Principles of fashion marketing project 1

CHANEL MARKETING

REPORT -2.55HAND BAG

Amanda lili

Chanel originates from France and is a long established brand in Europe, with fashion shows and

carried out yearly. Well aware of the need to remain relevant in a fast-changing world, Chanel woks to

continually attract a younger customer base whilst retaining her classic market group. This is partly

achieved through Karl Lagerfeld, who found a thousand different ways yo reinterpret the house‟s icons

and archives and took the double C insignia places it had never been before and strong publicity

campaigns featuring global celebrities such as Nicole Kidman, Keira Knightley and Lily Allen.

One of the most iconic designer

bags in the world is Coco Chanel's

quilted chain-handle bag, the Chanel

2.55; still as popular today as its initial

creation in 1955. During the 1980s, a

Chanel bag was the most coveted

status symbol, according to Anna

Johnson in her book Handbags,

the Power of the Purse. With its famous quilting, the 2.55 is based on the quilted coats worn by boys at

the race track, as Coco Chanel‟s designs were influenced by her love of horse racing.

Today the Chanel 2.55 purse is just as much an It bag as it always was. In 2005 , in celebration of the

bag's 50th anniversary, Karl Lagerfeld (who took over creative leadership of the Chanel fashion house in

1983) revived the design exactly as

Mademoiselle Chanel had made it, and the

reissue proved even more popular than its

original, according to Caz Moss, in her Female

First article "Chanel 2.55 Handbag."

The chief desiner of chanel is Karl Lagerfeld.

He is a German Fashion designer, artist and

photo grapher based in Paris, France. He Has collabo rated on a variety of fashion and art related

projects, mostno tably as head designer and creative director for the fashion house.

Let‟s review the fashion trends in the past 40 years.

Trends of past 40 years

1960s

Miniskirts

Skinny pants

Go-go boot

Baby doll dress

1970s

Platform shoes

Track suits

Earth shoes

Leisure suits

1980s

Status bag( Big shoulder bag )

Polo shirts

leg-warmers

Punk

1990s

Power bead bracelets

Pashmina

Tattoo

Capri pants

Over the last 40 years we can find the changes we have seen to our high streets and local shops have

been as drastic as any in technology ,those changes may all leaded by celebrities, magazines and runway

shows.

There are more indicators than that,for example:

Task 1

Political:

Chanel is a well know international company, therefore the implementation of strong regulations to

reduce piracy rate is particularly crucial in asia area. Although chanel has the emerging markets with

huge potential, but because of the dampener on sales of bags and accessories as a result of uncontrolled

piracy in asia.

Economic:

Increasing purchasing power of the developing world: an increased in income for the consumers lead to

more desiring luxury goods is a positive sign for chanel.

Worldwide economic crisis rebound: economy is recovering from the crisis, a positive outlook in

consumer behavior and hence possible increased sales for chanel.

Social:

Most of Asians believe that brands like chanel increases the value of the one who uses it. Chanel may

consider producing more products with visible logo placements in asia.

Technology:

Growth of broadband: The growth of high-speed broadband internet connections had redefined

advertising possibilities.

Emergence of mobile internet: Brought about by the introduction of smart phones like iphone,black berry

has a massive public appeal.

Legal:

Taxations on chanel bags in asia area are quite heavy, hence would cause black market.

Environmental:

Chanel proposed “green fashion”, clothing usually to use the organic primary material, for example has

not executed the agricultural chemicals the cotton, the reuse material and so on, does not use harmful

chemical reagent or the bleaching agent dyes.

Task 2

Chanel customers are women who want to identify what chanel represents which is; elegance,

simplicity, modern and class. Chanel cosmetics are targeted at a younger consumer but they still retain

the „classic‟ market.

In the past fifteen years Chanel's target market

expanded to reach out to more customers. In

2009, pop singer Lily Allen became the face of

Chanel's new handbag line called Coco Cocoon.

When Chanel used the young singer in their

advertisements they wanted to catch the

attention of a younger market without losing

their original target customers.

Through this carefully selected upgrades of

their design they manage to keep old customers

like the wealthy Parisian ladies in their Chanel dresses as well as attracting young women buying

expensive handbags but also apparel from the ready to wear shows. This positioning makes Chanel

unique as a luxury fashion brand. Competitors in the fashions industry such as Chloe or Balenciaga often

attract a younger 25-50 segment. However, companies such as Herms attract older customers as well.

Task 3

Market research company: -Unity Marketing

-TNS Global market research

Unity Marketing is a boutique market research firm specializing in consumer insights for marketers and

retailers that sell luxury goods and experiences to the 'masses as well as the classes.'

Unity marketing company is to Commission a custom research study of the business, brand awareness,

target market to achieve 'future vision' for the business.

In another hand, TNS Global is a market research experts focus exclusively on researching specific

industry sector issues and understand inside out the challenges. With market research operations

spanning over 80 countries, TNS boasts a powerful global network. In each country they could combine

the benefits of industry specialisation & research expertise, to deliver powerful insights.

Although Unity and TNS are both very helpful to chanel, but it is more appropriate to use TNS as chanel

is a global company needs specialist market research expertise and global brand insight services and

solutions.

Task 4

-Chanel 2.55 handbag

In the early 1920s, Coco Chanel became frustrated with

having to carry her handbags in her arms. Coco then

decided to create a handbag that allowed her to use her

arms freely.The Chanel 2.55 was inspired by straps

found on the soldier's bags.

The bag has a number of features:

1, The lining. The lining‟s brown colour represents the colour of the uniforms at the convent where she

grew up.

2, The zippered compartment. There is a zippered compartment at the inside of the front flap. That‟s

where Chanel is rumoured to have stored her love letters in her original bag.

3, The backside. The backside has a back outside flap for storage of money.

4, The chains. The chains were attached by leather-threaded chain inserted though eyelets. The

caretakers of the convert she grew up at hold the keys at their waist dangling from the same type of

chains as the 2.55 shoulder strap chains.

5, The front lock. The bag originally came with a front lock called “the Mademoiselle Lock” (in reference

to Coco Chanel never marrying). Since the 1980s versions can also be supplied with a lock in the shape of

a double CC logo. These called “Classic Flaps”.

6, The pattern. The bag has a quilted diamond or herringbone pattern on the exterior.

In 2005 Karl Lagerfeld revived the 2.55 design exactly as Coco had made it for it's 50th anniversary and

the new Reissue was even more popular than the original release.

Although Chanel 2.55 may just look like another designer bag each aspect of it's design contains a little

part of the fashion icon that was Coco Chanel- therefore making it a true icon of fashion itself.

Task 5

A product life cycle refers to the time period between the launch of a product into the market till it is

finally withdrawn. This cycle is split into four different stages.

1. Early Adoption:

Objective: build an ecosystem of partners, established in your target niche, that will help you

dominate it.

2 Early Majority - Mass Adoption:

Objective: Coverage: Rapid recruitment and enablement of as many partners as possible

3 Late Majority - Conservatives:

Objective: Maximise profit

4. Trailing Adoption- Laggards:

Objective: Maximise service revenue

For example CHANEL 2.55 hand bags is in the maturity stage at the moment, they are famous and

has a lot of celebrities carrying their bags. Chanel was one of the first designers that started to use

celebrities to promote the brand. Important persons who have made a higher value for the brand are

Marilyn Monroe, Nicole Kidman, Greta Garbo and Audrey Hepburn.

Task 6

Product development may involve modification of an existing product or its presentation, or

formulation of an entirely new product that satisfies a newly defined customer want or market niche.

Chanel is a worldwide reference in the domain of perfumes. The company originally introduced its

range in developed countries with populations enjoying high purchasing power, which is only logical

regarding the brand's luxury reputation and its prestigious history. Chanel now has to face the growing

globalization phenomenon, which forces the company to settle in new markets and expand its reputation

towards tough competitors.

The risks of launching a new product could be high costs and time consuming. The biggest con of

creating a new product is the unknown competition.Many ideas and products change a hundred times

before they are released.

For example, chanel launched Channe chance lEAU DE TOILETTE in 2008, 3 months later, CHANCE EAU

FRAICHE are introduced.

Chance Eau t FRAICHE is stronger and longer

lasting perfume suitable for woman aged

between 30-50 where Channe chance lEAU DE

TOILETTE is more fresh and toilette for young

audience.

Fromm this we can see that Chanel takes into

consideration the market angle more than it is

getting blame for.

Task 7

Chanel‟s product prices reflect the opulent image of chanel, The pricing has to be consistent with the

positioning.

A little research reveals a classic 2.55 Chanel bag varies between $2301

to $3199, and the annual turnover for 2.55bags are 500milllions, that is

about 170000 bags sold per year. This is because of the high quality

controlled and each operation is down to the minutest detail. With its

own plants, chanel can ensure that no outside manufacturer will omit

the steps and jeopardize the quality of the goods. People really do hold

strongly to the idea that you get what you pay for.

From marketing prospective, pricing is also decided by demand, costs of

production and environmental factors.

For example, what possible actions might competitors takes or legal

laws announced by the local government.

Task 8

Chanel's brand image has been updated by the endorsement of younger actresses and models. Nicole

Kidman and Kate Moss have been the face of Chanel for cosmetics. Channel offers the classic items in

their stores throughout the year whilst introducing new, trendy products with each fashion season.

Range of merchandise includes fashion apparels and shoes, accessories, fragrance, make up, skincare,

fine jewelry and watches.

Place

Chanel sells their clothes, bags and shoes only through directly owned stores. Except for one store in

Tokyo where you can buy the bags. Their eyewear, sunglasses and

makeup can be bought in licensed stores within the same product

category. For example can you buy sunglasses in stores where you find

other brands of sunglasses. The reason of only having this kind

of distribution is so that Chanel can have total control over the selling

of the products and in that way keep a better control over the brand.

Chanel often attract elder women with its elegant and feminine

style but it also attract younger women nowadays. Those famous

people using the brand will also been seen as some kind of

ambassadors because people who will see them wear the clothes will

connect them with the brand.

Positioning

Positioning is the strategic placement that a brand wishes to have in the market.

Chanel is positioning itself as a luxury brand with high design and high image.They have good quality

control systems and as same as distribution of the products.

Task 9

A distribution channel can be as short as being direct from the vendor to the consumer or may include

several interconnected intermediaries such as wholesalers, distributors, agents, retailers. Each

intermediary receives the item at one pricing point and moves it to the next higher pricing point until it

reaches the final buyer.

The method that chanel using is to directly transport from the manufactures then distribute to different

stores.

Chanel uses advertisement in Magazines as Vogue and Elle and they also uses street billboards and

commercials.

They use direct marketing, you can subscribe for on their homepage. They also promote the brand

through their fashion shows.. They always have their shows in Paris every year.

But in another hand, a big weakness of Chanel is that the company is not offering an online-shop at its

homepage! The internet as a sales channel is nowadays essential for luxury brands .By not providing an

e-retail options the company losses enormous profits and customers.

Secondly, when Karl Lagerfeld designed fashion for the celebrities, the clothes are almost nowhere to

find and not advertised at all, especially the in-store representation of the apparel is very weak and not

attractive to the young public at all.

Manufactures

Distributor

Retailer

Retailer

Distributor export to retailer

in other countries

Task 10

The recommendations from the CEO of Chanel, Maureen Chiquet are presentedas follow:

“In order to increase the sales and revenues Chanel has to acquire new markets and distribution channels into their strategy.

Therefore we recommend to open stores in so called “it-locations” as for example Soho in NY or the 6th arrondissement in

Paris. The shop design of these stores should be more focused on the new generation, by offering the hippest trends and

collections.

Furthermore we recommend to focus on the consistency of the brand, what should be realized by centralizing the headquarters,

which are so far divide into 5 separated locations. The advantage of this centralization is a higher communication consistency

and a better controlling of the whole brand.

Another strategy we recommend is strengthening of the HNWI-customers. By offering ultra-luxe goods as for example this

alligator bag amounting to € 26,000 new target markets are developed.

Besides that, we recommend the extension of Chanel’s product lines, by implementing new sub-brands, as for example a

interior decoration line in the heritage Coco Chanel style, as you can see on the following picture, the brand would set new trends

and increase their market presentence.”

First of all, there is the great opportunity of market expansion in new and not satisfied areas as Asia

and Russia. Chanel for example has already boutiques in 23 cities in China, there is still huge demand in

the upper-class societies, they are nevertheless having great potential and offering huge opportunities

for luxury brands.

There as well as in the European market the development of the upper-class society is increasing. This

socio-economical change is leading to another chance for chanel.

Chanel has many strengths that makes it the reputation of the company and established within the

elusive designer and haute couture market.

The strength of an established brand started by coco chanel, then carried forward by talented and

creative karl Lagerfeld and an amazing marketing and management team.

To prepare for an even brighter future, chanel could consider investing into emerging market by

opening more stores aborad because there is an increase in income for people in china and india, and this

leads to more demand for luxury goods. chanel should open more stores in this emerging markets, and

tapping onto new media marketing to remain relevant in a technology society and particularly to attract

younger consumers.

Last but not least, chanel can work with the government boards to clamp down on counterfeit goods at

cross-boarder checkpoints.

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