Swot Analysis On Chanel Marketing And Advertising

SWOT Analysis on Chanel Marketing and Advertising

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SWOT Analysis on Chanel Marketing and Advertising

Chanel S.A. is one of the top fashion houses that specializes in ready to wear clothes and haute couture, fashion accessories and luxury brands. Chanel S.A. is well known for using jersey knit fabrics to create garments that were breathable, comfortable, and affordable for consumers. Chanel revolutionized high fashion and everyday fashion by replacing corsets and bodices with materials and fabrics that were flattering to a women’s figure. This is one of the reasons Chanel has been covering the market around for over 100 years because they are creating pieces that allow them to stand out from their competitors. Chanel is a very established brand and its estimated revenue report was $11.12 billion for 2018 and sales have increased by almost 11 percent from 2017. On the Forbes list, they are ranked number 87 while two years ago they were ranked number 82 out of the top 100 companies. Chanel has strong marketing and advertising strategy. They use a mixture of both demographic and psychographic segmentation strategies to attract their target market. They also use selective targeting strategies to promote the product to their selected groups. For promoting and advertising they use billboards, fashion shows, social media brand ambassadors to market and advertise their brand. Chanel also has a wide range of products at its disposal. Their top-selling perfume is Chanel No.5. Their diverse range of products include makeup, clothing, watches, and skincare products.

SWOT analysis of Chanel will help in identifying the internal factors in relation with competitiveness of market. Through this analysis, Chanel’s strengths, weaknesses, opportunities and threats will be identified. After these have been found, priority lists will be determined that will explain how strengths can be used to gain competitive advantage and how the company’s weaknesses can be mitigated. It will also be determined that how well the company is able to compete in the fashion industry considering the analysis.

SWOT Analysis: Chanel

The SWOT analysis for Chanel is as follows:

Strengths

The biggest strength of the company is its brand name. This name is known in the whole world. The brand also has historical significance that has added more to its fame. Coco Chanel, was known for her dresses and modern designs in the 20th century. She, herself is a name that is famous in the world due to which her designs were recognized in the world.

Almost all the products of the brand are very famous but Chanel No. 5 is one of the most iconic perfumes of all times. This perfume is considered as the most famous perfume. Even in the time when Coco Chanel herself introduced the perfume, the scent became famous. CITATION BBC11 \l 1033 (BBC, 2011) The advertisements that the company creates for this perfume feature famous celebrities such as Brad Pitt, Lily-Rose Depp, Beyoncé, Nicole Kidman and even historic celebrities such as Marilyn Monroe, Ali McGraw, etc.

The brand portfolio of the company is very diverse. Therefore, it is easy for the company to target diverse groups of consumers. As it is a luxury brand, many celebrities have been seen wearing and using the brand’s products. These celebrities have worn the dresses to awards shows, public events, etc. These celebrities include Beyoncé, Kiera Knightly, Blake Lively, Kristen Stewart, etc.

As Chanel is a global luxury brand, it enjoys many benefits that a brand on such a scale enjoys. The company has a workforce that is diverse and talented. The company also believes in training and development of employees to ensure that the best workforce is employed. This belief of the company has resulted in highest quality products.

Weaknesses

Market growth is one of the weaknesses of this brand. The industry and segment that the brand targets is already saturated as there are many established brands in the industry. Market growth is difficult to achieve because there are not much chances for expansion of the brand.

Although brand is very popular not only in the modern times, but since it was introduced in the early 20th century, there is still a lot of work that company has to do in order to reach the position of market leader in the industry.

The price range of the brand is very high therefore there is a small class of people who can afford the products. Middle class that constitutes most of the population cannot buy the products due to the high prices.

Opportunities

The biggest opportunity that any brand has in the modern world is that it can make use of E-commerce to make sure that most of the people can access the brand. There are many brands that are taking advantage of this due to the benefits that e-commerce e provides. Chanel can make use of this trend to ensure increased sales and revenue. CITATION Eco18 \l 1033 (Econsultancy, 2018)

There are many markets that are emerging due to different factors such as changing technology, changing consumer tastes, etc. Chanel can focus on targeting these markets in order to diversify its market and segment.

As being an established global brand has increased the revenue and developed stable cash flows for the company, this revenue can easily be used to develop even more product lines. These product lines can help the brand to target diverse groups of consumers on the basis of different factors.

The brand can target millennial market as they are the largest market in this age and due to their changing shopping patterns, they can prove to be valuable for the brands. Many brands have been targeting them as they have realized that they can help the company to be successful. CITATION CNB18 \l 1033 (CNBC, 2018) Chanel can also move its focus to this market in order to increase its sales.

Advertisements can be done using online platforms that are accessible to every generation. Millennial market has been seen to be very active on social media, especially Instagram and Facebook. Similarly, in this age older generations also use Facebook a lot. In this age, Chanel can make use of these platform for its marketing and advertisements.

Threats

The biggest threat that the brand faces in that it competes with a number of established competitors in the market. These competitors include Gucci, which is considered a market leader, Louis Vuitton is also one of the most valuable brands, and Balenciaga is also a well-known brand. There are many other brands as well such as Dior, Tiffany, Prada, etc.

There are many smalls scale industries that copy the designs of luxury brands and then sell them to the people. This affects the originality of designs exclusively by the brand. Due to companies copying the designs, sales of the company are also affected. This happens because these companies sell the copied designs at lower price.

Priority Lists

Priority Strengths and Weaknesses

Score

Strategies

Importance

Rating

Score

Strengths to Exploit

Strong Brand Name

0.23

5

1.15

The brand name and historical significance of the brand is one of the reasons of its fame. The brand name can be exploited to make sure that the benefits of being a famous brand can be achieved.

Famous products such as Chanel No. 5

0.1

4

0.4

The products of the brand are very famous and especially Chanel No. 5 is one of the products that are used by almost every woman in the brand’s target market.

Diverse Brand Portfolio

0.09

4

0.36

The diverse range of the brand’s product allows it to attract and cater many consumer groups. More products ranges can be added in order to capture even more markets.

Trained Global Workforce

0.17

3

0.51

As the company has access to global market, it is able to use workforce with diverse expertise and talents. The company also believes in training and developing its workforce.

Weaknesses to Mitigate

Low Market Growth

0.21

5

1.05

This is the top priority because as a luxury brand, it is a part of industry that is already very saturated. This saturation and maturity restricts the growth of company. This can be overcome by moving into different emerging markets.

Not a Market Leader

0.12

4

0.48

This is the 2nd priority item for Chanel because being a market leader means that the brand is successful. Despite being historically significant, the brand hasn’t gained the position of market leader. The brand can achieve this by making strategies that are targeted towards the market in this present age.

Not Affordable to Many Consumer Markets

0.08

2

0.16

As it is a luxury brand and targets the markets such as celebrities and upper class, it is bound to charge prices. However, this results in products not being accessible by majority of the people.

Competitive Readiness: Chanel

The company has a number of well-established and strong competitors. In such a competitive market, Chanel is trying to make strategies that will help in the prolonged success of the company. With the age of technology, businesses have many opportunities that they can avail.

Chanel has an option to exploit its strength that is its brand name. Despite being a luxury brand, it still has demand in the market due to the quality it provides. Chanel’s products are very famous among target market of the brand therefore it can be said that among the crushing competition, the brand still has distinction when it comes to its brand. One of the weaknesses that the company faces due to competition is that the industry has been so saturated that there is no chance of market growth for Chanel. The company has an opportunity to outgrow its competitors by using its revenue to enter more markets that will also mitigate the weakness of market growth. The biggest threat that the company faces in terms of competition is that although the company is known as one of the most valuable companies, well-established competitors such as Gucci, Prada, Balenciaga, etc. still pose threat as they are operating in the same industry.

Bibliography

BIBLIOGRAPHY BBC. (2011, May 29). Chanel No 5: The story behind the classic perfume. Retrieved from BBC: https://www.bbc.com/news/world-13565155

CNBC. (2018, October 4). The luxury sector is growing faster than many others and Gucci is in the lead. Retrieved from CNBC: https://www.cnbc.com/2018/10/04/the-luxury-sector-is-growing-faster-than-many-others-and-gucci-leads.html

Econsultancy. (2018, March 7). Four examples of ‘hard luxury’ brands embracing ecommerce. Retrieved from Econsultancy: https://econsultancy.com/four-examples-of-hard-luxury-brands-embracing-ecommerce/