Chanel

Xin Gao
Location:

Chanel is headquartered in Neuilly-sur-Seine, in the le-de-France region just outside of Paris.

The company sells its products across Europe, North America, Central and South America, Asia, the
Middle East, and Oceania.
Brand history:
The house of Chanel, more commonly known as Chanel, is a Parisian fashion house in France founded by
Gabrielle Bonheur Coco Chanel (1883-1971). Brand Chanel was revolutionized womans fashion with her
elegance and fashion look. It is known for classic couture like "the little black dress" and famed fragrance Chanel
No. 5, Chanel has been an haute name in fashion and cosmetics for decades. The company also creates watches and
jewelry and has a single license -- for eyewear with Luxottica. Founder Gabrielle "Coco" Chanel opened her first
boutique in 1913, touting designs known for simplicity. After Coco died in 1971, Chanel's style stagnated for years
until Karl Lagerfeld took over the designs and revived the label by tapping a younger market. The Chanel logo is
an overlapping double C, one facing forward and the other facing backward. This comes from the name Coco
Chanel. Coco is a nickname frequently used by Chanel founders, Gabrielle Chanel. The logo was not
trademarked until during the first openings of Chanel stores in 1909.
Chanels Role in Modern Relationship between Woman and Fashion
Change the way woman thought of her body and life style

Used simple and comfortable fabric

Simplified womans clothes by removing all unnecessary elements and designed to free the movement (boxy
lines, shortened skirts, removed the corset and freed woman for the practical activities made necessary by
the war)
Financial data & Annual report:
Analyst at Bloomberg, according to this report, combined with great beauty and luxury-goods companies (l Oral,
Este Lauder, Prada, LVMH and Kering) valuations, 18.5 billion dollars to Chanels overall valuation. WWD list
published last year by the worlds largest beauty enterprises, estimated 2011 Chanel cosmetic and perfume sales
amounted to US $ 5.25 billion, surpassing the LVMH group; the basis of this calculation, Chanel Haute Couture
accessories and clothing sector revenue should be around $ 650 million. According to Telsey Advisory company
luxury analyst David Wu of New York estimated that beauty and perfume Chanel business proportion of business
should be around 55%, the basis of this calculation, 2011 Chanel cosmetic and perfume sales should be about $
3.25 billion, selling Haute Couture accessories and clothing sector should be at about $ 2.65 billion.

As a reference, Dior, which is Chanel competitor, fashion sector (excluding perfumes beauty) in 2011, with annual
sales of 1.06 billion, about US $ 1.5 billion or so.
Chanel reported 2014 revenue of $7.5 billion and net income of $1.4 billion. Chanel International BV files the
closely held company's global financial results with Kamer van Koophandel, the Dutch chamber of commerce.

Net profit for the five publicly traded companies the index uses to value Chanel -- Prada, Kering, LVMH, L'Oreal
and Estee Lauder -- was down a collective 6 percent in their 2014 fiscal years

Key personnel

Founder CEO Current designer Head Perfumer

(Chanel
Nose)
 Coco Chanel Alain Wertheimer & Gerard Wertheimer Karl Lagerfeld Jacques Polge

Recent News
Karl Lagerfeld presented his Spring 2017 collection for Chanel on October 4 th, 2016, at Grand
Palais in Paris. Spring 2017 fashion for Chanel are bright colors and flat brim baseball caps.
Category
There are lots of product lines of Chanel.
-Clothes (Chanel Clothes was founded in 1909) -Shoes (Founded with clothes in 1909)

-Sunglasses (In 1999, launched a line of sunglasses)

-Accessories (1978 launched distribution of accessories)

-Perfumes (In 1924, Pierre Wertheimer founded Parfums Chanel)

-Watches (The Chanel wristwatch division was established in 1987)

-Handbags (2.55 Flap bag came out in February 1955) -Skin product (1998 launched skin care line)

-Cosmetics (Founded with Jewelries in November 1932)

-Jewelries (Chanel 'High Jewelry' was founded in November 1932)

Category
The label positions itself in the top end of the luxury segment. It's speculated that its perfume and cosmetics sales,
particularly its No. 5 scent is Chanel's biggest business.
Seasonal factors for Perfumes Seasonal factors for Handbags

Spring & Summer --- Fruity and fresh scent Spring & Summer --- Bright color and light weight

Fall & Winter --- Woody and warm scent Fall &Winter --- Dark color and heavy weight

Regional Factors
Weather

Raining day --- so Chanel produce waterproof mascara and eyeliner

 Sunny day --- so Chanel product foundations with SPF 25+ sunscreen

Influences from different countries and different culture

Europe --- Tanning products

Asia --- Skin brightening products

Products
Their products are marketed differently for men and woman. Below products are explained based on gender.
Womans product

They produce different sorts of handbags, dress, shoes, jewelries, bikinis, skin cares, make-up and perfumes for
ladies. Chanel N5 is a scent which comes in perfume bottle and perfume purse spray. Its the most famous
fragrance from Chanel. Some of other perfumes from them are Coco Mademoiselle, Chance Eau Frache, Chance
Eau Tendre, Coco Noir, Allure Sensuelle, Cristalle, Cristalle Eau Verte and N19 Poudr.

Mens product

Their mens section includes watches, perfumes, jewelries, shoes and dress etc. Some of their perfumes are Blu de
CHANEL, Allure Homme, Allure Homme Sport, Allure Homme dition Blanche, Pour Monsieur, Antaeus, goste
and Platinum goste. Most of them come in perfume bottles and spray. Some of the fragrance is used in after
shave as well.
Classic Chanel Products

2.55 Flap bag Boy Chanel Chanel N5 Matte Powder makeup

New Cosmetic products
The French luxury brand has presented a first makeup collection from Lucia Pica, its global creative makeup and
color designer. The collection is based on the color red, reinventing this timeless, sensual, and iconic color of
passion with both classic and more unusual applications, such as eye makeup.
After famously introducing the beauty world to its now cult Rouge Noir nail color at the Fall/Winter 1994 1995
ready-to-wear catwalk show, Chanel is striking out again with an innovative makeup collection thats all about red,
the color of passion, love, sensuality, and, above all, femininity, at its most extreme.
With this first collection, the Naples native has reinterpreted red, updating this favorite shade for lips, cheeks, and
nails where it has always been popular as well as bringing the color to eyes. The range reveals a new facet of
the iconic shade, synonymous with power, seduction, and fighting spirit.

In [the collection] there are also ideas of subversion and classicism. It is about the power of femininity, but also
the vulnerability. Red is intense, vulnerable, sexual, and eternal, explains Lucia Pica.
New Cosmetic Products for Dior (Competitor)
Dior launched new Diorshow collection recently. The new Diorshow line is aimed at making morning routines
easier. "All the products are essentials that every woman needs," says makeup artist Peter Philips
Brand Analysis
Chanel becomes #80 valuable brand in the world.

It brand value as of May 2016 is $7.2 billion. It has $5.2 billion sales. Refers to the 2011, Chanel total sales of 5.9
billion dollars, an increase of 26%.

Earnings before interest, tax, depreciation (EBITDA) reached $ 1.4 billion. Chanels EBITDA margin was 24%
over l Oral (19%), Este Lauder (17%) and Kering (23%), down slightly from LVMH and Prada 29% 26%.
Category share by Country
China is #1 in Apparel and footwear, United States in #2 and United Kingdom is #3

Australia is #1 in Beauty and personal care, United Stated is #2 and United Kingdom is #3
Chanel Category Target
Pricing Trends
Product Price
Eau De Toilette Spray And bottle 45 to 140
After shave 29 to 80
Chanel Dress Starts from 250
Chanel Watch Starts from 1,000
Consumer Profile
Chanel Cosmetics Buyer Profile in Gender, Age and State
Consumer Profile
Chanel Cosmetics Buyer Profile in Work Status

The chart shows most Chanel Cosmetics Consumers are working part time or students who are not in employment
Consumer Profile
Frequency of Purchase: Once every several years to purchase Chanel Handbags; Every once six months to
purchase Chanel Cosmetics and skin care products

Place of Purchase: Chanel sells its luxury goods worldwide through more than 120 boutiques. Besides boutiques,
Chanel sells its beauty products through department stores and specialty stores, as well as online. The company
also operates its own network of more than 80 company-owned retail stores worldwide.

Awareness and attitude: Most people are awareness of Chanel and think it is luxury brand with high quality

Loyalty: People who are Chanel fans have a strong brand loyalty and would not let other brands replace Chanel
Advertising/Marketing Communications
Traditional Media

TV Ads

Magazine

Brochure

Poster
 Billboard

Nontraditional Media

Website

Social Medias

Video Online

Mobile Application

Media for Chanel

Chanel spend huge amount of money in their campaign. In 2011, it spent 3.2 million in Blu De Chanel Be
Unexpected campaign. Most of their advertisements are placed on Television channels and lifestyle magazines.
They also do huge amount internet advertising using for example Google AdSense and Perfume shops etc. They
use biggest and emerging celebrities as their brand ambassador.
The timeline shows advertising spending of Chanel in the United States from 2012 to 2014. The fashion company
invested 362 million U.S. dollars in advertising in the United States in 2012.

(From Statista)

Media Regionality
In most countries, Chanel use Facebook, Twitter, Pinterest, Instagram and Youtube as social media

But in some Asian countries, Chanel also use Weibo, Youku as social media

Competitor spending on Media (LV)

This statistic highlights the trend in advertising and promotion expenditure of the LVMH Group worldwide from
2008 to 2015. In 2013, LVMH Group's global ads spend amounted to about 3.31 billion Euros.
 (From Statista)

Promotion
Chanels priced classics never go on sale. You are not likely to find the coveted 2.55 handbags or any of the brands
iconic pieces marked down. However, some ready-to-wear items, costume jewelry, shoes, and seasonal handbags
are discounted at least once a year.

Private sale events

Chanel does give discounts on clothes and accessories from current and previous seasons. Like most luxury
retailers, it conducts what are called private sales, where loyal customers are given first dibs on discounted
Chanel ready-to-wear (jackets, dresses, cardigans) and other (usually older) merchandise. It does not advertise
these exclusive events; instead, preferred customers may get a call, an email, or a postcard. The shoes and clothes
are sometimes from the current collection, and bags are one to two years old. Note that you will not find classic
handbags on salejust seasonal bags. Sizes are also often limited.
Department stores that carry Chanel (such as Saks and Neiman Marcus) also have private sale events. If you intend
to shop there, follow the same advicebefriend a sales associate.

Public sale
After the private sale events, unsold pieces are shown to the public. Thus, it is possible to see the sale sign in
some Chanel stores

When is the Chanel sale?

The dates vary every year, but some of the biggest boutique private sales begin mid-June. Often, department stores
that carry Chanel also conduct their own private sale events a week earlier than the boutiques do.

Digital Strategies for Chanel

Chanel always post their new products or collections on their social media before these products
come out, so people are aware of the new products and release date. They use social media to market
their products.

Hootsuite Dashboard
Extension Section on social media strategy
Chanel has a note section on Facebook House rule section on Facebook
Celebrity Endorsements
Audrey Tautou - Actress (2009, Chanel No. 5)

Brad Pitt - Actor

Carole Bouquet - Actress (1990s, Chanel No. 5)

Catherine Deneuve - Actress (1970s-1980s, Chanel No. 5)

Blake Lively - Actress (Chanel Spring 2011)

Danny Fuller Athlete

Diane Kruger - Actress (Chanel Allure)

Gaspard Ulliel - Actor (2010, Bleu de Chanel)

Keira Knightley - Actress (2006-, Coco Mademoiselle)

Kristen Stewart - Actress (2013-)

Marilyn Monroe - Actress (1950s, Chanel No. 5)

Nicole Kidman - Actress (2003-2009, Chanel No. 5)

Vanessa Paradis - Actress (Coco)

Top competitors

PRADA SPA LOUIS VUITTON

CHRISTIAN DIOR GUCCI

BURBERRY
Market Competition
SWOT Strategy
Strength
High quality of the products, classic and timeless designs, comfortable and functional clothes, strong brand equity
and loyalty

Weakness
As a high value brand, products are sold in very specific and fewer numbers of stores. Strong competition from
other luxury brands gives Chanel a limited market share; consumers are likely to switch brands

Opportunity
Online sales, e-marketing and moving to China to open Asian market

Threats
Counterfeits and cheaper brands knocking off their designs and selling them for more affordable rates.
Unavailability of products may result to customer shifting to another brand.
SWOT strategy for GUCCI (Competitor)

Strength
Controls their distribution channels effectively, strong chain value with suppliers and retailers, has a large product
portfolio and is associated with UNICEF and car companies to add brand value

Weakness
Has to spend a large amount of money to keep their brand value and risk of their brand delusion

Opportunity
Luxury brands grow in India and China and target youth with stylish designs

Threats
Competitive segment and easy product substitution; Unstable market and designs
Line Extension
Lagerfeld features various mens looks throughout his ready-to-wear shows
Mens wear is a hole in the Chanel brand. The lifestyle of a Chanel woman includes a Chanel man

Extension market strategy

Global launch party

Commercial

Short film

Billboards and print

Relaunch of Little Black Jacket

Joseph- Gordon Levitt

Flower of Chanel
Camellia
Chanel Slogan
In order to be irreplaceable, one must always be different.
Personal Interviews
I interviewed a Chanel beauty advisor in North Park, Dallas. She told me that people who are not familiar with
Chanel or never used Chanel products before do not have a strong brand loyalty, if they did not find the products
they want or if the products are unavailable in store at the moment, they may go to other luxury brands to buy
similar products instead. However, for people who buy Chanel very often, they have a strong brand loyalty, if they
did not find the products they want, they would check other stores or check online, they would even leave their
phone numbers or email addresses for her or other Chanel beauty advisors and tell her to call them when the
products are available in store, so they can come and buy it.
Quantitative Research
Survey
From the survey above, the result shows me that most buyers are female; people from age 26-35 are more likely to
purchase Chanel products. Most people are familiar with the brand Chanel. Most people never purchased Chanel
and some people purchased Chanel only on special occasions. Most people in my survey spend around $0-$500 in
the past year for Chanel products
Qualitative Research
I interviewed 20 people to ask them to give me 3 separate words when they think of Chanel

Here are the most famous words they used to describe Chanel

1. Vintage

2. Luxury

3. Classic

4. Expensive

5. French

6. Style

7. Girly

8. History
Marketing Strategy
To be Ultimate House of Luxury, defining style and creating desire, now and forever.

Campaign
Commercial
Short films online
www.chanel.com
Boutiques around the world
Online app
Social media
No co-branding or licensing

Recommendations
First, Chanel needs to partner with more department stores, such as Sephora. Most people like to go to Sephora to buy beauty
products, we can find Dior, Yves Saint Laurent, Givenchy and other luxury brands in Sephora, but we cannot find any Chanel
beauty products in Sephora at all. Sephora beauty advisor always need to tell customers that they do not carry Chanel products. I
think it is very important for Chanel to partner with Sephora, because it is a very competitive market for luxury brands, if people
cannot find Chanel products, they are more likely go to Dior or Yves Saint Laurent to find similar products to replace Chanel.
Then Chanel will lose market competition and a huge amount of profit.

Second, Chanel needs to make their website simpler and easy to find products. They have runway shows on their websites front
page; it is really hard to find the specific products through their website. You have to find products by going through collections
or seasons, and it is very easy to get lost in their website. Once you find the product on their website, you cannot find checkout
button, they do not support online shopping, you have to go to a Chanel boutique to buy the product and some products listed on
the website have no price labeled, you have to call their assistants to ask for price. The whole process takes a long time and is not
pleasant to shop anymore. I recommend them to make their website simpler, and make it easy for people to find the products
they want, and also support online shopping. Because some people may want to buy Chanel products online, but they may get
tired of finding the products and still could not get enough information, so they may give up on purchasing this brand, instead,
they may go to Dior, Gucci or Louis Vuitton to buy products.

Third, Chanel needs to carry foundations with more color choices. Chanel beauty products still have a lot to improve. They do
not have enough color shades for their foundations and powder foundations. People found it hard to get their skin tone matched
with Chanel foundations, so they could not buy Chanel foundations. I recommend Chanel to come out with more color choices
for their foundations, so it can fit for all customers. If not, they may lose their market to other luxury brands.

Fourth, open more Chanel boutiques around the world. Even though Chanel has 120 boutiques around the world, but it is still not
enough, a lot of people still cannot find Chanel boutiques in their city, so they have to go to different cities to buy Chanel
products, or they would just buy other luxury product such as Dior, Louis Vuitton, and Prada to replace Chanel. Chanel could
lose market competition because of that. So I recommend Chanel to open more boutiques around the world, especially in Asian
countries.

References
Does Chanel Go on Sale - Ever? (2013, February 26). Retrieved December 06, 2016, from
http://www.designerdiscounted.com/feature/2013/does_chanel_go_on_sale.html

Forbes (2016). Retrieved December 06, 2016, from http://www.forbes.com/companies/chanel/

Malae, S. (n.d.). PRODUCT STRATEGY. Retrieved December 06, 2016, from http://sofiamalae.blogspot.com/p/product-strategy.html

Pendleton, D. (2015, September 11). Chanel Profit Beats Rivals and Makes Owners $3 Billion Richer in 2015. Retrieved December
06, 2016, from http://www.bloomberg.com/news/articles/2015-09-11/chanel-profit-beats-rivals-and-makes-owners-3-billion-
richer-in-2015

Roy Morgan Research (2011). Retrieved December 06, 2016, from http://www.roymorganonlinestore.com/docs/Chanel.pdf

Ullah, R. (2012, November 12). Chanel Brand analysis. Retrieved December 06, 2016, from
https://wakibullah.wordpress.com/2012/11/05/hello-world/

Valentino2016, ~. (2015, December 21). Chanel s market value nearly 20 billion financial data for the first time. Retrieved December
06, 2016, from https://valentino2016.wordpress.com/2015/12/21/chanel-s-market-value-nearly-20-billion-financial-data-for-
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