
women and they design fashion products for kids as well.
● PESTLE
Political
This factor has a large influence on fashion industry. Political stability of developed countries
has helped this company to grow their business (David et al. 2016). On another hand,
unstable political environment on Asia and middle east can have various implications on the
operations of Chanel. For Example, poor policies regarding intellectual property cannot
protect Chanel's intellectual property, which is a valuable asset for each company. Moreover,
political decisions like Brexit and supply chain disruption in middle east can impact on
business of Chanel. Increase in export and import duties and irregularity in procurement of
raw materials can occur.
Economic
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A major economic factor that has impacted the business of Chanel is increase in purchasing
power in both developed and developing countries. Low rate of inflation and increase in
annual wage is increasing income of people and this factor is making them unable to
purchase luxury products Chanel. Rise in disposable income of people in the countries of
Asia and Africa has impacted on luxury products sale (Varadarajan, 2019). Desire to buy
luxury goods of people is increasing with increase in income.
Social
Major social factor of this company is their exclusivity of products. Products and accessories
of this company can only be accessed and afforded by high level of the society and those who
live near their boutique. As opined by Pedersen et al. (2018), social factors like education
level and women empowerment must be focused by every company. Chanel has focused on
women empowerment that is included in their CSR policies.
Technological
Chanel has focused on improving tier technology, which includes building an improved
website. Moreover, they have adopted technology to maintain quality of their products and at
the same time focused on maintaining sustainability. Research and development are done in
eliminating harmful chemicals from their products like fragrance (Felix et al. 2017).
Legal
Different laws regarding production and selling must be maintained by fashion
manufacturers. Chanel maintains laws around the world that have relation with their business.
Hence, ethical integrity can be maintained. In June 2017, they have won a lawsuit against
Amazon regarding trademark infringement.
Environmental
Chanel is aware of the environment and they are trying to maintain sustainability by
preserving rare raw materials. Significant impact is faced by environment during production
of fashion products (Chan et al. 2017). Chanel has taken initiative for eco-packaging of
products.
● Market share
Chanel has second largest amount of market share after Louis Vuitton. At present Louis
Vuitton has 28.6% of market share in the fashion industry. However, Chanel has 20% of
market share in the fashion industry (Chanel.com, 2019). One-third of Chanel's sales are
from the USA, China, and France. After the United States, China is the second biggest
market of this company.
● Industry report
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According to the latest report of Mintel in 2017, sales of luxury fashion accessories has
increased by 3.6% (Reports.mintel.com, 2018). This includes handbags and others. This has
impacted on the sales rate of Chanel. As per this report, young people and women are the
main drivers of this market. And females prioritize designs than price whose age range is
between 34 to 54.
In the report of Mintel, it is described that over one-third of US millennial considers social
media as top influencer regarding the purchase of clothing (Mintel.com, 2018). They have
predicted that investment on social media promotion will increase in the near future as this
impacts on purchasing decision of women and millennial.
SWOT
Strength Weakness
● High-quality product and signature
style
● Brand recognition and reputation
● More than 1200 employees
● Ability to understand customer
demand
● Wide range of product line
● Brand switching of customers
● High price of products
● Limited number of stores
● Limited growth in market share
● Limited online products
Opportunities Threats
● Increasing importance of e-
marketing
● Increasing rate on online buyers
● Innovative product designs
● Merger and acquisition
● Business expansion
● Increasing market competition
● Economic downturn and slowdown
● Substitute products
● Counterfeit
● Changing consuming behavior
Table 1: SWOT analysis of Chanel
Chanel is renowned for its signature styles and high-quality products. This luxury brand is
recognized all over the world and they have developed a reputation through their product as
well as services. More than 1200 employees are providing their best effort to meet
expectations of customers. Ability to understand demand of customers and variety of product
line are strengths of Chanel. Opportunities of this company include effectiveness of e-
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