Research on Chanel's Market Strategy

Abstract

Chanel, as a famous luxury brand in the world, has gain a wide reputation among the consumer groups. The article analyzes the market strategies of Chanel in depth, the preference of consumers, as well as some of the problems exists. Suggestions and references have put forward in the paper to improve and promote Chanel’s current marketing strategies.

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Highlights in Business, Economics and Management EDI 2022
Volume 1 (2022)
160
Research on Chanel's Market Strategy
Hanwei Hong
John Bapst Memorial High School, Bangor, 04401, US
Abstract. Chanel, as a famous luxury brand in the world, has gain a wide reputation among the
consumer groups. The article analyzes the market strategies of Chanel in depth, the preference of
consumers, as well as some of the problems exists. Suggestions and references have put forward
in the paper to improve and promote Chanel’s current marketing strategies.
Keywords: Chanel; Market Strategies; Market Segment Brand Analysis.
1. Introduction
Did you know the quote "I only wear N°5 to sleep" by Marilyn Monroe? It became the immortal
legend of Chanel and up to now CHANEL N°5 is still the world’s best-selling perfume. What did the
brand do to make it so profound? My research paper aims to demonstrate the market strategy that
Chanel uses to increase its brand’s position and positive perception in the market and how it finally
raises consumers’ awareness. It is important to discuss it today because I discovered through academic
research and survey amongst high school that consumers in the modern era rarely understand the
brand and what the brand has done to stand at the top of the social ladder. Instead, they follow the
flow and use it as a tool to enhance their social status and to show off. This slowly faints the true
value of Chanel. Therefore, it is necessary to bring it back. Chanel is an independent luxury brand
that differentiates itself from other luxury brands because of its distinctive market strategies in three
aspects.
Chanel’s unique personality and perspective toward social media makes it a distinctive luxury
brand from others. As social media continues to rise and boom from decades ago to the modern era,
a large number of luxury brands found it a good platform to distribute and sell their products and
services to consumers all over the world. They offer their products online by establishing their own
ecommerce website, even Hermès, a luxury brand company that emphasizes traditional in-store retail
expertise, is not exceptional. Other brands are more open, such as Gucci, which started selling its
products in December, 2021 on Tmall’s luxury Pavilion, China’s largest-retail platform. Under this
general trend, Chanel stands alone in this luxury industry. By deleting all its social media accounts in
January, 2021 and ignoring all e-commerce, Chanel differentiates itself from its competitors in this
luxury space. “Today, e-commerce is a few clicks and products that are flat on a screen. There’s no
experience. No matter how hard we work, no matter how much we look at what we can do, the
experience is not at the level of what we want to offer our clients.” (Guilbault, “Inside Chanel's Digital
Strategy,” Differentiation in luxury) Bruno Pavlovsky, president of Chanel Fashion and Chanel SAS,
told Vogue Business in October. To Chanel, service is much more important than pure e-commerce
itself. They believe that “nothing can replace the physical try-on and the sensory benefit,” (Guilbault,
“Inside Chanel's Digital Strategy,” Fine lines between on and office) and they are not willing to
sacrifice the opportunity for consumers to have a real contact with the physical product even if they
acknowledge that digital has a huge attraction. In recent years, Chanel is always testing digital. They
have launched Chanel beauty’s first app, Lipscanner, in 2021 which has combined visual recognition,
visual try-on technology and ecommerce. Chanel is doing their best to connect consumer experience
with the product. Cédric Begon, director of Chanel fragrances and beauty’s Connected Experience
Lab said that “One click you like this picture, you upload the photo, second click you see yourself
with the lipstick on your face… There’s value in going fast.” (Guilbault, “Inside Chanel's Digital
Strategy,” Differentiation in luxury) In this way, Chanel is able to provide upper body experience to
consumers that is lively and fun, and thus allow consumers to see if they suit the product.

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2. Market Strategy
As Chanel started developing their ecommerce, they also have a good positioning and control over
advertising. In order to bring viewers unforgettable visual effects and convey an image of nobility,
Chanel has an extremely tight control over the mass media, which must be closely related to its target
consumers, such as fashion magazines, high-end hotels, and clubs. They also developed an
advertising cycle that makes their advertisements targeted and planned rather than wide coverage like
Louis Vitton. The advertisement strategy of BRIC is an example. It is the most advanced series of
Chanel make-up, which definitely targets the upper-class customers. Therefore, the advertisement of
BRIC is rarely seen on the street or TV. But it appears in magazines and private clubs or first class-
cabin, which shows that their products and advertisement are matched. This undoubtedly makes
things more efficient and rapid than wasteful advertisement. Moreover, Chanel will also choose
Hollywood stars and supermodels to represent their products, because they are people who have big
influence. When stars and supermodels are wearing high set clothing and holding Chanel bags in the
ceremony, the media will quickly focus on the stars, which benefit both the brand and the stars.
Chanel has good control over different segments of its target consumers through effective market
segmentation strategies. They allocate corresponding products to each group of people and for each
of them they have clear and accurate planning. The process of market segmentation is divided into
three stages: segmenting, targeting, and positioning. Segmenting, the first step, is to group similar
consumers who have the same need and buying habits together into segments. As for Chanel, their
main consumer groups are those middle and upper class people, because of their high consumption
ability. Therefore, they divided consumers into middle lower class, middle upper class and upper class.
Targeting, the second step, involves decision making on how many segments they should target.
Chanel targets all segments because of their abundant resources. They use a Multi Segment strategy,
which is targeting different products and service concepts in each of the multiple market segments.
This is a good wide adopted approach to spread risk for the corporation. Positioning, the last step,
involves locating distinctive products in each of the segments and consumers must be convinced by
the value of the products compared to other brands, which is difficult. For upper class women, Chanel
provides private customization or limited edition, because they like to be unique among others. Color
makeup and skincare are more inclined to those in the middle lower class, but some of them, such as
BRIC, the most advanced series of Chanel makeup, is more inclined to upper middle class. Regular
Chanel clothing will be targeted mainly to the middle upper class. They're kind of stuck in the middle,
because they are not that wealthy to have private customization or limited editions, but they can afford
Chanel’s clothes and bags. Since Chanel’s products are mainly for celebrities, such as stars and
supermodels, and royal families, Chanel’s boutiques are rarely distributed around the world in order
to match their noble status. The Chanel boutique stores are only available in luxurious store fields
and famous areas. For example, only SKP and International Trade stores have sales channels in
Beijing, which those smaller cities will miss. They can also be seen at relatively famous airports in
big cities like New York, Boston, Amsterdam, Sydney, Tokyo, Los Angeles, Paris, Dubai, and London.
However, cosmetics stores are distributed relatively in more places, because cosmetics are targeted
to larger groups of consumers. They usually appear in smaller shopping malls in different cities. The
distribution of sales channels indicate the different levels of product positioning for different groups
of consumers. Chanel has a well-developed market segment strategy by clearly positioning each kind
of products to each of the segments and by using the distribution strategy of sale channels to
emphasize the level of each segment.
Telling a brand story is another strategy that Chanel uses to showcase its logo and symbol. It is
undeniable that about 50% of the interviewees do not really understand the meanings behind the brand.
They simply buy luxury to show off or to raise their social status. Only about 40% of them are
interested in the history and background of the brand. That is to say, they didn’t build a strong
emotional relationship with the consumers and they are losing the inherent meaning that they wanted
to show to the audience. For Chanel, to make them ‘real and true’ in order to maintain ‘loyal
consumers’, it is necessary for them to give consumers more knowledge about their brand. Telling

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stories is a way that Chanel has used to show the symbol of the brand as well as to shorten the distance
between the brand and consumers. Thus increasing the authenticity of the brand and creating a strong
connection with the consumer’s emotion. Chanel has a long and impressive history and its founder
Coco Chanel is a lady who reforms women's fashion that still affect the world’s fashion today. The
importance of Chanel is that Coco Chanel only designs and produces women clothing, making it an
icon of women’s empowerment. Back in the 1920, women dressed conservatively and were
considered inferior to men. Coco Chanel incorporated her wild idea into the design, producing black
dresses and trousers for women. She started the trend of embellishing ordinary dresses with pearls,
jewelry, and lace to give a simple and elegant dress uniqueness. During the war, she used the cheap
Sweatshirt originally used for men’s underwear to make flowing trousers and sailor pants for women,
so that they can move freely and comfortably when they are at work. This design provides women a
fashionable and practical choice. Coco Chanel’s bold idea totally turned people’s perspective toward
women and women’s perception of fashion, which resulted in a huge influence in the 20th century.
She is the person that connects the whole story together. Until now, men’s clothing is missing in this
brand because Chanel wanted to emphasize women’s desire to be independent of men as well as
women’s status. The history of the brand allows it to be seen as a cultural identity. The intention of
every product that Chanel designs makes women appreciate the brand and build a strong relationship
with the brand. This is how Chanel successfully differentiates itself in the luxury market, by not only
providing high quality products but also providing the audience with knowledge about the brand and
the product that raises their credibility.
3. Conclusion
As Chanel’s ultimate goal is to build a strong luxury brand, it is important for the brand to create
perceptions of exclusivity, identify niche segments, and emphasize the symbolic value. Unlike the
usual mainstream brand, Chanel blocked the attraction of social media and had a precise control over
advertisement. It also produces specific products that target different segments of consumers, making
a powerful association with specific kinds of advertisement. Lastly, in order to create a sense of loyalty,
credibility, and trust, Chanel emphasizes its symbolic value through storytelling and building a
longstanding heritage. The marketing strategies that Chanel uses shows why it stands in such a high
position in the luxury industry. And it is essential for audiences to learn about the brand to really
build a strong emotional relationship with it.
The contribution of this paper mainly includes the following two points. Firstly, few paper has
analyze Chanel’s marketing strategy in the past, while this paper discusses Chanel’s marketing
strategy from the perspective of e-commerce, brand, advertising, and provides a meaning reference
for related research. Secondly, this paper suggests an important idea that Chanel is exclusive. Only
when consumers have enough understand of the brand history and intrinsic value can they establish
a deep emotional relationship with Chanel.
References
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empowermen t/.
[2] Dibb, Sally and Simkin, Lyndon. “Market Segmentation Success: Making It Happen!: Sally Dibb, Lyndon
S.” Taylor & Francis. Taylor & Francis, December 6, 2007. https://www. taylorfrancis. com/ books/
mono/ 10.4324/9780203823484/market-segmentation -success-sally-dibb-lyndon-simkin.
[3] Wang, Zihan. “Analysis on the Marketing Strategy of Chanel.” researchgate. Atlantis Press SARL., 2021.
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Strategy-of-Chanel.pdf.

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[4] Guilbault, Laure. “Inside Chanel's Digital Strategy.” Vogue Business, February 22, 2021. https:// www.
voguebusiness.com/companies/inside-chanels-digital-strategy.
[5] Yang, Ni. “The Brand Analysis of Chanel - Francis Academic Press.” francis-press. Francis Academic
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