Strategic Marketing Audit Report: Chanel Fragrance UK Market

This report presents a comprehensive marketing audit of Chanel's fragrance sector within the United Kingdom, analyzing both the macro and micro environments. The analysis includes a PESTEL framework, examining political, economic, social, technological, environmental, and legal factors impacting Chanel. A micro-level analysis investigates markets, customers, and competitors, including a Porter's Five Forces analysis. Internal factors are reviewed, covering strategy, functions, and productivity. A TOWS analysis identifies strengths, weaknesses, opportunities, and threats, leading to the identification of key strategic challenges. The report concludes with a summary of findings and recommendations for Chanel to maintain and improve its market position, supported by references and appendices containing detailed analyses such as customer segmentation and the CBBE model. The audit aims to support strategic marketing planning for Chanel's fragrance business in the UK market.

Running head: MARKETING AUDIT FOR EXTERNAL ENVIRONMENT ANALYSIS
MARKETING AUDIT FOR EXTERNAL ENVIRONMENT
ANALYSIS
Name of the Student:
Name of the university:
Author Note:

1Marketing Audit for External Environment Analysis
Executive summary
Chanel is a very popular company in fashion and industry and it has managed to maintain
their equal reputation in the fragrance industry. This report is developed to analyze all the
market strategies and possibilities to sustain their position and all the key challenge are
identified to finally conclude a solution for the company.

2Marketing Audit for External Environment Analysis
Table of Contents
1.0 Introduction..............................................................................................................4
2.0 MACRO analysis.....................................................................................................4
2.1 PESTEL analysis..................................................................................................4
2.1.1 Political.........................................................................................................4
2.1.2 Economic.......................................................................................................5
2.1.3 Social.............................................................................................................5
2.1.4 Technological................................................................................................5
2.1.5 Environmental...............................................................................................5
2.1.6 Legal..............................................................................................................5
3.0 MICRO analysis.......................................................................................................6
3.1 Markets.................................................................................................................6
3.2 Customers.............................................................................................................7
3.3 Competitors..........................................................................................................8
3.3.1 Porter’s 5 force analysis................................................................................8
3.3.1.1 Threat of new entrant.................................................................................8
3.3.1.2 Bargaining power of suppliers...................................................................9
4.0 Internal Analysis......................................................................................................9
4.1 strategy review.....................................................................................................9
4.2 Function Review..................................................................................................9
4.3 Productivity Review.............................................................................................9

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5.0 TOWS and Strategic Analysis...............................................................................10
5.1 TOWS analysis...................................................................................................10
5.2 Key strategic challenges.....................................................................................11
6.0 Conclusion..............................................................................................................11
References:...................................................................................................................12
Appendices:..................................................................................................................14
Appendix 1: overview of the company....................................................................14
Appendix 2: PESTLE analysis.................................................................................15
Appendix 3A: Clients Segmentation........................................................................15
Appendix 3B: Porter’s 5 Forces analysis.................................................................16
Appendix 4A: 7P’s analysis.....................................................................................17
Appendix 4B: CBBE model.....................................................................................18

4Marketing Audit for External Environment Analysis
1.0 Introduction
Fashion industry in growing day by day and one of the popular name in this industry
is Chanel. Coco Chanel had introduced her style to the world during 1909 and since then this
company have earned fame in the fashion world and became one if the prestigious company
among others. Performing an audit program regarding the marketing performance of Chanel
in United kingdom only focusing into the Fragrance sector is the main objective of this
research paper (whole company overview is provided in Appendix 1). Detailed discussion is
done over the internal and external factors and identifying the key strategies of Chanel. For
preparing this report total macro and micro level analysis along with examining the internal
environment. This will help to conclude a summary and find out the key strategies which
should be owned by the company to avoid external and internal challenges also (CHANEL
2020).
2.0 MACRO analysis
2.1 PESTEL analysis
PESTEL factors are analyzed completely which impacts Chanel in United Kingdom.
The full detail regarding the whole analysis is done in Appendix 2. In the below section only
brief detail is given regarding every part (Essay48 2020).
2.1.1 Political
Stability of the ministerial environment in that country might be very important for
the company to sell their product with great profit. There are a lot of politick risks associated
with the company as well. As there are very limited trade barriers, which makes it easier for
the company to export their product and this also increases the competition in the current
market.

5Marketing Audit for External Environment Analysis
2.1.2 Economic
The economic condition of United Kingdom is there GDP growth rate is high which
results in fast growth of Chanel as well. The interest of that country is also under control and
hence, people of that country have more monetary power in their hand and they can afford
more of Chanel products.
2.1.3 Social
The demographic condition has a huge impact over the product because majorly the
adult aged people are most attracted to the perfumes of Chanel. The higher class people have
more power to afford the high ranged product (Research Prospect 2020).
2.1.4 Technological
The country is well developed with high-end technologies which helps the company
to manufacture their product using new technologies and sell the product at a comparatively
lower price.
2.1.5 Environmental
The current weather condition of the place puts a huge impact over the perfume sell
because the density of the weather condition will change the preference of the consumers.
Chanel have to continuously come up with new innovations to match the preference.
2.1.6 Legal
In United Kingdom there is a legal strictness over the foreign companies which
Chanel have to maintain and function there.

6Marketing Audit for External Environment Analysis
3.0 MICRO analysis
This section involves the micro economic factors which impacts the sell and
manufacturing of the product in the current market. Market, consumers and competitors are
the major factors and they are discussed in the following points:
3.1 Markets
Current market trend for perfumes is increasing day by day and Chanel have focused
into that industry only to increase their sell all over the globe. During 2016 the sales of
perfume has more contribution in $18.69 billion (Edwards-Johnston 2016). The ratio of the
preference is however increasing yearly and estimated that in 2025 the sales will increase
further.
Figure 1: Sales of fragrances in UK for 10 consecutive years
The below shows that Chanel perfumes crosses different step before entering into
market. All the needs and demands of the consumers are kept in mind before manufacturing
the product.

7Marketing Audit for External Environment Analysis
Figure 2: Steps of market analysis
3.2 Customers
Form the below figure it can be stated that the customers who mostly prefers the
fragrances of Chanel are the age group between 20 to 35 because they are the targeted
customers who prefers to buy the product according to their taste and to show higher status.
The majority portion of the age group is the targeted customer of Chanel which makes it
possible for the company to earn more profit from the market. This company does not add
alcohol and harmful ingredients into their perfumes which attracts customers more because
every people is becoming conscious regarding skin issues (Monchanel1.blogspot.com 2020).
One more major reason of high selling of this product is that the services provided by Chanel
is top quality which matters equally for the customers. Before buying the product customers
can smell test whether they like it or not and then decide to buy. (Clients segmentation in
Appendix 3A).

8Marketing Audit for External Environment Analysis
Figure 3: Customers targeted
(Source: menfragrancessolvey.wordpress.com)
3.3 Competitors
3.3.1 Porter’s 5 force analysis
Full porter’s 5 force is provided in the Appendix 3B (Case48 2020). Only the threat
from new companies and supplier’s negotiation power is discussed below.
3.3.1.1 Threat from new entrant
Chanel perfume is the most prestigious brand among the market still there is chance
that the company faces threat from new entrants because there is globalization levied in
almost every country which makes it easier for every brand to expand their product (Zeng
and Wang 2016, August).

9Marketing Audit for External Environment Analysis
3.3.1.2 Negotiation power of suppliers
Suppliers negotiation power here is low because Chanel takes the marketed price form
them. Price for every suppliers is almost same.
4.0 Internal Analysis
4.1 strategy review
Chanel is already a well-known brand in the market which makes a strong position to
focus on other innovative ideas to increase their sales. They get the first mover advantage in
the perfume industry (Marketing91 2020). They provide the high quality service through high
quality salesperson who have great knowledge and interest over the product knows how to
understand the need and demand of every customers who comes to them for their assistance.
The salesperson are also provided training for few weeks to behave in a proper and kind way
with the customers.
4.2 Function Review
This section of the company is justified with the help of 7P’s of the market which is
provided in Appendix 4A (Marketing Mix - Comparative Analysis of Chanel & Zara 2020).
It is important for such a popular company to manage their marketing mix and the targeted
market very smartly so that there is customer retention (Sugimoto and Nagasawa 2017). The
company has managed to maintain a good relation with their customers by providing high
quality service along with the product.
4.3 Productivity Review
This section is proved with the help of CBBE model available in Appendix 4B. This
Company maintains all the ethics and regulations of the area where it is operating and
manufacturing their product. The main strategy of their product is to focus into long term
needs of the customer rather than focusing into short term needs which help the company to

10Marketing Audit for External Environment Analysis
sustain into the market for longer (Chanel; l'entrepreneur 2020). The perfumes are designed
and made in such a way that it targets the majority of the age group and attracts new
customers as well. It is very important to position their high quality product and service in the
market carefully so that even if there is high risk from the competitors still it can survive into
the market strategically and skillfully.
5.0 TOWS and Strategic Analysis
5.1 TOWS analysis
This part of the research paper provides the threat, opportunities, weaknesses and
strengths of the company (Fern Fort University 2020).
External Threats
 There is a huge competition in
the market.
 Very limited product option
available for the customers
from their side.
 Competitors are coming up
with new technologies in the
market.
 Supply condition of their
product is still an issue.
External opportunities
 They have a huge customer base
and they acquired them through
online channels.
 They follow up and maintain the
new trends in the market.
 They maintain the healthcare
research going on in the country
and maintain the regulations.
 Low inflation rate of the country
helps the company to flourish
more.
Internal Weakness
 They need more new and
innovative technologies to cop
up with the diversified market.
 They have very limited option
outside their main business.
 There are a lot of gaps in the
product range which are sold
by Chanel.
 Very limited work culture
inside the company.
Internal Strengths
 This company have a strong
brand portfolio in the market.
 They have maintained a high
customer satisfaction quality.
 Their execution of new products
and projects were always with
strategies and hence it always
gave good returns.
 They have a really strong base of
suppliers.

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5.2 Key strategic challenges
1. The Brand awareness: Developing some brand awareness through some extra
advertising along with maintain a good public relation and ethics of that area will
allow the company to flourish more into other markets as well.
2. Quality and creativity: maintaining a high standard of their product is main signature
of this brand which should be kept at the top aim.
3. Promotion: promotions like online shopping access and free delivery would help
Chanel to improve their selling rate and attract more consumers.
4. Product line: manufacturing extra product line by keeping in mind the diversified
needs and preferences of the customers would help the company to stay in their
market position.
5. Salesperson: providing proper training to the salesperson of the store would help the
company to attract more customers because sales persons are considered to be the
face of the company. It will help the company to retain good relation with the
customers as well (Pulizzi 2013).
6.0 Conclusion
After discussing all the points related to the marketing strategies and marketing audit
of Chanel, it can be specified and concluded that this company is still facing a lot of
challenges and trying maintaining their position in the market. A lot of analysis is done and
found out that Chanel has a huge market capability and customer loyalty base which helps
them to maintain their high quality service. This company have tried to maintain all the rules
and regulations of United Kingdom which allows them to sustain in there market and
continue to sell their product to the customers.

12Marketing Audit for External Environment Analysis
References:
Case48 (2020). Chanel Porter Five Forces Analysis. [online] Case48. Available at:
https://www.case48.com/porter-analysis/13808-Chanel [Accessed 4 Mar. 2020].
CHANEL (2020). CHANEL Official Website: Fashion, Fragrance, Makeup, Skincare,
Watches, Fine Jewellery. [online] CHANEL. Available at: https://www.chanel.com/en_GB/
[Accessed 4 Mar. 2020].
Chanel; l'entrepreneur (2020). About Chanel. [online] Chanel; l'entrepreneur. Available at:
https://chanelentrepreneur.wordpress.com/about/ [Accessed 4 Mar. 2020].
Edwards-Johnston, C., 2016. Message in a Bottle: An Analysis of Modern Perfume Usage as
a Nonverbal Communicator (Doctoral dissertation).
Essay48 (2020). Chanel PESTEL & Environment Analysis. [online] Essay48. Available at:
https://www.essay48.com/term-paper/13808-Chanel-Pestel-Analysis [Accessed 4 Mar. 2020].
Fern Fort University (2020). Chanel SWOT Analysis Matrix [step by step] Weighted SWOT.
[online] Fern Fort University. Available at:
http://fernfortuniversity.com/term-papers/swot/1433/1201-chanel.php [Accessed 4 Mar.
2020].
Marketing Mix - Comparative Analysis of Chanel & Zara (2020). Marketing Mix -
Comparative Analysis of Chanel & Zara. [online] Marketing Mix - Comparative Analysis of
Chanel & Zara. Available at: https://gillsrob8.wordpress.com/ [Accessed 4 Mar. 2020].
Marketing91 (2020). Marketing mix of Chanel - Chanel marketing mix. [online]
Marketing91. Available at: https://www.marketing91.com/marketing-mix-chanel/ [Accessed
4 Mar. 2020].

13Marketing Audit for External Environment Analysis
Monchanel1.blogspot.com (2020). Ch. 8 - Segmenting and Targeting Markets. [online]
Monchanel1.blogspot.com. Available at: http://monchanel1.blogspot.com/2016/04/ch-8-
segmenting-and-targeting-markets.html [Accessed 4 Mar. 2020].
Pulizzi, J., 2013. Epic content marketing: How to tell a different story, break through the
clutter, and win more customers by marketing less. McGraw-Hill Education.
Research Prospect (2020). Chanel’s Brand Identity and Personality | Research Prospect.
[online] Research Prospect. Available at: https://www.researchprospect.com/chanels-brand-
identity-and-personality/ [Accessed 4 Mar. 2020].
Sugimoto, K. and Nagasawa, S.Y., 2017. Luxury branding: the case of Chanel. International
Journal of Quality and Service Sciences.
Zeng, X. and Wang, S., 2016, August. A Study on the TV Commercials of Luxury Female
Perfumes. In 2016 International Conference on Engineering Science and Management.
Atlantis Press.

14Marketing Audit for External Environment Analysis
Appendices:
Appendix 1: overview of the company
Company Name: Chanel
Industry/ Country: Fragrance/ United Kingdom
Company Vision/ Mission
Statement:
Vision: This company contributes a
portion for a positive future of this world.
Mission: Style statement of every
men and women should be perfectly
enhanced by this product.
Company Size (Employees): 20,000
Company Turnover (2018): $11 billion
Key Competitors: Bvlgari and Dior.
Customer Demographics: Gender: Female and Male
Age: 16-40 years old
Generation: Baby Boomers and
Generation Y
Income: Higher Middle income to
upper income
Occupation: Varies
Key Products/ Services: 1. Haute Couture
2. Ready-to-wear
3. Perfume
4. Jewelry
5. Accessories
(Source: CHANEL 2020)

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Appendix 2: PESTLE analysis
(Source: Essay48 2020)
Appendix 3A: Clients Segmentation
(Source: Monchanel1.blogspot.com 2020)

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Appendix 3B: Porter’s 5 Forces analysis
(Source: Case48 2020)

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Appendix 4A: 7P’s analysis
(Source: Marketing91 2020)

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Appendix 4B: CBBE model
(Source: Chanel; l'entrepreneur 2020)