Introduction to Chanel No.5 Created by Ernest Beaux the product was first launched in1921and was only avaliable in Chanelboutiqies.Expresses liberated spirit of 1920’s In 1924 the perfume introduced to the world marketbeginning from the USA.The next target was Europe. During the World War II the sales increased tenfold as aresult of genius marketing strategy.Pocket flacons weresold on military PX’s. In 1950’s ad campaign with participation of Merlyn Monroecalled great success. During 1980’s allure of the product tended todisappear.Brand name wasre-vitalized. Ad campaign with” Share The Fantasy’ sloganwas held. In the 1990s, more money was reportedly spentadvertising Chanel No. 5 than was spent for the promotionof any other fragrance brand..
Understanding Marketplace Needs-love and belonging,self esteem Wants-Brand Marketing-creating desire for thingsthat no one really needs and charge premium price forthem. Offerings-product+emotional experince which is hard tobe delivered by compatible products Value and satisfaction-the company sets high level ofexpectation as of representing scarcity and luxury andsatisfies this expectation. As a result company have goodnumber of loyal customers.
Designing strategyThe company successfully employs MarketingConcept: Learning demand- Legendary designer of brand-Gabrielle Coco Chanel was a learning innovator.ForChanel 5 -she spotted gap in perfume industry. Twoperfume types were available by that time-perfumefor sexy women , perfume for classy women. ChanelNo.5 merges these qualities and reflects liberal spiritof 1920’s.In addition by the time perfume waslaunched only floral based perfumes were popularbut Coco changed this trend—’I want artificialflowers smell natural on women, not natural flowerssmell artificial’. Distinctive ad campaigns-mini-film formatted adswith participation of celebrities Attempts to build profitable relationship with rightcustomers by delivering satisfaction
Marketing Mix Product- Fashion and Clothing, FineJewellery, Watches andAccessories,Perfumes and Cosmetics Place-South America, NorthAmerica,Asia,Europe,Africa,Australia Price –300$-8000$ Promotion-Fashion Shows,celebrities,launchingevents,TV,magazines(Elle,Vogue),exhibition(mobile art,little black jacket) Public Relations-specialevents,blogs,forum,website,mediarelations Publicity-celebrities,cartoons(TheSimpsons),movies(Womenhistory),books(Shophacolic,Undomestic GoddessSophie Cinsella) Advertising-mini film formatted adswith celebrity participation,printedad(magazines),
Chanel-Building CustomerRelationshipsLike many other luxury brands Chanel investattention to customer relationships For high-margin customers attempts tocreate “membership ”atmosphere. Partieslike the Chanel Dinner are held in anattempt to endorse “Chanel Club ”image byparticipation of celebrities like movie stars ortop models. For it’s low-margin mass market userscreates innovative ads with celebrityendorsements-the only company thatdesigns ads in mini film format. Chanel’starget is women who dream to becomefamous or to live that sort of exciting storywith a beautiful young man. Cinema withfamous people represents the dream worldfor young generation and compatible withcharacteristics of target customer group. Exclusive Invitations-private sales, boutiqueopenings
Chanel No.5-Value capturingtoolChanel changes its historical attitude which representedscarcity and luxury and aims to reach younger customergroup by it’s youth strategy which was first commencedin 1999. Treats perfume & cosmetics product line as a way ofintroducing youth to Chanel family and targets getting potentialcustomer lifetime value by gaining more customer equity. Chanel No.5 is crucial as it’s bestseller for decades but needsome contemporary appeal Re-formulation- despite the fact that denied by Chanel for it’spossible effect on loyal customers Celebrity participated ads as of to attract more youth attentionCustomer loyalty groups-true friends and butterflies
Chanel in Digital Era Re-designed website—In France has received the tophonors in a study by Keynote Systems that lauds the fashionlabel for its simple, sleek site that showed its design elegancewhile remaining completely available to customers. Mobile applications-available for purchase on itunes. Theseapplications can be uploaded to the iphone or to ipods. Expanding presence in social networks. On Facebookalone there are also over 500 groups that are based uponChanel.Users are treated as a part of brand and their visionfor company are evaluated. Fan-first marketing-Coco Shine lipstick was first soldthrough Facebook before it’s introduced tomarket.Experiences of users then shared on fan page. Viral marketing-2012 Brad Chanel campaign wasn’tconsistent with previous ads for the for the same product.Criticized parodied and became popular on socialmedia .Chanel did it intentionally in order to become “talkable”
Company Profile Chanel expresses it’s mission as-’Tobe the Ultimate House of Luxury,defining style and creating desire,now and forever. The objective of company is consistedof paths lead to aforementionedmission. In order to be style definingthey should invest on R&D and it shouldbe financed through retainedearnings.Creating desire requirelearning underlying customer need. Toretain sustainability company shouldmake profits. Making profit require tokeep costs on reasonable level.Butreducing costs too much may result inpoor quality which is contradicts withbeing luxury. So all these choices setobjectives which lead through companymission.
B.P Analysis-BCG MatrixChanel’s Business Portfolio is consisted offashion & clothing, watches &accessories, cosmetics and perfumery.Each of them constitutes differentSBU’s. 5.We will also Chanel No.5 asdistinct SBU.The fragrance and beauty businessalone has been estimated to turn overmore than $1 billion a year, poweredby the world’s first and most famousmodern fragrance, Chanel No.5.As aRule perfume industry represent cashCow for most luxury brands. So ChanelNo.5 Eu De perfume spray will be placedin Cash Cow Section.
Product Market ExpansionGridEstablished product within the market already. Certain promotional tools are used to re-enforce brandand product awareness Market Penetration Strategy. Offering product in different sizes-For normal users bottle ranges 1,2-3,4 ounce (74-130$).Formore affluent users Grand Extrait was released in limited number(2100-4200$) Special offers-Duo set-bath gel of No.5 series +Chanel No.5 30 ml perfume at lower price. Effective distribution- available more than 100 countries over the world,the use of onlineshopping options effectively -Sephora.com,Ebay,Chanel.com,Chanel Boutigie.com etc. note thatdue to strong brand image Chanel can distribute limited retailers. Updating image of -2005 Chanel ad starred by Nicole Kidman was an attempt to re-positionproduct in US market to younger generation. Most modern consumers associated the fragrancewith the romantic lifestyle of mid-century France. In an effort to stay relevant and up-to-date,avoiding the classic undertones, the commercial is set in NYC instead of Paris, and all dialogueis in English Innovative ad campaign-Brad Pitt starring Chanel No.5 ad in 2012..First time a male was spokesman for Chanel perfume Reemphasizing legendary and timeless image of product-2012 two videos was launched inInside Chanel.com.The first one was about innovative characteristics of product.The second one was revealing the voice recording and photoswhich contained materials about Merlyn Monroe ‘s confess her actuallyusing of Chanel No5.In this way they merged timeless image of Merlyn andChanel No5.
SWOT AnalysisStrength Production Quality) Leading Brand Distribution Channels Loyal Customers High R&D Strong brand equityOpportunities Economic welfare improvement New distribution channels and onlineshopping New untouched markets andsegments Increased interest in luxury goodsformulationWeaknesses Availability of similar products Lower price by competitors Possible ‘out-of fashion’ perceptionThreats Chanel counterfeits especially in Asia Competition&lower cost specially The risk of banning ingredients and re-formulation
Microenvironment The Company-strong organizational culture, flexibility and non-bureaucratic approachhelp departments to work efficiently; Suppliers-heavily depends on Amazonian resources for ingredients of product andcooperates local suppliers especially from Brazil. Marketing Intermediaries-. Sells selectively to number of retailers worldwide, includingamong others Harrods,Jenners,The Boots and The Perfume Shop.The company hasstores in more than 100 countries of the world and plenty of online retailers. Competitors-Loreal,Dior,Guerlain Publics- Media publics- Regular merchandise demonstrations for publishing new products invitemedia to report. This kind of meetings can also function as a means of buildingrelationship with media; Local publics-the locals of Brazil accuse company for enormous margin between theirwages and price of products consisted of materials they assemble. General public –being luxury,trust in quality.extravagant, overpriced, exploiting third world suppliers, and wasteful Customers- consumer and international markets
Macroenvironment Political- Consumer protecting laws-EU require to re-formulate ChanelNo.5 and Miss Dior for the reason of containing allergic ingredients; Piracy regulation laws-preventing fake products especially in Asia Technological-the product was first containing synthetic chemicals.Due to the increased concern for the environmentally safe productsduring the 1990’s technological improvements centered on“reformulating products to move away from synthetic chemicals andto rely on natural products. Natural-sustainable packaging, protecting green resources ofAmazon,banning of civet and musk etc; Economic-globalization and entering into markets like Asia andLatin America. Carefully spending pattern caused decrease only0,7% growth between 2007-2010. Social-sustainable packaging,recuparetion waste packages Demographic-change in family structure makes more fundsavailable for “nuclear families and it leads to more spending onluxury products. With the education level rising young generationhas more opportunity to spend on this type of product. Cultural-in modern world boosts self-indulgent of people and luxurybrands offer different tools for this
Chanel No.5-Customers areaffected Cultural factors Culture-Hollywood culture helps to boost thepopularity of the products of ‘luxury’ brands.In addition movie stars like Nicole Kidman,Audrey Tatou,Brad Pitt took part in adcampaigns. Social class-appeals to upper and middleclass. Social factors Membership groups- If one hang around asocial group of well off upper classindividuals, by wearing Chanel No.5 she isidentifying herself as part of a social groupthat she wishs to belong Reference group- Celebrities, oldergeneration Roles and status-belonging high socialclass,young,elegant educated women
Chanel No.5-Customers areaffected(cont) Personal factors Age and life-cycle-single women under the age of 30 Socioeconomic status-wealthy or young professional women Lifestyle-Classic but adventurous at the same time Personality-sophisticated-upper class and charming Psychological factors Motivation-love and belonging,social and self-esteem status Perception-subliminal messages in movies, books,tv shows etc. Learning-providing high quality reinforces repurchases Beliefs-Chanel No.5 was favorite of grandmas.2005 ad campaign changed that belief Attitude-expensive but provied high quality
Chanel No5.-BuyingBehaviourTwo distinct types of Buying Behavior; Habitual Buying Behavior-theperfume has long history so large loyalcustomer basis for whom it’s alwaysthe first choice .In addition it’slegendary perfume of Chanel andperhaps among the first choices ofChanel loyal customers for perfume. Complex Buying Behavior-not yetloyal young customer group .Perfumerepresents personality to some extentand choice require high involvement.Chanel is trying to get retention fromthese consumers by ad campaigns
Chanel No.5-Decision process Need recognition-external stimuli Information search-personal,public,commercial,experiential; Evaluation of alternatives-lasting longer,high quality,brandimage,stylish,famous; Purchase decision-poor service by salespeople,inconvenient storelocation, discounted similar products; Post-purchase Behaviour-satisfaction level
Chanel No.5 from a NewProduct PerspectiveConsumer group in respect to innovativeness-early and late adoptersProduct characteristics in respect to rate ofadoption; Relative Advantage- not floral based, longerlasting as synthetic ingredients were used; Divisibility-as product appeals high andmiddle income class and price is quiteaffordable for them Communicability-after launching the productfor long years no active ad campaign was heldbut anyway product sales was high as result ofword-of mouth influence,
Segmentation Demographic Segmentation Age and life-cycle-18-30 years old,working singles or young men; Gender-woman; Income-high disposable income to buyhigh brands Psychographic Segmentation Lifestyle-classic but yet adventurous; Personality-charming and elegant;
Segmentation(cont.) Behavioral segmentation Occasion Segmentation-men buying perfume as a gift; User status-ex-users ,potential users, and regular users; Loyalty status-highly and potentially loyal customers Lady G-use normal perfume daily but Chanel No5 on occasions Business market segmentation Sector-right place to sell is cosmetics shop; Profitability-the main partners- Boots and The Perfume Shop rules 33% and 20% odmarket respectively; Organizational size-Boots has 168 stores across the UK
Segmentation(cont.)Effective SegmentationDimensions Measurable-information aboutage,gender and social class is highlyattainable; Accessible-it is again easy to targetthe chosen segments as they are allexposed to different but specificmediums; Substantial- high price and largemarket share; Differentiable-men and womenrespondi differently,socioeconomicgroups have different disposableincome; Actionable-there are multiplemarketing tools than can be used toreach the chosen segments, but thereare not too many segments to makethis unattainable.
Targeting Characteristics of Market Segment High current market share; High possible growth rate; Profitability through newsegments(potential users etc.,) Primary target-18-30 years old,singlewomen; Secondary target-young men buyingperfume as a gift on occasion; Targeting strategy-differentiatedmarketing strategy as differentsegments are targeted
Differentiation andPositioning Positioning Attributes-In the Chanel No.5 advert, the voiceover says ‘I’m afool to want you’ suggesting that the attributes forthe product are romance and power as thewoman is in control. Price would be expensive butluxurious in quality.. Product class is thedifferentiation of Chanel No.5 from otherperfumes, in that it is classic and timelessFinally,the emotion in the advert is of seduction, lust,passion and a feeling of beauty Positioning Map- high quality and highperformance(see attc.1)
Positioning Map• Shalimar ByGuerlain-80$• Armani Code ByGiorgio Armani-87$• No.5 by Chanel98$• Ref. Boots.com for50 ml bottle
Positioning at 3 steps Differentiating CompetitiveAdvantages Product differentiation-quality,performance,timeless,stylish; Image differentiation-well establishedcompany image Choosing the right competitiveadvantage How many differences to promote-USP“No.5 attempts to provide young professionalwomen with a classic and timelessperfume to suit their luxury lifestyle andto enable her to be the beautiful,powerful and classic woman she aspiresto be”
Positioning at 3 steps(cont.) Which differences to promoteo Important and distinctive-boosts self esteem with it’s luxury,timeless anduniqueness features. Innovative ad campaigns delivers the image clearly more thancompetitorso Superior-the nearest perfume Shalimar can’t create the same experience;o Preemptive-the secret formula and successful initial marketing strategies;o Affordable-designed for affluent customers;o Profitable-bestseller for decades Selecting an overall marketing strategy-More for More