Brand Audit

MKT 3320

CHANEL

December 9th, 2015

Sonia Kwak

TABLE OF CONTENTS
PART I: BRAND INVENTORY
EXECUTIVE SUMMARY...3
A. COMPANY.4
B. CATEGORY AND COMPETITION....12
C. PRODUCTS WITHIN BRAND CATEGORY.....16
D. BRAND ANALYSIS.....19
E. CONSUMER PROFILE........21
1. TARGET MARKET......21
2. MARKETING MIX (4 PS) .....21
F. ADVERTISING/MARKETING COMMUNICATIONS.....23
G. MEDIA FOR BRAND...23
H. PROMOTIONS FOR BRAND..24
I. INTERNET AND NEW MEDIA..25
PART II: BRAND EXPLORATORY
A. RESEARCH I26
B. RESEARCH II...27
C. RECOMMENDATIONS AND BRAND VALUE EVALUATION------------------------28
APPENDIX....31

EXECUTIVE SUMMARY
Europe indisputably trumps the rest of the world, in terms of provenance, when it comes
to luxury. Chanel, currently ranked as number 4 in the 2015 Brandz list of most valuable luxury
brands, is one of the notable brands to call Europe home.1 As a Parisian fashion house founded
by the late couturier Gabrielle Coco Chanel, Chanel holds an iconic and ubiquitous influence
in the fashion world. Since Chanels emergence, the company is easily recognized as one of the
most established brands in the luxury industry specializing in haute couture, ready-to-wear
clothing, luxury goods, and fashion accessories. The essence of the companys brand institutes
from the creator herself; Coco Chanel built the House of Chanel on the ideals of simplistic,
timeless elegance and style. Through her strong personal conviction and strives for perfection,
Coco Chanel completely revolutionized fashion and is arguably one of the most game-changing
women in history. Her ability to create trends before the concept of trends even existed reveals
why the remarkable innovation and uniqueness of her designs became symbols of luxury and
sophistication. The causation of the House of Chanels fervent brand health begins with Coco
Chanel, as one could argue, she herself is a brand with an influential omnipresence that continues
to transcend through time.
Chanel has been a successfully run company for over 100 years, utilizing a number of
strategic brand decisions over time to build and sustain their brand equity. The purpose of the
following report is to analyze the proceedings and conclusions of these strategies. The analysis
of Chanels brand prompts questions regarding the consumer profile, marketing and advertising
approach, corporate financials, brand promotions, and countless other brand extensions that have
contributed to the success and failures of the company. In-depth answers to these questions will

See Appendix A

manifest through the analysis completed in this report, followed by concluding recommendations
in hopes to foster the companys continuous success.
The results from this reports audit on Chanel measures and interpret the composition of
the companys past, current, and future standing. From these results it can be deducted that
Chanel has been able to establish and maintain strong brand equity by employing marketing and
management strategies utilizing the strengths of the company. The synthesis of Chanels
strengthsimpressive history and credibility, ability to consistently and successfully attract
consumer interest, effectiveness in preserving and promoting the brand image, attunement to
consumer needs and market trendassures Chanels likelihood to retain its powerful marketing
position. However, Chanels prominent presence in the luxury goods industry may also be
responsible for their weaknesses preventing potential lucrative growth. To expand their market
share and global power, Chanel could consider venturing further into e-commerce and increasing
emphasis on new media marketing.
COMPANY
Brand History:
The companys history is a vital factor to their strong brand equity, as it is well known
that Chanels key to success is staying consistent and true to its primitive foundation. The House
of Chanel originated in 1909 when Gabrielle Coco Chanel opened up a hat shop on the ground
floor of a Parisian flat with Etienne Balsa. In 1910, her lover, Arthur Boy Capel financed her to
open up her very own independent millinery shopChanel Modesat 31 rue Cambon, Paris.
Initially, Chanel primarily sold womens garments including: flannel blazers, straight-line skirts
of linen, sailor blouses, long sweaters made of jersey fabric, and dresses parallel with the eras
flapper popularity. It didnt take long before Chanels garments were reported to be on every

clothing factory buyers list in Europe according to Harpers Bazaar magazine in 1915 and 1917.
Her post-World War I designs gained the upmost attention and Coco Chanel birthed her first
fashion revolution with modernistic pieces such as beaded dresses, the infamous little black
dress, the two- or three-piece suit. By 1921 she introduced one of the worlds best-selling
fragrances of all time, Chanel No.5. During World War II Coco Chanel fled to Switzerland, but
returned home and rode her second fashion revolution wave with her post-World War II
comeback. At this time Christian Dior was rising as Pariss colossus couturier, however, Chanel
rose again with the launch of her chain-link belt and quilted leather bagstoday with the
interlocking C'sreestablishing Chanel as the definition of classy glamour with an edge. Coco
passed in 1971, but the brand continued, even launching their first ready-to-wear collection in
1978. (NYMag) After Coco Chanels death, just as the House of Chanel was at risk of losing its
enchanting reputation for luxury, Karl Lagerfeld joined in 1983 to revive its elite status with his
unique touch of glamour and sexiness. In the era following Gabrielle Coco Chanels death, the
House of Chanel increased the number of their fragrance launches for both men and women,
continued to unveil iconic and unique collections in the clothing and accessory categories, and
slowly started to focus on the growth of their beauty category. Coco Chanel inspired nearly every
product that Chanel released; there was always an undeniable element of the houses founder.
Just to reiterate: the significance of House of Chanels history is embodied in the brand, as well
as the continuity of the companys firm hold of its primitive foundations.
Key events of Chanels history are bulleted below in chronological order for an
accessible display. The timeline of these crucial moments for the companys brand, product, and
overall growth is taken directly from Chanels website.2

See Inside.Chanel on Timeline

1910 Coco Chanel opens her first shop, a hat shop, at 21 Rue Cambon in Paris under the
name Chanel Modes.

1913 Coco Chanel opens a new boutique in Deauville, France and introduces a collection
of sportswear.

1915 Coco Chanel, her reputations now firmly established, opens her first couture house
in Biarritz, France.

1916 Coco Chanel became the first designer to create loose womens clothing using
jersey.

1918 Coco Chanel opens her couture house at 31 Rue Cambon in Paris.

1920 Chanel designed the first practical and feminine suit for women known as the
Chanel Suit.

1921 Perfumer Ernest Beaux was commissioned to create a perfume to complement

Chanels new line of Chanel Suits; Beaux created the iconic fragrance, Chanel No. 5.
(Named No.5 because it was the fifth scent presented to Coco Chanel.)

1922 Chanel No.22 launched, named after the year of its creation.

1924 Creation of Chanels first line of makeup, featuring lip colors and face powders. In
the same year, the Societe Des Parfums Chanel is founded and dedicated to the purpose
of creating unique fragrances and beauty products.

1924 Pierre Wertheimer gave financial and founding support to Societe Des Parfums
Chanel, as well as acquired a fraction of the ownership share of the company.

1925 Chanel launched her signature cardigan jacket and introduced a new fragrance:
Gardenia, also created by perfumer Ernest Beaux.

1926 Chanel created the little black dress as well as launched the first oriental
fragrance for women named Bois Des Iles.

1927 Coco Chanel launches Cuir De Russie, the next oriental fragrance made by Ernest
Beaux.

1931 Chanel designed outfits for Hollywood at the personal request of Samuel Goldwyn.

1932 Coco Chanel presents Bijoux De Diamants, a dazzling exhibition of fine jewelry,
staged in honor of the diamond in her private residence in Paris.

1935 Gabrielle Coco Chanel is at the height of her fame, with four thousand employed
workers and five boutiques on Rue Cambon in Paris.

1945 Due to the Nazi invasion in France, Coco Chanel closed all of her shops except the
one on Rue Cambon No. 31where perfumes and accessories continued to be in high
demand among the Parisians and American soldiers alike.

1954 Chanel returns to the fashion world at the age of 71 and stages the grand re-opening
of her couture house. Tired of the fashions of the time, she inspires a second fashion
revolution with her original creations.

1955 The 2.55 quilted handbag was released in February, named after the date of its
creation.

1957 Coco Chanel creates the legendary two-tone slingback shoe, conceived in beige
with a contrasting black toecap.

1957 Chanel was presented with the Neiman-Marcus Award.

1960 The fascination with Chanel grows, as the most celebrated stars of the time
Elizabeth Taylor, Jane Fonda, Jackie Kennedy, Grace Kelly, and Jeanne Moreau wear
the latest fashions from Chanel.

1970 Coco Chanel introduces a new fragrance: Chanel No.19, named after her date of
birth, conceived by master perfumer Henri Robert.

1971 Gabrielle Coco Chanel died at the age of 87 on the tenth of January.

1974 Chanel launches a new fragrance, Cristalle.

1978 The House of Chanel expands with the introduction of its first ready-to-wear
collection and the worldwide distribution of its line of iconic accessories.

1980 Jacques Polge is named master perfumer of Chanel, following in the footsteps of
Ernest Beaux and Henri Robert.

1983 Karl Lagerfeld is appointed artistic director of all haute couture, ready-to-wear and
accessory collections.

1984 Chanel launches Coco, the first womens fragrance created by Jacques Polge.

1987 The first line of Chanel watches is launched with the creation of the Premiere
Watch, designed by Jacques Helleu.

1990 Chanel introduces Egoiste, an original scent that defied the conventions of mens
fragrance.

1993 A milestone is reached with the launch of the first Chanel Fine Jewelry collection in
the heart of the Place Vendome in Paris

1996 Chanel unveils a fresh oriental fragrance for women, Allure. Allure Homme, a
masculine interpretation of the fragrance, is launched immediately after.

1997 Chanel establishes 18 Place Vendome as the home of Chanel Fine Jewelry.

2000 The first Chanel sport watch is created with the launch of the J12developed for
both men and women.

2001 Chanel launches Coco Mademoiselle, a scent inspired by Gabrielle Chanel.

2002 Chanel acquires eight Parisian specialty ateliers to establish Paraffection, a

company consisting of Desrues (metalworker), Lemarie (flower and feather craftsmen),
Maison Michel (milliner), Maison Lesage (embroiderer), Massaro (shoemaker),
Goossens (goldsmith), Guillet (floral accessory expert), and Atelier Montex
(embroiderer). In doing so, Chanel supports the historic arts and preserves the unique
expertise of fashions traditional craftsmen.

2003 Chanel introduces Chance, its first youthful fragrance.

2005 The Metropolitan Museum of Art in New York honors Chanel with a grand
exhibition dedicated to the House of Chanel.

2006 Chanel launches a new lipstick, Rouge Allure, with an innovative case that opens
the lipstick case with one click and the use of only one hand.

2007 The art world celebrates Chanel once again with the Chanel, Art As Universe
Exhibition at the Pushkin State Museum of Fine Arts, in Moscow.

2008 Celebrated artist Zaha Hadid presents a traveling exhibition titled, Mobile Art
Chanel Contemporary Art Container by Zaha Hadid featuring artworks inspired by the
iconic quilted handbag.

2009 Chanel introduces Rouge Coco, a luxurious line of lip color designed by Peter
Philips.

2010 Chanel launches Bleu De Chanel, a provocative fragrance for men.

2011 The International Art World honors Chanel with the unveiling of Culture Chanel
at the Museum of Contemporary Art in Shanghai and at the National Art Museum of
China in Beijing.

2012 The Little Black Jacket is launched alongside the book and photo exhibition, titled
The Little Black Jacket: Chanels Classic Revisited by Karl Lagerfeld and Carine
Roitfeld.

2013 The Chanel No.5 Culture Chanel Exhibition revealed the iconic essence of the
timeless fragrance

Organization and Major Activities, Subsidiaries, Key Personnel:

According to Forbes, the privately held House of Chanel is jointly owned by the
grandsons of the early business partner of Coco Chanel, Pierre Wertheimer: Alain Wertheimer
and Gerard Wertheimer. Additional key personnel for the company include: Karl Lagerfeld,
internationally recognized for his unique and inspiring style, as Chanels renowned Creative
Designer; Maureen Chiquet currently holds the Global CEO position for Chanel (Forbes).
Furthermore, Arie L. Kopelman is vice chairman and COO, and John Galantic is President of
Chanel. Chanel S.A.S. designs, manufactures, and retails luxury fashion and beauty products,
along with luxury accessories. Chanel acquired gun maker Holland & Holland in 1996, high-end
swimwear designer Eres in 1997, stake in luxury watchmaker Bell & Ross in 2011, and milliner
A. Michel et Cie and embroidery house Lesage in 2002. 3 Eventually Chanel established
Paraffection, a company comprised of eight acquired Parisian specialty ateliers, with the purpose
to support the historic arts and preserve the unique expertise of fashions traditional craftsmen.
Paraffection consists of Desrues (metalworker), Lemarie (flower and feather craftsmen), Maison
Michel (milliner), Maison Lesage (embroiderer), Massaro (shoemaker), Goossens (goldsmith),
Guillet (floral accessory expert), and Atelier Montex (embroiderer).4 In addition to Paraffection,

3
4

See FundingUniverse on Chanel SA History

See Inside.Chanel on Timeline

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Chanels other subsidiaries are as follows: Chanel Inc. (USA), Chanel KK (Japan), and Chanel
Hong Kong.
Financial Data and Annual Report:
In the Forbes list of the worlds most valuable brands, Chanel is ranked as number 85
with the brand value of 6.8 billion dollars and 5.8 billion dollars in sales for the year 2015
(Forbes). In 2014, Chanels profit growth beat out the competitors with a 38% percent rise in
annual profit5; Chanel reported 2014 revenue of 7.5 billion dollars and net income of 1.4 billion
dollars.6 Chanels recent phenomenal growth is partly due to their extraordinary success in China
and with the Chinese, according to the head of luxury goods research at Exane BNP Paribas in
London. Net profit for the five publicly traded companies the index uses to value ChanelPrada,
Kering, LVMH, LOreal and Estee Lauderwas down a collective 6 percent in their 2014 fiscal
years, in contrast to Chanels outcomes. Chanels International BV files the closely held
companys financial results with Kamer van Koophandel, the Dutch of commerce. (Pendleton)
Although Chanel is a global luxury brand, the privately owned aspect of the company prevents
from blatant publicity of their annual reports.
Location:
Chanels headquarters is located in the same city the company was born in: Paris, France.
7

Chanel currently operates in six continents with 94 stores in Asia, 70 stores in Europe, 10 stores

in the Middle East, 128 stores in North America, 2 in South America and 6 in Oceania. This
totals out to 310 boutiques that Chanel has scattered worldwide, collectively generating annual
sales revenue of 4.4 billion dollars. From cross-referencing the number of Chanel boutiques

See Appendix B
See Pendleton on Chanel Profit Beats Rivals and Makes Owners $3 Billion Richer in 2015
7
See Appendix C
6

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worldwide (310) and discounting the repetitive quantity within a city (e.g. three Chanel
Boutiques in Los Angeles equals one), it can be concluded that Chanel boutiques are in a rough
estimate of 150 cities.8 The Getty Thesaurus of Geographic Names has 248,740 inhabited places
(cities, towns, etc.) listed in its database. 150 cities appear granular in comparison to the total
number of cities in the world; the 248,590 other cities in this world that do lack Chanels
immediate physical presence are faced with a geographical restriction hindering prospective
buyers interest to purchase from Chanel. Chanel pieces are sold exclusively at Chanel
boutiques, through department stores and certain specialty boutiques; the only products that are
available through their website is makeup, skin care, and perfumes.
CATEGORY AND COMPETITION
Category definition, size and history:
Chanel is categorized as a luxury goods brand, and a pivotal player in the incredibly large
and vast luxury industry, which is not an easy position for a company to obtain. Luxury is as old
as civilization, noted as anything in high and exceptional regard from ordinary things. An exact
diction of the term luxury good is as follows: a material object, service, etc., conducive to
sumptuous living, usually a delicacy, elegance, or refinement of living rather than a necessity.
(Merriam-Webster). It started with the Romans and their conquest over Greece, which placed a
high value over luxury. Pleasure and extravagance, especially in dining and leisure, increasingly
took over their daily lives and was integrated into the development of new societies and
colonization. In the 16th century, Venice was birthed as a prime site of trade and luxury, and
later in the 17th century extreme luxury environments emerged in France with two major
chateaus: Chateau de Maisons and Chateau de Vaux-le-Vicomte. After the industrial boom of the
8

MyStore 411
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19th century, a new era of luxury and extravagance appeared in the United States of America,
witnessed in luxury architectural sites. After the world wars, mass production increased access to
goods and luxury became more widely produced. Coco Chanel, an adroit designer in her time,
built her brands credibility through the use of extremely high quality material for her products.
She differentiated her clothing line from the masses with exceptional quality and design, thus
leading to the House of Chanel becoming a status symbol worldwide.
Method of Distribution:
In every country Chanel operates in, they have a signed franchise with local distributors
to sell their products as well as operate through Chanel boutiques. The House of Chanels
signature reputation for luxury is embodied in their strategy of focusing on the brands
exclusivity aspect; if they took full advantage of e-commerce then the ease of availability of their
products, paired with the unavailability of Chanels service, will tarnish their signature reputation
for luxury. Chanel chooses to only sell their pieces in stores so the customer can receive a 360degree Chanel experience, which consists of high-end service powered by their Customers
First Slogan. Chanel believes in the meaning of luxury, the customers are not only purchasing a
product but a refined lifestyle, which mean anything associated with their name must be of the
upmost elegance and class. They do, however, allow customers to purchase their makeup,
skincare, and perfumes online through their website. In 2015, e-commerce grew to a 7% market
share for Chanel. Wholesale is the dominant selling channel, at a 66% market share.
Seasonal and Regional Factors:
Chanel follows the fashion industrys custom of showcasing new, seasonal collections
every year in order to keep up with the continuously changing trends and to maintain relevance
for consumer interest. However, Chanel business practices are outdated and out of tune with the

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contemporary business methods used in our fast-paced modern world. Despite the seasonal
collections produced and showcased annually, the number of products they release in a year is
significantly lower than of those immediate competitors in the same category. The number of
products released is significantly lower in quantity, but it is certainly not lower in quality. The
management style Chanel has adopted is not parallel with the contemporary business practices
that emphasize speed. Chanels new product launches follow the waterfall model rather than the
conventional sprinkler model; the waterfall model encompasses the strategy of focusing on the
expensive and luxurious complex of the singular product they are launching. Chanel products are
renowned luxury goods, with high and distinctive demand, and almost always have an extremely
long life cycle. For example, the Chanel No. 5 perfume was released in 1922, yet the demand for
it is still impressive because of its originality and prestige. The waterfall model is justified
because it sustains the pristine brand image Chanel coveted from the beginning of its very
existence. In addition to the timing and focus of their product launches, regional factors come
into play and not just for Chanel, but for the whole luxury good industry. Luxury brands are keen
to gain greater market share in China due to wealthy consumers who have a greater disposable
income and spend more. There is and always will be a direct correlation between the luxury
industry and households disposable income increase or decrease. Chinese consumers make up
the largest portion of the luxury goods market at 31%, Americans at 24%, and Europeans at
18%. (Bain)
Legal Considerations:
Legal considerations for Chanel include local and legal laws, health considerations in
terms of the production of materials, as well as the overwhelming number of counterfeit Chanel
products being sold by unauthorized individuals and the illegal use of its double C logo.

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Competitors: Gucci, Louis Vuitton, Christian Dior, and Prada.

Louis Vuitton, established in 1854, and is one of the main divisions of LVMH with more
than 390 shops worldwide. The brand produces and sells handbags for men and women, jewelry,
leather goods such as wallets and belts, shoes, clothing, luggage, and watches. Louis Vuitton is
recognized as a powerful global luxury brand.
Gucci is an Italian company birthed in the Netherlands, with 425 Gucci stores worldwide.
Their brand produces and retails ready-to-wear clothing, handbags, shoes, cosmetics, skin care,
jewelry, watches, and other leather goods. Gucci, as well, is a force to be reckoned with in the
global luxury market.
Christian Dior is an internationally renowned company owned by French luxury
conglomerate LVMH and based in Paris. Founded in 1946, it currently has 210 stores
worldwide, they specialize in ready-to-wear clothing, leather goods, fashion accessories, shoes,
jewelry, watches, fragrances, make-up, and skin care products.
Prada is an Italian based luxury fashion house founded in 1913 by a man named Mario
Prada. They currently have over 202 stores worldwide and specialize in producing and retailing
ready-to-wear leather and fashion accessories, shoes, luggage, perfumes, and watches
Gucci, Louis Vuitton, Christian Dior, and Prada are strong competitors because of their
immense global presence in the luxury industry, and their easily recognizable logos conveying a
strong brand image. They compete closely with Chanel with product sales, except Chanel does
not participate in the specialization of retailing leather goods and luggage like they heavily do.
Gucci and Louis Vuitton are higher on Brandz 2015 Top 10 Luxury Brands list; Louis Vuitton
takes first place with the highest brand value, Gucci lands in third place, Chanel is right after
Gucci in fourth place, and Prada is settled at seventh place. Christian Dior did not even make the

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list this year, assuming a low brand value for 2015, according to Brandz. Notably, while the
brand value of the overall luxury category declined by 6% in the last year, the only two brands
on the list that saw a growth instead of a decline in brand value were Louis Vuitton (6% growth)
and Chanel (15% growth). In Brandz 2010 valuation we saw Chanel lose 11% of its brand value,
best explained by their hesitance to enter China. In comparison to the 2010 statistics, we see
Chanels healthier stance in brand equity now due to a change in marketing strategies.9
Using Porters Five Forces analysis we can better understand the luxury goods
industry and the impact of rivalry on Chanel. The threat of a new entrance for the luxury fashion
industry is relatively high because of the many modern fashion styles that gain popularity over
just a short amount of time. These new players are able to snatch considerable market share even
without an extended history.10 This leads to a high power of buyers due to the number of
comparable brands against Chanel. In addition, since Chanel uses a pull strategy versus a push in
their sales and because Chanel does not sell necessities, the consumers power is high. The threat
of substitutes measures high as well because of the similar quality of service and products
offered by Chanels competitors. One advantage Chanel does seem to have in the five forces is
the power of suppliers. Chanel products use raw materials that are relatively abundant in nature,
so the power of suppliers is low. These previous four forces lead to high competitive rivalry, this
is mainly due to the factors that play against Chanel in dominating the market such as the power
of buyers, threat of substitutes and threat of new entrants.
PRODUCTS WITHIN BRAND CATEGORY
In 2005, the president of Chanels subsidiary in JapanRichard Collasse made a
remark about Chanels corporate philosophy in regards to their product categories.
9

See Appendix D
See Wenting, Spatial Formation of the Fashion Design Industry 1858-2005

10

16

Chanel has three business areas: fashion, fragrance and beauty products, watches and jewelry
under the single brand name. We have been focusing efforts to specialize in the respective areas,
instead of pursuing them as side businesses of the fashion segment.
Chanel has three product divisions, as previously stated:
1. Fashion

Pret-a-porter

Haute couture

Cruise collection

2. Fragrance and Beauty Products

Fragrances
o Light, airy, floral for women fragrances
o Symbolic of luxurious taste

Cosmetics
o Most accessible Chanel product
o Symbolic of luxurious beauty

3. Watches and jewelry

Watches
o Symbolic of luxurious taste
o Unisex style
o Ceramic material
o Bridal and Jewellery watches

Jewelry
o High Jewellery

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o Camelia
o Comete
o Baroque
o 1932
o Ultra
New Product Introduction: Cruise 2015/2016 collectionavailable in November 2016.

Benefits and appeals

o Highly anticipated
o Showcased on top models in South Korea and international celebrities
o Integrated Korean culture and fashion into the collection

New Packages
o

Chanels strategy is to aim for global launches of a singularly consistent

product and packages, coordinated to appear nearly simultaneously around
the world. Chanel packaging department operates under the motto: We
have one product for one world. Chanels package design is successful
because they have a long-term relationship with a relatively small number
of suppliers and converters, as well as have a close control on every aspect
of package production. The consistent continuity of their package
enhances the luxury experience of Chanel for their customers, and circles
back to the pristine roots of Chanels history.

Chanel and Innovation:

Chanel is an institution founded on innovations for the fashion world, starting with the
creations of their founder, Coco Chanel, such as: the first designer fragrance, the first suit for

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women, the first womens cardigan, the invention of the little black dress, the first womens
pantsuit, bell bottoms. In todays fashion world, Chanels designer, Karl Lagerfeld is well known
for his consistently successful and innovated designs. Using inspiration from all corners of the
world to integrate into his designs.
Recent News About Product Category (including competitors):

Milan Fashion Week

Paris Fashion Week

Mercedes-Benz Fashion Week

BRAND ANALYSIS
Top brands in category by dollar sales (Forbes)
o Christian Dior $42.8 billion
o Louis Vuitton $10.1 billion
o Chanel $5.4 billion
o Prada $4.64 billion
o Gucci $4.5 billion
Luxury has always been in high demand, but over the past twenty years we see the
increase of global reach luxury goods makers has expanded beyond, leading to the point where
sales growth in the luxury goods market segment has outpaced growth among more broad-based
consumer goods companies. In fact, luxury consumer spending has doubled the global rate of the
gross domestic product, leading to the estimation of a tripled luxury goods consumer universe of
roughly 330 million individuals. (Bain) This tripled increase in consumer spending in the luxury
category in the past twenty years, however, does not reflect the sales of individual global luxury
brands. For example, Prada reported in the third quarter of 2014 to have a whopping 44%

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decrease in profits against a sales drop of 5.6%. A huge influence on category growth trends is
consumer behavior categorize by location such as by country and by region. These seven
countries represented 84 percent of the Top 100 luxury goods companies and accounted for 90.5
percent of global luxury goods sales in 2013. China/Hong Kong was the runaway leader in
composite luxury sales growth in 2013, with 33.4 percent growth. The U.K. and the U.S. both
outpaced the Top 100s 8.2 percent growth, with 11.1 percent and 9.4 percent respectively.
Switzerland and Italy trailed the Top 100 with growth at 5.4 percent and 4.3 percent. Growth in
French companies dropped significantly from last year to 2.9 percent, while Spain just managed
to stay in positive growth, at 0.1 percent. (Bain) According to Bains research, Chinese
consumers continue to make up the largest luxury goods purchases globally at 31%, followed
closely by Americans at 24% and then Europeans at 18%. In current events happening in China,
the most heavily influence on the luxury goods category, it is clear to see the relationship
between the buckled down security and zero-tolerance for corruption in their politics directly
correlating with the decline in consumer purchases of luxury goods in China, which affects the
grand total because of the immense impact the country has in the category.
Chanels product prices reflect the lavish image and feel of Chanels brand. Chanel
believes the discussion of price as unrefined, therefore Chanel chooses to not reflect the prices of
their high-end products featured on their website, leaving curious consumers with the only option
to further request the products information by phone call or inshop. In recent news about
competitor brands, we witness the slow transformation into the digital world. For example,
Gucci previewed their Pre-Fall collection on the tremendously popular and ever-so-growing app,
Snapchat, before they posted it anywhere else. (Vogue) A familiar pattern appears in the papers
of luxury brands hurting fiscally from the sudden and unforeseeable decline of consumer

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spending in China, only underlining the heavy influence China has become for the luxury
category. Brands who have made headlines closing shops in China are Louis Vuitton and Prada.
And lastly, another pattern found ubiquitously from all of the brands in the luxury goods
category is the brand mentioned or accompanied by an opinion leader in todays society, ensuing
relevance and brand recognition.
Consumer Profile
1. Target Market
Chanel customers are primarily women who want to identify with what the brand
represents which is: timeless elegance, simplicity, modernity, and class. Pillars
Coco Chanel has instilled with the name Chanel ever since she started. Chanel
cosmetics are targeted at a younger consumer but they still retain the classic
market, which is their forte. Since 2002, with the launch of Chance perfume,
Chanel is targeting women in the younger age demographics of 18 years old to 39
years old. The reason for this is because Chanel is targeting hyper-active
consumers in the market, the ones who will return to buy more products because
of the younger generations tendency to collect luxury items due to their
materialistic complex. The change in target markets is a factor in Chanels
increase in brand value. You can see the shift in consumer spending due to the
change in amount of repeat purchases done by consumers in the younger age
demographic. Chanel has products with an extremely long lifeline, so the
importance to peak the younger target markets interest has dramatically
increased.
2. Marketing Mix

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Product: Chanel is a classy brand with products that are made with the upper elite
and wealthy class in mind. Its high standard finished products are for
sophisticated, educated people who can afford expensive products and want to use
Chanels established brand image as a way to express their own lifestyle. The
detailed and precise skill, intricate and unique designs, superb use of technology,
its innovative qualities, and the best of the best quality materials have helped
Chanel retain its ability to translate luxury and class through their brand image.
The products that Chanel offers such as daywear and evening clothing for both
men and women are elegant, sophisticated, and chic with exquisite proficiency
and style. Spearheaded by the famous designer Karl Lagerfeld, Chanel is able to
stay ahead of the curve in terms of style and fashion trends. The jewelry Chanel
retails (listed above in brand elements) are beautiful and sparking diamonds and
white gold of eighteen carat. The designs are timeless and exhibit the upmost style
and class while staying aligned with fashionable trends. Handbags for men and
women are exclusively reserved for the high class, the elite and the fashionable.
Pricing: Due to the astonishing amount of time it takes to complete a Chanel
product, after the various processes in production, the end result is of
exceptionally high standards. Skilled individuals who are expert in textiles and
design are trained in the production of Chanels products to ensure premium
quality. Based on these factors, the pricing policy for Chanel is that extraordinary
measures taken for extraordinary products conclude to extraordinary prices. The
prices are also indicative of Chanels high and exceptional regard in comparison
to brands whom use cheaper materials for their products they retail much cheaper.

22

Place: Factors such as high intensity of competition, distribution characteristics,

and zones with high consumption of luxury goods, and cosmopolitan enriched
communities all contribute to where and why each Chanel boutique was placed at
a specific location around the world.
Promotion: Chanel follows a global brand strategy, since it sells all of its products
under one name the advantage of this strategy is to give the reputation of a brand
to all of its products. On the other hand, it may lead to the whole degradation of
the brands image from selling a defective product. Currently, Chanel pursues and
maintains their strong global reputation, reflecting the image of luxury and
elegance, rich experiences, and its renowned quality brand products. Chanel
always associates its brand with opinion leaders in society that carry themselves
in high regard. Using the psychological concept of setting the minimum prices at
which consumers are willing to pay for a luxury brands product, there is a
willingness to adapt to customers prestigious perspective of Chanel. A part of
Chanels global promotion strategy, as Chanel reach out to the younger market
with the launch of products aimed towards younger audiences, Chanel intends to
follow a policy of falling prices for lower volumes or a more compact size of the
product. This strategy is to rejuvenate the consumer population and encourage
consumer-spending behavior to increase towards their product.
ADVERTISING/MARKETING COMMUNICATIONS
Chanel has encompassed the efficiency of brand storytelling and exemplifies how luxury
brands should advertise. Chanel firmly believes they do not exist to just sell a product but a
lifestyle, status, and heritage. Chanels ability to capitalize on their heritage is displayed in the

23

masterpiece of a story-styled ad they beautifully communicated to consumer. In this particular

story-styled ad, Chanel begins with a Once Upon A Time, setting up the fairy tale vibe. Then
introduces the strong characters: the protagonist, Coco Chanel, and the Antagonists, society and
poverty. The powerful and moving plot is revealed, a woman determined to change the face of
fashion against all odds. The struggle depicted in the story-styled ad about how the antagonist is
against poverty and societys fear of change and the unknown is of much relevance to the
demographic of our target market. Even though poverty is not a common trait among the
demographic of the consumers in our luxury industry, the symbolism of adversity every woman
has faced is very transparent. The story-styled ad then concludes with the resolution of Coco
Chanel overcoming all odds and deciding to continue on with the journey she started. The reason
this is so effective is because the aspect of a strong woman overcoming adversity caused by
society makes for an emotional attachment to the brand, and it will make a vast impact globally
because women empowerment is an up and coming social trend. This story-styled ad helped the
consumers connect emotionally with the brand and then took it a step further to strengthen the
emotional connection by using the real-life story of Chanels heritage. This creative strategy
produced positive reactions from the public with millions of views and reviews.
PROMOTIONS FOR BRAND
Chanel was Luxury Dailys 2013 Luxury Marketer of the Year for the measured
attention it paid to multiple consumer segments, its strong use of video and its advertising flair in
luxury publications. (Luxury Daily) Each piece of communication and marketing that Chanel
employed was another piece in the grand construct of the Chanel story. As mentioned in the
Advertisement/Marketing Communication segment, Chanel was able to beautifully craft a way to
communicate to their consumers a story of their brands heritage that stirred longing and emotion

24

for craftsmanship and high quality. In addition to relating their brand with emotional connections
with the consumers, Chanel elevated the standard with marketing with a style of finesse
unmatched and truly admired. Under the creative direction of Karl Lagerfeld, Chanel was able to
polish and adorn its image to remain relevant despite the rise of non-heritage, digitally adept
brands.
INTERNET AND NEW MEDIA11
Chanel introduced their new mobile site in 2013, which offered e-commerce for its
beauty lines and resembled Chanels website overhaul for brand continuity. The most proficient
part of the mobile site is now the beauty section that integrates mobile commerce and easy
vertical navigation. This portion of Chanels mobile strategy could help to increase sales since
consumers are likely more open to buying beauty via mobile rather than high-ticket apparel,
jewelry and watches. (Luxury Daily) The cross-channel brand experience was strengthened
with this new mobile-optimize site, and the extremely elegant aesthetics and functionality made
it transparent a great deal of time went into this strategy. The beauty site was commended for its
user-friendliness throughout the entire customer journey, from the home page all the way to
checkout. When consumers were at checkout they were offered two free samples as well as a
complimentary second-day shopping on orders of more than 125 dollars.
In December 2013, Chanel remodeled their website- www.chanel.com -to more
effectively intertwine product browsing with content and imagery to fully immerse the visitors
into Chanels world. Navigation to and within each section was a principal change with the
purpose to make the consumers browsing experience more intuitive of their usage habits.

11

See Appendix E

25

Another enhancement on the site was the larger and higher-quality images of photographs and
videos of Chanel in accordance to their heritage, products, and media.
Chanel produced an array of contemporary, product-driven videos with flippant tones to
showcase the modern Chanel consumers, with the brands Premiere watches positioned as the
spotlight collection. On the other side of the spectrum, Chanel also ambitiously produced a
dreamy web of heritage films. Each film was released after substantial build-up and to gigantic
audiences reaching over ten million views.
RESEARCH I12
Q1. I showed 5 respondents the bottom half of Chanels logo while covering the top half and
asked them if they could recognize the brand.

All of them responded with yes, which indicates a positive and strong brand recognition
and awareness.

Q2. I asked 5 respondents if they have ever made a purchase from Chanel, or if they have hopes
to make a purchase from Chanel in the future.

3 respondents were female and 2 respondents were male, and I received 3 yes and 2 no,
respectively. This indicates that Chanels best customers are women. The three female
respondents that yes to this question were 19 years old, 22 years old, and 34 years old.
This also indicates the age group for Chanels target market. Only the 34 year old had
responded that she had already made a purchase from Chanel, indicating the more active
consumer will be within the demographics of women with more financial security, which
tends to come for women older than 25 years old.

12

See Appendix F

26

Q3. I asked 5 respondents if they observed Chanels participation during Fashion Week, and if
they noticed Chanels emphasis on feminism.

All 5 respondents replied no, indicating a negative interest in Chanels products because
of the lack of interest in the brands involvement with our culture.

Q4. I asked 5 respondents if their parents or older relatives had a Chanel product.

I received 4 no and 1 yes, indicating the target market for Chanel is best for the
generation X and older.

Q5. I asked 5 respondents if they have ever bought a luxury good online

I received 2 yes from both male respondents and 2 no from 2 of the female respondents
and 1 yes from 1 of the female respondents, which indicates male consumers purchasing
luxury items are more apt to make online purchases and utilizing a luxury brands ecommerce.

RESEARCH II13
Q1. What is the first adjective you think of when you hear the word Chanel?

The responses I received showed that the brand has a more elite complex to it, and it
confirms the brands luxury standards are reflected through the consumers minds.

Q2. If youre on the fence about purchasing a luxury good, what is usually the obstacle that
causes the hesitation?

All of the responses I received led back to financial reasoning, indicating that the only
thing preventing them from purchasing a luxury good is the price.

13

See Appendix G

27

Q3. I showed five respondents one of Chanels story-style ad that was 18 minutes long and
observed their reactions to it.

All of them applauded Chanels marketing communication through the story-style ad,
except for one male respondent who did not want to watch the whole thing. This indicates
the majority of the respondents appreciated Chanels heritage being communicated to
them through promotions. The one no indicates the lengthiness of the video was a turn
off.

Q4. I showed five respondents a picture of Coco Chanel without giving away her identity and
asked if they knew whom she was.

I received 4 no and 1 yes from the 34 year old female respondent, indicating that women
in the older age demographics are more inclined to be knowledgeable about Chanels
brand.

Q5. I showed five respondents a picture of an altered packaging of Chanels with vibrant colors
added to it, and then Chanels simple packaging with the two toned colors of black and white,
then I asked them which one they would prefer or expect from a luxury brand.

All of them preferred or expected the latter, which indicates that Chanels packaging
continues to prove successful responses.

Recommendation and Brand Value Evaluation

Chanels brand value is already strong, loaded with a rich brand heritage. Chanel has a
secure footing in the luxury industry, especially now with an increase in market share in China
and an increase in their brand value for the year 2015. Their marketing movements are award
worthy, building their brand awareness and emotional connection with their consumer. Its
unlikely Chanel will every have to worry about lack of brand recognition as it has been

28

dominating the luxury industry for over a century. Their marketing communications also
maintain their relevance and sustain consumer interest. For a brand with this colossal of a
presence in their industry, as well as incredibly strong brand health, its difficult to synthesize
recommendations with the undeniably successful elements they possess. But after careful
deliberation of the analysis conducted in this report, two primary recommendations can be made
to improve Chanels market share and broaden their target market for a larger pool of consumers.
1. Increase their emphasis on e-commerce. Come up with a strategy that will alleviate the
reasons why Chanel chooses to not sell their clothing online, holding onto the exclusive
and elegant aspect experienced in the physical stores. To remain relevant in a technologysavvy society and particularly to particularly attract younger consumers, Chanel can
increase their presence on new media marketing, which will increase the demand for ecommerce.
2. Invest in the emerging markets by opening up more stores. As stated previously,
referencing the number of Chanel boutiques worldwide (310) and discounting the
repetitive quantity within a city (e.g. three Chanel Boutiques in Los Angeles equals one),
it can be concluded that Chanel boutiques are in a rough estimate of 150 cities. The Getty
Thesaurus of Geographic Names has 248,740 inhabited places (cities, towns, etc.) listed
in its database. 150 cities appear granular in comparison to the total number of cities in
the world; the 248,590 other cities in this world that do lack Chanels immediate physical
presence are faced with a geographical restriction hindering prospective buyers interest
to purchase from Chanel. Chanel pieces are sold exclusively at Chanel boutiques, through
department stores and certain specialty boutiques; the only products that are available
through their website is makeup, skin care, and perfumes. For the consumers who wish to

29

purchase Chanel clothing but dont live in a city with a Chanel boutique, theyre
discouraged and the chance of gaining their purchase diminishes quickly. With the
opening of more stores, more people will have accessible opportunities to become
prospective buyers.

30

APPENDIX
Appendix A

Appendix B

31

Appendix C
Location of Chanels headquarters:
135 Avenue Charles de Gaulle,
92200 Neuilly-sur-Seine Cedex
Paris, France

Appendix D

32

Appendix E: Hootsuite Dashboard Simulation

33

Appendix F
Research I

Respondent 1

Respondent 2

Respondent 3

Respondent 4

Respondent 5

Q1

Yes

Yes

Yes

Yes

Yes

Q2

Yes

Yes

No

Yes

No

Q3

No

No

No

No

No

Q4

Yes

Yes

Yes

No

Yes

Q5

No

No

Yes

Yes

Yes

Research I

Respondent 1

Respondent 2

Respondent 3

Respondent 4

Respondent 5

Q1

Expensive

Expensive

Classy

Luxury

Luxury

Q2

Money

Money

Opportunity

Price

Price

Appendix G

Cost
Q3

Positive

Positive

Positive

Positive

Negative

Q4

Yes

No

No

No

No

Q5

Second

Second

Second

Second

Second

34

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"Currency Fluctuations and Luxury Globe-trotters Boost Global Personal Luxury Goods to over a Quarter
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"Fashion Shows: Fashion Week, Runway, Designer Collections." Fashion Shows Fashion Week Runway Designer
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Forbes. Forbes Magazine. Web. 04 Dec. 2015.

"Louis Vuitton, Chanel Rise as Prada Falls in Luxury Brand Survey." Bloomberg.com. Bloomberg. Web. 6 Dec.
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History of Chanel SA. Funding Universe. Web. 04 Dec. 2015

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mystore411. All CHANEL Locations in US.

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"What the 2015 BrandZ Top 100 Means for Luxury." Luxury Society. Ed. Daniela Aroche. 3 June 2015. Web. 6
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