CHANEL

PERFUME
IN THE USA
 TEAM
SATISHKUMAR
ABINAYA

RAVICHANDRAN
SRIRAJA SHRAVANTHI

PARMAR SHRUTI

ZIQING ZENG

 CONTENTS

• COMPANY BACKGROUND

• COUNTRY/MARKET

PRESENTATION

• MARKET EVOLUTION

• MARKETING STRATEGY

• CHALLENGES

• RECOMMENDATIONS
EXECUTIVE SUMMARY
In this project, will find an extensive search on the current
and the future scenario of Chanel Perfume in the US
Market. The future is likely to be dramatically different
from today. We have explored market evolution and the
challenges ahead for the perfume industry. 

 COMPANY BACKGROUND
The famous Chanel brand that is know all across
the world for its high quality, unique products
that range from clothing to perfumes all started
with young, passionate Leo, Gabrielle
Bonheur Chanel, born 19th Aug 1833.
After learning how to sew whilst living
in the orphanage of Catholic monastery
of Aubazine. In 1910 Chanel had a brief
career as cabaret singer in front of
groups of cavalrymen, gaining the
nickname “Coco”. In her early 20’s,
Chanel became involved with French
socialite Etienne Balsan, who offered
her start her millinery store in Paris,
a hobby she picked up whilst living in
Balsan’s chateau. She then invented
hats, made up of fewer feathers and
flowers. In 1908, Chanel met one of Balsan’s
friend Captian Arthur “Boy” Capel, an English
aristocrat and feel deeply in love. Later leaving
Balsan and moving back to Paris with Capel,
Chanel opened her millenery store in 1910 at
21, Rue Cambon. After a couple of years with
her millinery business, Chanel
venture into fashion. At 1918
she opened her first couture
house at 31, Rue Cambon,
Paris.”In 1920 Coco became Mademoiselle”
After Boy Capel’s death Chanel moves to Venice
after her new style of comfort has been favoured
by most of the Europe.
In 1921 Chanel is introduced to Ernest Beaux who helps to create the
Chanel No.5 that goes on to be the best selling perfume in England for 25
years. During the Second World War, Gabrielle Chanel closes her store at
Rue Cambon and moves to Switzerland. However in 1953, at the age of
70 Gabrielle Chanel makes a return to fashion. Once regaining her
influence upon the world Chanel created the Chanel worked tirelessly
until her death at. In 1983 Karl Lagerfeld joined the Chanel Label who has
kept the unique spirit and legacy of Coco Chanel whilst reinventing what
we see as fashion this day.
TIMELINE
 MARKET PRESENTATION
Chanel reported revenues of US$9.6 billion in 2017 with 11% organic
growth, meaning the company has produced an operating profit of almost
US$2.7 billion. The company has zero debt and US$1.6 billion cash.
Chanel also revealed that sales growth was strongest in its Asia-Pacific
markets, up 16.5% and accounting for 38.9% of sales in 2017. Though
Europe remained its largest market with 40.6% of sales, posting a 10.2%
increase. The Americas were its weakest performer in 2017, with a only
5.3% increase, accounting for 20.4% of total sales. Chanel’s report also
indicated its “Gabrielle” line of fragrance and “Gabrielle” handbag were
the top sellers during the period.

THE GLOBAL PERFUME MARKET INDUSTRY

The global perfume market was worth US$ 37.4 Billion in 2017, growing at
a CAGR of around 3.7% during 2010-2017. Global perfume market is
gaining impetus from the rising concerns for personal grooming and
increasing demand for youth oriented and exotic fragrances. Rising
population, growing urbanisation, higher spending capacity and product
diversification by manufacturers are some of the other major factors that
are stepping up the demand for perfumes worldwide.

The market can be bifurcated into two groups: premium and mass products.
Currently, premium products dominate the global perfume market and
account for the majority of the total global sales. Every company in the
sector reported growth, with around a quarter of the total sector growth
coming from L’Oreal, Coty Inc and Estee Lauder. Unsurprisingly, Coty
Luxury was the fastest-growing company in the sector
(both year-over-year and for FY2014-16 CAGR), and took the 14 position in
the Fastest 20. Reported sales were up 40 per cent, with around 33 per cent
of this growth due to the acquisition of the Procter & Gamble beauty
business. L'Oréal Luxe had the highest FY2014-16 CAGR. Artisanal and
Luxury Fragrances were reported to be a profitable new growth engine,
with their ultra-prestige fragrance portfolio sales up10 per cent Country-
wise,  Brazil  represents the world's largest market for perfumes.  Brazil  is
followed by  the United States,  Germany,  France,  Russia,  Spain,  United
Kingdom, Mexico, Italy and Saudi Arabia. The key players operating in this
market which include Avon Products Inc., Natura Cosmetics SA, Chanel SA,
Coty Inc., LVMH and L'Oreal Group.
 CLIENT SEGMENTATION
Chanel’s key demographic is typically women
aged 18-50 years old with an annual income
of around Euro 50000 or more. Their
psyc hographic is t hat
Chanel products represent
power and status. Women
believe that bold
interlocking C’s stamped on
their bag or shoes
symbolises wealt h and
class. Over the last couple
of decades, Chanel’s
consumer needs have
changed. They have
c hanges as t he t arge t
audience has dropped to
yo u n g a d u l t s , n o t j u s t
middle aged women. The
designs need to be kept
moderniSed and match with
new trends. Chanel
customers fare those desire
for style, materials and
quality. In 2018, it was the
first time that over half of the apparel and
footwear sales originated form outside
America and Europe. Some of the main
sources amongst emerging markets are
countries are across Latin America and Asia
Pacific.
INFLUENCERS MARKETING

Influencer Marketing is a
form of marketing in
which focus is placed on
influential people rather
than the target market as a
whole on social media .It defines
the individuals that have influence
over potential customers,
and orients marketing
activities around these
influencers.

For fashion-focused
brands, Instagram
provides the best
engagement rate of
any social media platform
and gives companies
the perfect outlet
to showcase their
visually-appealing products.
 CASE STUDY
To leverage the platform's high engagement rates and build anticipation
for the release of their new No.5 L’Eau perfume, iconic brand Chanel
invited  top Instagram influencers  to the company's beautiful production
facility in the South of France for a perfectly Instagrammable retreat.

THE GOALS WHERE:

Build awareness of and anticipation for the new Chanel No.5 L’Eau, which
will be available in stores September 2016.Reach the large, engaged
social followers of the world's top fashion Instagrammers—audiences that
would be especially interested in Chanel's new fragrance.

APPROACH:
Chanel invited the world's top fashion-focused Instagrammers and fashion
bloggers (like Julie Sariñana of the blog Sincerely Jules) to Chanel's flower
fields and production facilities in Grasse, France, to see (and share with
their audiences) how Chanel makes its iconic fragrances. The company
created two branded hashtags—#newchanel5 & #chanelgrasse—to help
social media users find new branded content and inspire Instagram
audiences to generate their own photos and videos around the new Chanel
No.5.

RESULTS:
The branded hashtag #newchanel5 generated over 1,600 pieces of
content (both influencer-generated and user-generated) and garnered
nearly 1 million likes (over 900k) in the first month of the campaign.
SOCIAL MEDIA MARKETING
The accessible and “always on” nature of social media
seems slightly at odds with the world of luxury fashion
and beauty. However with a largest percentage of
shoppers now being influenced and even decisions
based on what they see online - social is hugely
important tools for luxury brands looking to deepen
consumer engagement. Last year Chanel was named
by InsightPool as the most influential luxury brand on
. social media topping the list above others like Louis
Vuitton and Christian Siriano. With a total of 40.8
million followers on Twitter and Instagram alone -
Chanel has generated a huge following.
Here’s a few reasons behind its social winning strategy.

UPHOLDING EXCLUSIVITY
Chanel has famously abstained from fully entering the
world of e-commerce, only selling limited
ranges of eyewear and products online.

But while the brand is clearly

mindful of protecting the
exclusive nature of its
. products. Chanel is still
. keen on maintaining a
se sense of exclusivity.
 HARNESSING THE POWER OF INFLUENCE
Another way Chanel extends its control over social is with the type of
content it produces-specifically content that makes it seem aspirational
rather than accessible.Unlike brands that promote products in the context of
consumers’ everyday lives, Chanel deliberately depicts its own world – one
that is overtly editorial and arty in nature.

A PLATFORM SPECIFIC APPROACH

To a large extent, Chanel is also differentiating and optimising the type of
content it posts across platforms. For example, it often takes snippets of ads
to pique interest on Instagram, while it might post the long-form ad on
YouTube or Facebook.

CRAFTING A LUXURY VIDEO STRATEGY

One clear, overriding truth is that the brand’s commitment to video has not
been faint-hearted. Chanel has posted more videos and generated more
than 300 million views on both YouTube and Facebook, more than any
other industry leaders.  On YouTube, with more than 860,000 subscribers,
Chanel is far ahead of other luxury brands.

!
 BRAND ENDORSERS/ INFLUENCERS
Chanel was among the first brands that did it well. It all started
with the founder endorsing herself for her brand which gave a
sense of beginning. Throughout the evolution of the brand and its
different products.

FAMOUS PERSONALTIES ENDORSING THE BRAND

Marilyn Manroe THE SUPERSTAR
You can’t simply ignore Marilyn Monroe while talking about Chanel
N°5. In 1954 during an interview with Marilyn Monroe, she was
asked “What do you wear to bed?”. She then replied: “Why,
Chanel N°5, of course!”. Suddenly, N°5 sales skyrocketed
because it was associated with the most influential glamour movie
star at that time. The
irony is that Marilyn
was not an of f icial
Ch an e l spoke spe rson
until 2013 as Chanel
d i d n o t p u b l i s h a ny
picture of her with the
perfume.
 Catherine THE GREAT
Carole Bouquet, a former bond girl
known as the icon of elegance and
chic, represented the brand in a simple
but a catchy way that speaks about its
self in a million words. The video
adver t fur ther emphasises the
personality traits of “Chanel woman”
who totally strong, independent, and
beautiful with a sense sophistication
and simplicity.

Gisele THE SUPERMODEL

The supermodel Gisele who is
well-known for her natural beauty
and elegance becomes the face
of Chanel N°5’s printed advert.
As you can see from the advert,
there is no text or slogan. There
is only Gisele wearing a simple
and elegant black dress with a
necklace full of diamonds sitting
inside the number 5 representing
the Chanel N°5 fragrance.
 DISTRIBUTION CHANNELS
Chanel distributes its offerings through various channels such as exclusive
stores, e-commerce sites, multi-brand stores and high-end super markets so
as to make the products available worldwide. Chanel exclusive showrooms
are called Chanel Boutique and there are more than 300 Chanel boutiques
across the globe. Chanel stores operate in nearly 310 boutiques worldwide
with six in Oceania, two in South America, one hundred and twenty eight
in North America, ninety-four in Asia, ten in the Middle East and seventy in
Europe.

STORES
Stores are located in affluent areas of the worlds capital cities for example,
Rue de Fauborg St Honore in Paris and the famous fifth avenue in New
York. Several stores are located in famous airports to target travellers.
Frequent fliers tend to be wealthy professionals and these stores have been
particularly successful. Many stores are akin to museums and by investing
in premier locations; Chanel ensures the company is customer orientated
and available. Chanel products are also retailed in several high-end
department stores that are also located in upmarket worldwide locations
like Harrods, David jones, Hudson’s Bay, Galeries Lafayette, and Bergdorf
Goodman.

E-COMMERCE
As the Chanel boutiques are exclusive the company also operate sales via
their website,  Chanel.com  (2017). The website is used to promote the
brand and offer the option to buy from the site.   The company employs
professionals who are proficiently skilled to handle the distribution of the
goods.  This scheme has resulted in improved sales revenue and has aided
advertising.
 MARKET EVOLUTION
KEY DRIVING FORCES
CONSUMERS
Through the “decade of change”, the opportunities created by U.S
consumers - their changing behaviours, increasing international travel,
millennial of luxury consumer, changing shopper behaviour, new luxury
consumer, rise of digital consumers, all of these are the main key trends
driving change in the luxury market, and exploring some of the implications
for the luxury brands and retailers.

Global fashion companies associated with perfumery are shifting their focus
on the consumer—and prioritising personalisation in their strategic efforts to
ramp up loyalty and sales. According to the report, 41 percent of
consumers demand personalisation for their shopping experiences, as they
continue to value authenticity and sustainability in their wardrobes. Fashion
companies are expected to harness the power of data to tailor personal
recommendations, engage with social media influencers and tap into the
needs of each consumer by facilitating more digital experiences online and
in stores.
UNPREDICTABILITY - THE NEW NORM
Economic uncertainty, geopolitical turmoil and unpredictability are the
current realities of the luxury perfume industry. Store closures, mall
vacancies and the growing dominance of online shopping will continue to
encourage these companies to stay nimble and adapt to the evolving
landscape by focusing on their own resources and consumer services.
What’s more, fashion companies are expected to pursue more technology,
including AI, to stay agile amid political tensions and economic
disturbances, including Brexit, and other international trade challenges that
may escalate this year. While uncertainty was the top word among
executives in 2017, roughly 21 percent of executives said “optimism” was
the top word they’d use to describe the perfume industry in 2017—pointing
to a more positive outlook for the coming months.

TECHNOLOGY
Convenience, Breadth of Offering and
Relevance are the drivers for consumers
beginning their purchasing journeys with
online platforms. In 2018, McKinsey &
Company predicts that global online
platforms, like Amazon and Tmall, will
experience two to three times more revenue
compared to the past three years. While
consumers frequent websites to compare
prices and products, global and luxury
online platforms are expected to expand
their fashion brand partnerships and
develop additional engagement methods to
stay competitive in the digital shopping
space. This year, the challenge will no
longer be about collaborating with online
platforms, but about how luxury fashion
brands can use these partnerships to boost
their online presences and attract more consumers outside of the brick-and-
mortar store environment.
SUSTAINABILITY
More and more fashion companies are taking sustainability beyond their
corporate social responsibility (CSR) agendas and making circularity part
of every point in their supply chains. From sourcing to product distribution,
luxury companies will creatively explore recycling concepts, including
fibres made from recycled plastic bottles and clothing take-back programs,
to make the global fashion value chain in the perfume industry more eco-
friendly. Last year, 42 percent of fashion brands shared their supplier
information in an effort to be more transparent with consumers—and the
report anticipates that this trend will continue.

GLOBALISATION
Though nationalism reared its head in 2017 with the U.S.
largely focusing on turning inward to protect itself rather
than looking to grow and expand free trade,
globalisation won’t be going anywhere anytime soon.
Shifts in global trade alliances, like the U.S. withdrawing
from the Trans-Pacific Partnership (TPP), may have altered
trade dynamics, but it hasn’t hindered globalisation on
the whole. “We are entering a new phase of
globalisation, driven by digital connectivity and the flow
of data, and this will lead to much greater global
connectedness, not less,” the report noted. “Cross-border
bandwidth has risen approximately 80 times since
2005, and over the course of a decade, data flows
have raised world GDP by more than 10 percent.
Data flows now account for a larger share of the
impact on GDP than the global trade in goods. ”
What’s more, according to the report, consumers are
estimated to spend $1 trillion on cross-border -
commerce by 2020 and more than 900 million
people have international connections on social
media—potentially providing fashion
tycoons the opportunity to grow their shopper bases and
boost revenues on global digital platforms.
GLOBAL ECONOMY
The economic situation in the US for luxury fashion & perfume industry is
surprisingly positive. Economic growth has been modest but sufficient to
bring full employment. Inflation and borrowing costs remain low, and asset
prices have risen steadily with only limited volatility. However, there are
some potential risks. First, consumer spending has been growing much faster
than household income, due mainly to reduced rates of saving and higher
levels of borrowing. This growth cannot be sustained indefinitely. The danger
is that, unless growth in wages begins to accelerate, the spending on luxury
goods and other leisure goods will be cut back.

Moreover, some analysts warn of the risk of a potential bubble in asset

prices, and predict that if the Federal Reserve increases interest rates
sufficiently, asset prices will fall. The result would be a drop in the wealth of
consumers and increased stress in credit markets. At the time of writing, the
US administration seems intent on introducing significant protectionist
measures to save jobs, but the outcome would likely be an increase in
consumer prices and a fall in consumer purchasing power. Moreover,
protectionism aimed at China could provoke severe retaliation, hurting trade
and damaging economic growth on both sides of the Pacific.

Although growth in 2017 has been slower compared with other

countries, the US remains the world largest luxury goods market and it is
expected to remain the world leader through 2018, reinforcing its strategic
importance within the global industry. The US luxury market remains
competitive and diverse, with a wide range of players, both national and
international. The major players are trying to diversify their product
portfolios in an attempt to maintain a competitive advantage. Notably,
online sales of luxury goods are growing strongly, thanks to growing
numbers of digitally-savvy consumers.
SOCIAL MEDIA
Digitally-savvy consumers expect to shop on multiple devices—and
increasingly on smartphones—and this year, even more purchasing journeys
will be completed on mobile phones. According to McKinsey & Company
data, there will be 8-20 times more mobile payment transaction value this
year compared to 2015. With more mobile payment solutions becoming
available worldwide, consumers will keep demanding luxury brand
companies deliver convenient smartphone transactions, where they can
shop and pay for products easily. More companies are expected to create
mobile transaction options, including frictionless checkouts online and self-
checkout in physical stores.
 MARKETING STRATEGY
In the American stores, there are 16 kinds of women’s perfumes and8
kinds of men’s perfumes. About the perfume of women, there are n°5,
Gabrielle Chanel, Coco Mademoiselle, Chance, Chance Eau Tendre,
Chance eau Fraiche, Chance Eau Vive, Coco Noir, Coco, n°19 Poudré,
n°19, Allure, Allure Sensuelle, Cristalle, Cristalle Eau Verte, Les Grands
Extraits. About the perfume of men, there are Bleu de Chanel, Allure
Homme, Allure Homme Sport, Allure Homme Edition Blanche, Egoïste,
Platinium Egoïste, Pour Monsieur and Antaeus.

COMMUNICATION(ONLINE)
As one of the most famous brands in the world, Chanel has covered all the
media channels to promote their products, including not only traditional
ways like TV, Newspapers, Magazines etc., but also unconventional
methods like Official websites, Facebook, Weibo, WeChat, Instagram,
Twitter etc. Nowadays, because of the developing of the technology and
reduced the cost of new information through the web, young people and
online information are connecting tightly. It means that if the brand can
draw the attention to people online, it can take the lead in the market of
the young people.

In the American stores, there are 16 kinds of women’s perfumes and 8

kinds of men’s perfumes. About the perfume of women, there are n°5,
Gabrielle Chanel, Coco Mademoiselle, Chance, Chance Eau Tendre,
Chance eau Fraiche, Chance Eau Vive, Coco Noir, Coco, n°19 Poudré, n
°19, Allure, Allure Sensuelle, Cristalle, Cristalle Eau Verte, Les Grands
Extraits. About the perfume of men, there are Bleu de Chanel, Allure
Homme, Allure Homme Sport, Allure Homme Edition Blanche, Egoïste,
Platinium Egoïste, Pour Monsieur and Antaeus.
 Different kind of perfumes have different communication methods.
Advertising is a good method to attract customers, and many brands are
using advertisement to increase awareness, Chanel is no exception.

CHANCE EAU VIVE CHANEL

Chance Eau Vive was launched in 2015. With the perfume was launched,
the advertisement was launched at the same time. There are three
advertisements in the YouTube right now, the style of all the advertisements
is brisk, bright, happiness youthful and lively. Nowadays, these styles can
catch the young women’s heart very easily, so these advertisements can
attract a lot of young women in age of 18 to 29 who love perfumes and
have money to buy the perfumes. Whatever the style of the advertisements
is, the main point of the propaganda is that meet the customers needs and
resonate with consumers, so the purchase crowd will buy the products
willingly.

The first ad. of the Chance Eau Vive is about four

young models who all wear Chanel outfits use the
bottle of the perfume as bowling, and share the
happy moment together. They roll an over-sized
bottle of Chance Eau Vive down the bowling lane,
where it knocks over three more bottles of Chance
perfumes. This ad., one the one hand, represents
those women who catch the opportunity with
hesitation, and it seems that they prepared well to
fight against all the obstacles. On the other hand,
the running track of the perfume bottles are quite
colour ful, and the per fume splashed and
fragrance suffused everywhere. When all the offer
endless energy and hope.
As the article of THE NEW YORK TIME said “Chanel has given Chance a
light and fresh, floral scent, which is meant to convey a youthful, sexy and
romantic attitude.”I think the brand is trying to appeal the young
independent women with high education, high salary and high taste to
take the challenge and hold the change bravely and attract more young
women who have enough brave but want to change the situation. The ad.
is communicating the idea of getting whatever you want from the Chance
Eau Vive. After the ladies using the perfume, they can be confident and
powerful to face all difficulties and obstructs and achieve what they want.
And from the product side, light music that is easy to remember, youthful
and colourful background and luxury decorations are easy to catch young
women’s eyes.

From some aspects, the first advertisement of the Chance Eau Vive is
successfully arouse the desire of the spectator and the determination of
having a bottle of the Chance Eau Vive Chanel. If everyone who watch the
advertisement can be aroused the desire of buying, the development
prospects of the brand will be limitless.

Posted the videos and communicating the spirit of the brand online is a
good way to build the image and make the people know the value and
culture of Chanel. Because nowadays, there are 1,254,453 followers in
the YouTube, about 21,691,800 like
it on Facebook and Instagram
about 31.2 million followers. So it
means that more and more people
prefer to follow the brands through
online social media. If the brands
want to promote the new products,
not only new perfume, they should
keep update in the online media.
 PRICING STRATEGY
The article of the WEALTH-X said: Luxury brand pricing strategy hinges not
just on finding the right balance between exclusivity and availability but also
on being able to provide consistency across various countries and product
ranges. The price of any product stemming from a luxury brand must reflect
the key messages of any luxury brand; quality, heritage, and exclusivity.

The luxury brand price is different from the price of the premium brand or
affordable brand where the product and gift is freely available to those
who willing to buy the product. However, luxury is all about a part of an
exclusive club. In the club, the luxury brands must compliance with the rules.
For example, maintain a higher price anytime and attract people who are
suitable for the brand to buy.

 “Luxury brands are now responding to millennial consumers who want, over
anything else, trust in the relationship and when it comes to pricing that means
transparency. Key to retaining customers for a luxury brand is having pricing
consistency to encourage loyalty,” Lyle Maltz, Director at Kantar Consulting, says.

The consistency is key to brand success. However, because of the tariff and
the depreciation or appreciation of the currency even the global travel for
people in all countries will have negative impact to the consistency, the
company have to make appropriate price adjustments for the region.In
general, the price must be consistent in order to keep perceived differences
in value to the absolute minimum and maintain a brand’s integrity. In current
year, because the U.S. economic downturn, compared with the time before
2008 and other regions, the US dollar exchange rate is at a lower level.
That means the price of the Chanel perfumes in America is lower than other
Asia countries like China, India, Korea, Japan. Therefore, the company
have to raised its price in America to reflect the currency fluctuation and
discourage people making round trip to America to buy en masse.
 BRAND STRATEGY
People buy the products not only because of the price but also the brand.
Actually, brand is everything and pricing is just one of component of the
brand. So the brand Strategy, to a large extent, it determines the success or
failure of the brand. When we talk about the Chanel, we always can remind
of two people.

Gabrielle Chanel
There is a storytelling. She grew up in the monastery with her sister and start
life without money. When she decided to have a new life with her sister, her
sister abandoned she and went away with her fiancé. After her sister left,
she had nothing and alone, just with her passion and strengths to created
the most famous and powerful brand in the world. Many people used to say
Gabriel Coco Chanel didn’t build a brand. The brand was built around her.
Her story, from the childhood to the product to the first store to famous
brand in the world. These stories created the value of the Chanel, gave the
Chanel a fresh vitality. Because of the life story of the Gabrielle Chanel,
many people want to pay for the value, the culture, the vision of the Chanel.

Karl Lagerfeld
He arrived in 1983, and had the hard task to keep the style of Chanel.
Because of the designs and the reputation all over the world of the Karl,
many people prefer to buy the Chanel’s products. No brand can do always
the same thing, and Karl knows that. He is good at creating the new style
and be the leader of fashion. That why the brand can be known around the
world until now.

Characters can make the brand know, and high quality products keep the
brand lasting. When people mentioning Chanel, they always can remember
two product, Chanel n°5 and the little black dress. Even after a few decades
since the creation of these products, remove these products from the stores
still are unimaginable. When they were famous in the world, they became
the signature of the brand.
 VALUE CREATING SYSTEM
There are three actors in the value creating system. Actor A is Chanel
boutiques, E-commercial sites. Actor A can bring money and sales to the
brand, Chanel, on the opposite, Because Chanel is very famous all over the
world, people will go the physical store to have a look. Therefore, the
Chanel can attract multiple of customers to the boutiques and official
website. Actor B is Hollywood actors like Kristien Stewart and Brad Pitt.
These Hollywood actors have a good reputation and personal image on a
global scale and they have many followers, so the actors can bring
popularity and positive brand image. Also the brand can pay money and
bring job opportunities to the actors for inviting them to represent the
products. Actor C is traditional and unconventional commercial such as
magazine, TV commercials, Instagram, Facebook, YouTube, Twitter etc.
These commercial methods promote new products which created by the
brand and communicate ideas of the brand to the public, in order to attract
loyal customers and potential customers to purchase.
People who buy the perfumes of Chanel in America is Millennial. Most of
them only 18 to 35 years old. When they spray the Chanel perfumes,
they feel that their social status is higher and the people around them
think that they have luxury and fashion lifestyle. Most important is they
are pleasure and happy. Of course when they buy perfumes, they will
bring money, sales, popularity. If they love the products after they using,
they will become a loyalty customers and help the brand to promotion.
Women, millionaire, professional buyers, workplace elite, social media
followers, travellers, regular customers are stake holders. This kind of
interest linkage is interrelated and inseparable. Stake holders can bring
better sales, turnover growth, funds, new arrivals to the Brand. They help
to create brand value.

In the meanwhile, the brand value will improve their social status, boost
confidence and bring a good customer experience. Friends, colleagues
and relatives is one of the stake holders as well. These people and true
clients are interconnected. The consumers who used the perfumers can
convey the knowledge and new information of the products to them.
Above all, every values and actors is indispensable and essential. All
aspects are connected. Because of these connections, the brand value
can continue to create and increase.
 CHALLENGES
Chanel, one of the world's most well known perfume makers also faces
various challenges currently and also for the upcoming future.
Consistently explaining about each, Innovation in any sector is coming
from smaller brands because the big players are afraid of taking risks.
That is one among the biggest challenge Chanel can face currently.
Typically big brands want a new launch to appeal to as wide a range
of consumers as possible, meaning they often produce something
‘bland’. As a saying goes ‘The future lies in bespoke’ - younger people
want something on their own, while marketing is crucial, word of mouth
is even more crucial.

The perfume industry currently is facing a major problem: maintaining

constant levels of quality like before which is crucial, but it is
increasingly difficult to obtain a regular supply of all the necessary
natural ingredients. Essential oils such as jasmine, rose, vetiver, ilang -
ilang, iris, vanilla, sandalwood or lavender cannot be synthesised in the
laboratory. But supplies are dwindling and need to be protected, in
some cases by the perfume industry itself. Unlike before Chanel has no
immediate plans to invest more extensively in growing the essentials.
They see raising the trees and flowers on
which they depend for essential oils as a
separate business. This can lead to be one of
the biggest challenge for Chanel in the near
future.
The next coming in line is on the whole aspect of the crop growth,each
bottle of perfume is made from raw materials whose quality and cost are
sensitive to changes in agriculture, politics, natural disasters, climate and
disease. All of which can be a major headache for perfumers generally
especially for a luxury brand like Chanel. The raw ingredients in Chanel
are vulnerable to political upheaval, changes in agricultural practices
and natural disasters. The reason behind this is that, rural flight has
substantially reduced these micro markets all over the world. Farmers
are tempted to switch to cereals or oil-producing plants, which often pay
much better than flowers. The growers who work for the perfume
industry and their pickers do not earn a great deal.

The one way to overcome is diversification into primary production as a

likely move for the industry to make. Whereas considering which is
investing further upstream in the long term,the concern about
"availability problems" for certain ingredients, which has prompted to
increase the range of sources for some flowers and even to seal an
agreement with that particular country. 

On a common note in the field of

per fumes , t hese f ollowing
countries are have been disturbed
abruptly with the raw materials
needed for perfume industr y.
Initially in Indonesia, the Chinese
who used to farm the patchouli
fields have been persecuted,
forcing them to give up their crops,
which in turn led to an incredible
price rise. For several months after
the earthquake that devastated
Haiti in January 2010 vetiver
exports stopped.
• On the other hand, the Arab spring in 2011 did not affect the supply
of jasmine, despite it being mainly sourced from Tunisia and Egypt.
The lavender fields of Provence in Southern part of France have been
severely damaged in recent years by insect-borne bacteria.

• One of the perfume manufacturer says, "We now keep reserves of

strategic raw materials such as vetiver, vanilla and lavender selected
on the basis of three criteria: they can't be synthesised,they only come
from a single geographical source and are needed in large
quantities,”. We sure know this applies for Chanel as well.There has
launches of schemes to protect and sustain sources of endangered
raw materials. It has helped Tonka bean growers in Venezuela,
restarted sandalwood production in Australia, and helped to improve
the quality of  benzoin resin in Laos and Ilang-Ilang in the Comoros
islands.

• Getting deeper , the decline of Mass-Market and Celebrity Fragrances

is going to be a major challenge. Mass-market fragrances sales in
North America have been declining and Euro monitor International
expects these sales to decline by a CAGR of 2.5% from 2018 through
2021. The firm projects that mass-market fragrances will register flat
growth in Western Europe over the same period. Celebrity fragrance
sales boomed for several years when performing artists like Christina
Aguilera, Taylor Swift, Nicki Minaj, Mariah Carey, Beyoncé and Justin
Bieber have all launched their own fragrances. However consumer
preferences in the US and the UK have shifted eventually.

• Artisanal, niche fragrances are the fastest growing segment of the

fragrance category. These products are not associated with any
fashion labels, designers or celebrities. Many are made with natural
and exotic ingredients instead of synthetic elements. They are
produced in smaller quantities by small companies and not distributed
widely, but sold through limited retail formats. IFF has notice`d a
bifurcation in the fragrance market, with the very premium, artisanal
brands showing higher growth than middle-market brands. Big brands
like Chanel are no longer only focusing on developing one-scent-fits-all
blockbuster perfumes.
Furthermore, technology is enabling the customisation of fragrances,
moving custom blending from a novelty to a mainstream service.
Bespoke and personalised scents are no longer the preserve of the
hyper-rich. Going forward, we expect to see ongoing sales growth in
smaller, more artisanal and tailor-made fragrance products.
 RECOMMENDATIONS
• Improving the investment of creating new perfume. These kind of new
perfume’s ingredients are not the same as the material that used
before. Nowadays, the most normal essential oils are jasmine, rose, iris
sandalwood and lavender. These kind of material cannot be
synthesised by people, and unfortunately, they can be impacted easily
by climate, natural disasters or pests. If any material I mentioned above
encounters these bad luck, it means the cost of the Chanel perfume
have to increase or no mass production. No matter what the conclusion
is, it will be detrimental to the development of not only the perfume
brand, but also the company. Therefore, I suggest that the Chanel have
to find the way out to solving uncertainties. For example, find a
material which is not affected by the external factors or create a
synthesised ingredient which is full of aroma and lasting fragrance, also
no harm to the people’s health.

• According to the market situation, the company can increase the price
reasonable. As I mentioned before, the raw ingredients of the perfume
are very vulnerable and they are changing from time to time. If the
company wants to make sure the raw materials are nature and
guarantees the profits, actually the perfume’s price can be improved.
There are two favourable reasons. One of the reason is enhance the
brand value by identifying the customers’ purchasing power. The
customers who are not rich, they won’t continue to buy the perfumes if
the price is increased. However, the consumers who have strong assets,
they will keep on buying the products which they like. Practically, it can
attract more rich customers, which is better to other lines of the Chanel.
The second reason is that, through this way, the brand can convey
information to the outside world silently that the ingredients of the
perfume are natural and no harm to human’s body.
• In order to making a brand develops forever, the brand must create a
kind of the perfume which can become a classic. Like the little black
dress which was designed by Gabrielle Bonheur Chanel. To some
extent, this classic dress makes sure the Chanel is well known all over
the world. Until now, when people talking about little black dress, the
brand, CHANEL, will come across their mind. So beside Chanel No.5,
the Chanel need to create a new classic perfume, which can lead the
trend and conquer the world. Because the decline of Mass – Market
and Celebrity Fragrances are sudden rising, the brand should not be
standing in the same place and waiting for the opponent to be
defeated.