Strategic Marketing Report: Chanel's Marketing Strategies and Analysis

This report provides a comprehensive analysis of Chanel's strategic marketing approach. It begins with an overview of the company, its products, and past marketing activities, followed by an identification of competitors and a perception map. The report then delves into marketing medium routes, objectives, and strategies, including a PESTLE and SWOT analysis to assess the external and internal environments. Potential risks and budget considerations are also discussed, leading to a conclusion that summarizes the key findings. The report highlights Chanel's strengths, such as its high-quality products and brand recognition, while also addressing weaknesses, opportunities, and threats. The report also includes an analysis of the fashion industry's market conditions and segmentation strategies, providing insights into Chanel's market share and competitive positioning. The report concludes with a detailed reference list of sources used.

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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marketing, launching new products, and increasing the rate of online buyers. This company
may expand its business in Asia-pacific and Latin America and merger & acquisition may
help this company to maximize its revenue generation. Limited number of online product,
stores, and market share are weaknesses of Chanel. This company may face brand switching
due to high price of products. Louis Vuitton, Zara, Gucci, and other similar companies are
threat to Chanel as these companies are producing substitute products. Economic crisis in
affecting this business. Many companies are coping style of channel and offering products at
a cheaper rate. This is a potential threat to Channel and this company is facing issues due to
changing behavior of customers.
Past marketing activity
Chanel has adopted storytelling approach of marketing in the past. Through their highly
interactive website, they used this strategy to share history and legacy of the brand. Different
success stories are shared in a chronological manner at their website that attracts customers.
Moreover, they have adopted other channels of marketing like print media and
endorsements (Chanel.com, 2019). Among these publishing articles and advertisements in
top magazines like Vogue and Marie Claire can be considered as a failure. Between January
and November 2012 they have spent $71 million in advertising on these magazines
(Chanel.com, 2019). However, their return on investment is low that caused the loss.
However, extensive social media campaigning have not been done by this firm. Moreover,
they have not given focus on customized marketing. Competition is impacting on business of
Chanel and main competitors like Gucci and Louis Vuitton is providing tough market
competition.
Identification of competitors
Chanel has both direct and indirect competitors and this company is implementing strategies
to beat their rivals. Louis Vuitton, Gucci, Hermes, and Burberry are direct competitors of
Chanel as these companies offer same products to consumers from all over the world. As
stated by Wang and Jin (2019), Indirect competitors do not sell exactly the same product but
similar product. On another hand, online retail companies such as Amazon is an indirect
competitor of this brand.
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Perception map
Figure 1: Perception mapping
Perception map has been created by using MS Excel and direct competitors have been
considered for this mapping. Based on product price, quality of product and revenue
generated by these firms, they have been positioned.
Marketing medium routes
● Social media
Chanel is considered as the most influential luxury brand on social media. They have around
57 million followers around different social media channels. As opined by Štefko et al.
(2015), social media can be used as a channel by business entrepreneurs to increase brand
awareness among target customers. This firm makes attractive contents and videos for social
media marketing. They have depicted their own world by becoming arty and editorial in
nature. This medium of marketing can be relied on by this firm because users of these
platforms are increasing with time. Chanel can use their popularity on social media to attract
their potential customers from various new markets.
● Advertising vehicle
These are media vehicles that are used by different business organizations to advertise their
products and services (Valaei and Nikhashemi, 2017). During the time of new product
launching, advertising vehicle is used to increase the popularity of the product. Chanel can
use these vehicles for increasing brand awareness among target customers. This medium is a
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type of outside promotion of products among mass customers. More people will be aware of
this brand globally.
● Events
Organizing events is another popular marketing channel that is used by big corporate houses
to increase brand image and popularity of their products. Different events are organized and
success rate is measured through different performance indicators. This includes increase in
sales and events check-ins. As stated by Shen et al. (2017), organization of events is a costly
process of marketing and investment in marketing must be increased to adopt this medium.
Chanel has organized different marketing events that include fashion shows, consumer
events, and other brand support activities. This has helped them to increase sales rate by
20.4% in the year of 2017 (Chanel.com, 2019). Direct consumer interaction can be done by
the help of this medium and popularity of products can be increased.
● Collaborations
Collaboration helps a firm by leveraging marketing activities. Chanel has collaborated with
supermarket giant Asda, which can help to increase sales rate of this company. Different
luxury items can be distributed easily to the target customers by the process of collaboration
(Ryan, 2016). On the other hand, collaboration can also be done by famous persons for
branding of products. Chanel’s collaboration with Pharrell is almost near regarding his
designed costumes. Different collections of Pharrell that have become popular will be sold
through Chanel. As stated by Pucci et al. (2015), collaboration with other firm or person
helps in bringing peace in the marketing process.
● Media
Different media like electronics, print, and digital can be used as a medium for advertising.
Chanel has used print media like top magazines to advertise their products. They have
inc=vested a lot for marketing in magazines like Vogue. Moreover, different blogs are used to
publish various strategies of this company and information about products are also given
through this medium. In addition, different popular stars like Keira Knightley has done
advertisements for this company. As stated by Hendrayati and Gaffar (2016), media channel
is a vast network that can be used to involve targeted consumers. Attractive contents and
informative advertisements help in creating a buzz about different products of a company.
● Databases
It is a type of direct marketing that uses different databases of consumers for generating
personalized communications. Main aim of database marketing is to inform and attract
potential customers towards a product or service (Codignola, 2018). Different database like
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phone number, previous purchasing records, and email IDs are collected by maintaining
ethical standards. This helps to maintain a constant and stable relationship with customers
and retention rate can be increased. Chanel usually connects with different customers who
prefer to use various luxury items and accessories. They provide latest news about brand and
information about nearest boutique is distributed through this strategy of database marketing.
● Conveying message to customers
A proper message regarding brand needs to be conveyed to customers to increase their
knowledge (Tafesse, 2016). Chanel uses content marketing platform to convey their message
regarding their art and quality of materials. Brand message includes different elements like
value proposition that can be used to motivate customers. Chanel promotes messages
regarding women empowerment and other social factors. Moreover, different art and designs
are conveyed through content platforms.
● Email marketing
Many business firms perform marketing and lead generation through the medium of email.
Email marketing is a part of customized marketing can be done to attract potential customers
by offering tier favorite products (Lai et al. 2018). Chanel uses email marketing for meeting
their sales goals. They use this platform of digital media to directly communicate with their
customers. However, sending regular messages to customers can cause irritation to them.
Hence, it can be recommended that use of newsletters can be done for email marketing.
Several messages can be sent all together through the help of this tool. Moreover, new
audience can be given brief about products and services of this company.
● Marketing audit
Marketing audit is a review process of marketing different factors like objectives, planning of
marketing, strategies and different current activities (Hendrayati and Gaffar, 2016). This
helps a firm to increase effectiveness in business and competitive advantage can be achieved.
Chanel reviews different strategies like relationship with suppliers and procurement activity
yearly. Moreover, return on investment can be analyzed on each marketing activity. This can
be done by measuring traffic on websites and social media followers. This helps Chanel to
gain new business ideas and competition depth can be analyzed. For example, a recent audit
shows that 0.25% of fan growth has happened in facebook page of Chanel (Unmetric.com,
2019). Hence, gaps can be pointed out in activities and remedies can be taken.
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Marketing objectives
Short-term objectives
i. Hiring expert team for improving digital marketing
● Specific: Meeting this objective can help to reach maximum audience within
minimum time.
● Measurable: Increase in sales rate and customer number can be measured after
meeting this objective.
● Achievable: Experts can be hired based on skills and experience by the HR
department of Channel.
● Relevant: Meeting of this objective can help to increase profit margin, which is a
corporate objective of Chanel.
● Time-bound: This objective can be achieved within 1 month.
ii. Improving website for representing the brand in a proper way
● Specific: This company can attract maximum customers towards their product by
meeting this objective.
● Measurable: Number and frequency of visitor at website can be measured by using
technology after meeting this objective to check its effectiveness.
● Achievable: Expert website developer can be hired based on ability and experience
by HR department of Chanel.
● Relevant: Meeting this objective can help the firm to increase efficiency of
marketing, which is a corporate objective of this firm. So, it is relevant.
● Time-bound: This objective can be achieved within 7-10 days.
iii. Improving relationship with customers
● Specific: This is specific as it can help to understand demand of customers.
● Measurable: Feedback can be taken from customers regarding service quality of this
firm after meeting this objective.
● Achievable: This objective can be met by providing training to employees regarding
process of dealing with customers.
● Relevant: This objective is relevant as meeting of this objective can help to provide
better customer service, which is a corporate objective of Chanel.
● Time-bound: This objective can be achieved by 10-12 moments.
Medium-term objectives
i. Launching new range of products
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● Specific: It is specific as it can help to broaden product line of Chanel.
● Measurable: After meeting this objective, response of customers can be recorded and
assessed.
● Achievable: Collaborative effort of employees can help to achieve this objective of
Chanel.
● Relevant: Meeting this objective is relevant for Chanel as it can help to meet
corporate objectives regarding meeting of expectation of customers.
● Time-bound: This objective can be met within 2 Years.
ii. Increasing brand awareness
● Specific: Meeting this objective can help in sales growth and can lead to economic
growth.
● Measurable: Changes in the size of customer base and number of new customers
within a specific time period can be measured.
● Achievable: It can be achieved with the help of effective marketing strategy.
● Relevant: It is relevant as it can help in enhancing market share, which is a corporate
goal.
● Time-bound: It will take near about 1.5-2 years to be completed.
iii. Growing market share
● Specific: This is specific as meeting this objective can help this organization to earn
more profit from their business.
● Measurable: After meeting this objective, market share of this company can be
evaluated.
● Achievable: This can be achieved by expanding business in existing marketplace.
● Relevant: It is relevant as it helps to meet one corporate objective related to
increasing of sales.
● Time-bound: It will take 1-2 years to be completed.
Long-term objectives
i. Entering new markets
● Specific: It is specific as it can help to target new customers for improving business
performance of Chanel.
● Measurable: Opening of new branches in the new marketplace can be measured with
respect to a specific time period.
● Achievable: It can be achieved by starting a branch in a new marketplace such as
Latin America or the Asia Pacific.
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