Marketing and Branding Coco Chanel

| January 10, 2017

1.0 Introduction

The survival of firms in the global market is related to their potential to identify brands that can respond to consumers’ needs. In this context, a successful brand is able to secure organisational growth even in periods of strong market turbulences (Doyle, 2009). However, the popularity of a brand in markets worldwide is not guaranteed; for example, it is possible for a brand to face low popularity in a market even if in most markets the response of consumers to the particular brand is impressive (Doyle, 2009). In other words, certain factors such as culture and social ethics can affect the performance of brands in the international market (Davis, 2010). This study focuses on the performance of a well-known brand: Coco Chanel. The specific brand appeared in early 1900s and was initially related to clothing accessories, such as hats (Siddiqui, 2014). Through the years the brand incorporated clothes and jewellery, becoming a symbol of high quality and unique style (Siddiqui, 2014). The characteristics of the particular brand and its performance, as part of the fashion industry, are analysed below. Emphasis is given to the brand’s environment but also to the strategies through which the brand has secured its market position. It is revealed that the brand’s success resulted from the combination of a series of strategic approaches. The economic and social conditions in markets worldwide during the 20th century had also a key role in the brand’s rapid expansion internationally. Under these terms, the brand has contributed in the increase of attractiveness of the fashion industry and the transformation of luxury products to elements of daily life style.

 

2.0 Coco Chanel as a brand

2.1 Overview of Coco Chanel

In order to identify the performance of the brand as part of the fashion industry it is necessary to refer primarily to the brand’s history, i.e. to the events that have led to the establishment of the brand and the strategies on which the management of the brand has been based through the decades. Coco Chanel is a brand closely related to the life of its creator: Gabrielle Chanel has been the child of a poor family; in her early years Gabrielle had to face the death of her mother, an event that led Gabrielle to work as ‘a singer in a cabaret in Paris’ (Siddiqui, 2014). There, Gabrielle, having become known with the name Coco, met her first husband who assisted her in opening in 1909 ‘a shop that specialised in hats’ (Siddiqui, 2014). In a few years, after the end of the World War 1, Coco Channel entered the fashion industry by developing clothes of high quality. These clothes were characterised by simple lines and persistence in colour: black and white were extensively used creating a unique identity for the particular brand (Siddiqui, 2014). Through the years, the brand was expanded incorporated jewellery and perfumes, such as the Chanel No5, the brand’s most successful product ever (Siddiqui, 2014). The success of the brand has been related to the ability of Coco Channel to pay attention to the needs of people and to understand the changes in social and cultural trends, as developed globally (Graj, 2013). In any case, the brand has been characterised by its strong dependency on the personal views and beliefs of Coco Chanel, a fact which is made clear through the brand’s logo: the initials of Coco Chanel have been combined for creating a logo that gives the sense of a signature of its creator (Figure 1, Appendices).

2.2 Key competitors of Coco Chanel

As already noted, Coco Chanel is one of the most powerful competitors in the global fashion industry. The brand is part of the luxury fashion sector, a sector which is characterized by the dominance of 10 brands. Different views have been developed in regard to the position of these brands in the relevant hierarchy. In the table included in Figure 2 (Appendices) two of these views are presented: the first view refers to 12 dominant brands of the specific sector while the second view focuses on 10 of these brands as the most powerful ones. Particular emphasis should be made to the following fact: the first list, the one included 12 brands refers only to the luxury clothing sector while the second list presents the top 10 fashion brands worldwide. From this view, the brand under examination would be considered as more relevant to the first list. However, the second list is important for understanding the competitive environment in the fashion industry in general. In addition, the two lists reveal an important fact: Chanel has managed to secure an important position not only as a fashion brand but also as a luxury clothing brand, being categorized at the fourth and the fifth position accordingly (Figure 2, Appendices). The lists presented in Figure 2 also reveal the significant power of certain brands that are included in both lists: brands such as Louis Vuitton, Prada, Dior and Gucci seem to be the most critical competitors for Coco Chanel since they have managed to be popular both as fashion brands and as luxury clothing brands (Figure 2, Appendices). According to a report published by the Luxury Institute Chanel is one of the top luxury brands worldwide. In fact, in the survey developed by the above Institute most participants seemed to prefer Chanel; in the particular survey Louis Vuitton ranked second while Prada ranked third (Carr, 2012).

2.3 Brand performance

2.3.1 Applied marketing mix (4p’s)

The performance of the brand in its industry could be made clear after reviewing the key elements of the marketing strategy employed for the promotion of the particular brand. In practice, emphasis is given to four of these elements, which as also known as 4Ps (Burrow, 2008). The particular elements constitute a quite known framework, the marketing mix (Burrow, 2008). The 4Ps included in the marketing mix refer to specific aspects of a marketing strategy. At the first level, reference is made to Product. The term Product, as part of the marketing mix, reflects not only an object, as a materialised element, but also the various characteristics of the object/ product, such as ‘value, packaging methods and materials and brand name’ (Lamb and McDaniel, 2011: 47). Place is the second element of marketing mix; the specific term denotes the geographical area in which the product is available or in which the product is planned to entry (Lamb and McDaniel, 2011). The term Place also reflects the means used by a firm for distributing its products internationally or locally (Fifield, 2008). The success of a product in a particular market is depended on the Promotion strategy used, i.e. on the means and the approaches employed for making the target consumers aware of the specific product (Satit et al., 2012). Finally, the Price of a product has to be decided taking into consideration various factors, such as the GDP in the target market, the market’s demographic characteristics/ average income and the status of the local economy (Lee, Cheng and Chen, 2008). If the marketing mix used in regard to a product is not appropriately planned, then target consumers would not be expected to buy the product. The relationship between the marketing mix and the consumer preferences is presented in Figure 3 (Appendices). On the other hand, marketing mix should be structured in such way so that it can respond to actual consumer needs, as these needs are reflected in the 4Cs framework; the relationship between the two frameworks is presented in Figure 4 (Appendices).

The issues highlighted above should be used when describing the marketing mix of Coco Channel. At the first level, in terms of its Product, the particular brand is characterised by exceptional quality (Ma, 2014). In fact, quality involves in all aspects of the brand’s product, meaning not only the materials of the products but also the materials used in the products’ packaging (Ma, 2014). For example, in the case of Chanel No.5 the uniqueness of the product was secured by employing an innovative name and by using a unique synthesis of aromas (Sicard, 2013). Also, the specific brand is related to a country well known for the quality of its cosmetics and clothing: France (Ma, 2014). The potentials of the brand to be expanded worldwide have been limited because of the following need: many of the brand’s products had to be supported by appropriate customer services schemes. Therefore, the selling points of the brand’s products are selected on the basis whether they can have a direct and close reference to France, as the source of these products (Ma, 2014). In regard to its Promotion strategy the specific brand can be characterised as unique: common marketing options are combined with less popular marketing approaches for attracting the consumers’ interest. For example, in its initial phase the marketing of Chanel No.5 has been based mostly on ‘word of mouth marketing’ (Sicard, 2013: 159). In addition, the advertisements related to the specific brand are likely to be included in media and press that are quite popular in the fashion industry, as for example ‘Elite and Vogue’ (Ma, 2014: 48). However, the high quality of the brand’s product has been secured by adopting high Prices, an approach which is considered as expected by which has set limits to the increase of the brand’s popularity (Ma, 2014).

2.3.2 Segmentation, targeting and positioning (STP)

For ensuring the effectiveness of a marketing strategy used for promoting a brand marketers need to develop three, key, activities: segmentation, targeting and positioning (STP). As part of marketing, Segmentation reflects the effort of marketers to divide a market into parts/ segments; each of these segments would refer to consumers with common characteristics, such as age, marital status and so on (Cant et al., 2009). By segmenting a market marketers are able to develop marketing strategies that would be welcomed by the target consumers (Cant et al., 2009). However, in order to respond to the expectations of marketers, segmentation needs to be following by targeting. In the context of marketing the term targeting is used for showing the identification of the market segments that will be addressed by a marketing strategy (Boone and Kurtz, 2013). For example, the decision to address only teenagers among the people living in the target market is an example of targeting. As for positioning, the specific term is used for showing the effort of marketers ‘to place a product in the mind of consumers’ (Boone and Kurtz, 2013: 98). Different approaches are likely to be used by marketers to achieve positioning, as this activity can secure consumer loyalty (Boone and Kurtz, 2013).

In the case of Chanel, STP could be achieved by using various approaches. For example, in regard to the particular brand market segmentation could be based on the views of consumers in regard to luxury products. This means that global market would be divided into parts based on the expected perceptions of consumers on luxury products; the evaluation of these perceptions could be based on luxury value as of its various dimensions (Figure 5, Appendices). The market segmentation for Coco Chanel could be also based, alternatively, on the frequency of use of luxury products (Ciornea, Pop and Bacila, 2012, Figure 6, Appendices). Targeting and positioning for the particular brand could be developed using similar criteria. More specifically, in regard to targeting the marketers of Coco Chanel should take into consideration the following fact: due to the high prices of its products the particular brand could not target all social groups, as could be developed using targeting. For example, teenagers would not be an appropriate target group for the brand’s products. As of positioning also there are certain issues that should be addressed: so far the brand has become synonym of quality; also, since its appearance in the market the brand has been among the top brands in its industry. Therefore, the best approach for positioning this brand would emphasise on ‘product’s class and on price/ quality’ (Boone and Kurtz, 2013: 298).

2.3.3 Brand illustration

When referring to brand illustration reference is made to the graphical elements used for presenting the brand to the public. For example, intensive colours could be used in a brand’s logo for attracting the attention of consumers (Shimp and Andrews, 2013). In addition, symbols that denote a particular characteristic of a brand could be employed for making the brand more attractive to the public (Kumar, 2009). In order for a brand’s illustration to be successful it should not follow common patterns, especially those related to the industry involved (Kumar, 2009). In any case, the logo of the brand has not necessarily to reflect the role of the brand in the industry but it needs to offer a view on the brand’s culture, as this culture would show to the public the values and ethics on which the creation of the brand has been based. The logo of Coco Channel is based entirely on the name of its creator. The design and the elements of the specific logo aim to show the close relationship between the brand and its creator’s values; simplicity is also another issue highlighted through the logo of the above brand (Figure 1, Appendices). From this point of view, it could be supported that the brand illustration used in the case of Coco Channel can be characterized as quite successful, promoting simplicity and showing the critical role of the brand’s creator in brand’s success.

2.3.4 Detail evaluation, critical perspective – SWOT analysis

As with most business strategies the effectiveness of a firm’s branding decisions is usually decided after checking the characteristics of the brand involved; the performance of the brand in its market has also to be taken into consideration for deciding whether a brand has been successful or not (Davis, 2010). In the case of Coco Chanel the SWOT framework could be used for evaluating the brand’s performance. The Strengths of the particular brand are mostly related to its brand name and its relationship to quality (Carr, 2012). In fact, the specific brand has managed to establish a unique culture, a culture based on ‘the spirit of its creator’ (Kapferer, 2008: 252). In the context of this culture, high quality in clothing would be considered not as an exceptional condition but rather as part of daily life (Kapferer, 2008). The high expansion of the brand in the global market, as compared to other luxury brands, is another important strength of the brand (Carr, 2012). However, the brand has an important Weakness: the price of its product is quite high, not allowing a high percentage of consumers to buy the brand’s products (Carr, 2012). On the other hand, the particular brand meets all the requirements of a luxury brand (Figure 7, Figure 8, Appendices). This means that the specific brand has important Opportunities for future growth. Still, there is the problem of continuous recession. Economic turbulences in the global market could result to the limitation of profitability of luxury brands, a fact that would be a severe Threat for the particular brand (JWT, 2009).

2.4 Brand value

The achievement of profit, at a pre-specified level, is the key target of a brand, at least for brands used in businesses (Larson, 2012). In this context, a business can significantly enhance its value using one or more brands (Larson, 2012). When having to estimate the value of the brand several issues can appear: the exact profit achieved by using a brand cannot be measured since the gain from employing a brand can result either in the short term or the long term. Also, this gain may not be always monetary; the improvement of a firm’s image in the market is an example (Davis, 2010). Therefore, for measuring the value of Coco Chanel, as a brand, a mixed model would be employed: the valuation framework used by ‘BrandFinance, an organisation based in UK’ (Davis, 2010: 44). The particular framework is based on the following method: a firm estimates the level of the sales it should achieve in the future, for securing profit; then ‘a royalty rate is set for achieving the above target’ (Davis, 2010: 44). This royalty rate can be used for estimating the current value of the brand, which is the actual brand value (Davis, 2010). The measurement of the brand value using the BrandFinance framework is made clear through the diagram in Figure 9 (Appendices).

2.5 Importance of Coco Channel for the industry

Since its introduction, the specific brand has achieved the following target: it has made luxury products more attractive to consumers. More specifically, in the 1920s, when the brand first appeared, women had to face the severe consequences of the World War I; widows were increased and the interest for high quality clothing was quite low (Siddiqui, 2014). The appearance in the market of the products of the particular brand, such as the ‘short black dress and the perfume Channel No.5’ (Siddiqui, 2014), introduced a new era for the relationship between consumers and the fashion industry. Since then, fashion products and luxury products have become quite attractive as this fact has been reflected to the radical expansion of luxury brands worldwide (Figure 2, Appendices). In addition, the particular brand managed to cover the gap between fashion and the other industries. Indeed, up to the appearance of the brand’s products in the market the hierarchy of importance as of the industrial activities worldwide had a standard format: manufacturing and transport industries were mostly valued, as of their potential to cover people’s needs (Kapferer, 2008). Since the introduction of the brand’s products in the market the perspectives for growth in regard to fashion and luxury products were made clear. Entrepreneurs worldwide were initiated to invest in the particular sectors, a fact that enhanced competition and kept quality standards high (Kapferer, 2008).

3.0 Conclusion

The performance of Coco Chanel as a brand can be characterised as high. In fact, as proved through the analysis made above the particular brand is one of the most powerful in the global fashion industry. The position of the brand in the luxury sector is also significant, an achievement that denotes the brand’s potentials to achieve further growth. The establishment of a unique culture has been proved to be the approach through which the particular brand secured its success. Indeed, the creator of the brand, Coco Chanel, managed to convince the women in her era that style and quality should be parts of their life style. At the same time, through the particular brand the independency of style from complex forms was achieved: instead of emphasising on heavy and multi-coloured clothing Coco Chanel preferred to use simple lines and just two colours: white and black. This approach made the brand Coco Chanel to distinguish in consumers’ minds. A similar approach was followed in regard to the other products of the brand: simplicity and innovation have been the key elements of the brand’s products up today. In this context, the success of the brand as revealed through the examination of all its aspects could be considered as expected. In the future, further growth could be achieved on the basis that brand’s culture would remain at the centre of the brand’s strategies.

 

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