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ETEMSS 2024
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(2024)
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Luxury Brand Marketing Strategy - Taking Chanel as an
Example
Miao Xu
*
Rosedale Global High School, Ontario, #800, 7030 Woodbine Avenue, Markham, Ontario, Canada,
L3R 6G2, Canada
* Corresponding Author Email: xm@hznu-edu.cn
Abstract.
As consumers pursue quality and personalization, brand marketing strategies play a
decisive role in the development of enterprises. In today's fiercely competitive business environment,
it is particularly important to study marketing cases for the Chanel brand. However, there is currently
relatively little in-depth analysis of the specific strategies and effects of Chanel brand marketing, and
there is a research gap. This study will combine direct and indirect methods to deeply analyze
Chanel's marketing methods, including advertising, product positioning, channel selection, etc.
Through comparative research and case analysis, reveal the key factors for its success. Research
has found that Chanel has successfully shaped a high-end and elegant brand image through precise
market positioning, unique creative design, and multi-channel marketing strategies. Its unique brand
story and cultural connotations have also attracted many loyal fans. In short, the success of Chanel
brand marketing lies in its meticulous market positioning, innovative and diverse marketing strategies,
and deeply rooted brand culture. This comprehensive approach ensures that Chanel maintains its
position as a leading luxury brand in the global market while still being attractive to consumers. By
understanding and analyzing Chanel's marketing practices, companies can gain valuable insights
on how to effectively position and promote their own brands in today's fiercely competitive market.
Keywords:
Market, price, product, strategy, marketing.
1.
Introduction
In the context of globalization and rapid economic development, brand marketing has become the
key for enterprises to win market competitive advantages. Especially in the luxury goods industry,
major brands are investing a lot of resources in marketing strategies to compete for market share and
stand out. In the post-epidemic era, according to Bain and Company, the luxury goods market
contracted by 23% in 2020, with a global market value of around one trillion euros, approximately
the same as the luxury goods market in 2015 [1]. According to Deloitte’s Global Powers of Luxury
Goods 2021, Chanel is ranked sixth, with Chanel Limited’s market capitalization at US$10,108
million. Compared to 2018, before the epidemic era, Chanel Limited’s market capitalization fell by
approximately US$ 1 billion from US$11.12 billion. As a world-renowned luxury brand, Chanel's
unique marketing strategy has always been a focus of research in the industry. The importance of
brand marketing is not only reflected in shaping the corporate image and reputation but also directly
related to the survival and development of the enterprise. In the luxury goods industry, the importance
of brand marketing is particularly prominent. The luxury goods market is highly competitive, and
brand marketing is not only a means of conveying brand information but also an important way to
showcase brand strength and demonstrate brand status. Luxury brands need to showcase their unique
value and noble quality to consumers through carefully planned marketing strategies, to attract the
attention of high-end consumers. This study will deeply analyze the marketing case of the Chanel
brand, and comprehensively review its development process and current situation using literature
research and case analysis methods. The analysis of Chanel's brand positioning, product design,
communication strategies, and channel management will be emphasized to unveil the inherent logic
and external manifestations of its brand marketing. Regarding research methods, the sequential
approach of posing questions, analyzing issues, and resolving them will be adhered to. Initially, the
research questions and hypotheses will be clarified through a comprehensive literature review and
field investigation. Subsequently, techniques like case analysis and in-depth interviews will be
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employed to gather and analyze data. Ultimately, based on the research findings, targeted suggestions
and strategies will be formulated, serving as a reference for other brands. In essence, brand marketing
holds significant importance for business success, particularly in the highly competitive luxury goods
industry. As a representative of luxury brands, Chanel's successful marketing strategy and brand
culture have provided people with valuable experience. This study will delve into Chanel brand
marketing cases, reveal their successful strategies and logic, provide valuable references for other
brands, and promote innovation and development in brand marketing theory and practice.
2.
Chanel Introduction
Chanel is a French fashion house established and initiated by Gabrielle Chanel in 1910. The
primary intention for Gabrielle was to create a visionary allure for modern women through Chanel’s
products by allowing “a wardrobe freed from constraints and superfluity.” Chanel is renowned for its
timeless design, iconic suits, and small black dresses. In addition, Chanel specializes in women's
clothing, luxury goods, and accessories. Chanel replaced structured tight-fitting bras with more
practical clothing, completely changing haute couture and clothing. Unlike the pursuit of beauty
that binds women to achievement, haute couture creates more comfortable clothing for women to
showcase their freedom. Even today, women still love Chanel clothes very much which is now
worth $3 trillion and contributes 2% of the world's GDP [2].
2.1.
Chanel Financial Statement
According to from the financial results of Chanel, financial results for 2021 were driven by solid
demand from the local customer base for all product lines, highlighting the desirability of Chanel's
creations. Total revenues for 2021 were $15.6 billion, up 49.6% compared to 2020 and up 22.9% to
2019. Operating profit of $5,461 million, up 170.6% compared to 2020 and 57.5% compared to 2019.
a positive net cash balance at the end of 2021, reflecting Chanel's strong performance and financial
discipline and the free cash flow of $4,540 million in 2021 [3]. Chanel's huge finances are also, as
Philippe (2019), Chanel's Chief Financial Officer, said, "This financial statement shows that financial
position is very sound and can maintain position as a private, independent company for centuries to
come.", meaning that Chanel can still maintain its independent position in the fashion world under
the pressure of being annexed by Kering and LVMH [4].
3.
Analysis of Chanel’s Marketing Strategies
Chanel's luxury brand concept is built around elegance and timelessness. This brand concept
directly contributes to the brand marketing of Chanel's products [5].
3.1.
Product
Chanel items are the only ones a fashion house product with a consistent market share [6]. From
1910 to the present, Chanel has expanded its product portfolio with more varieties, such as ready to
wear, perfume, accessories, cosmetics, and many fields related to fashion and daily life. Among them,
Chanel N°5 perfume, as a classic of the brand, has won the favor of global consumers with its unique
fragrance and lasting fragrance. The bottle design of N°5 perfume is simple and elegant, which not
only reflects the elegant style of Chanel, but also highlights the unique personality of the brand.
Another classic product, the Chanel 2.55 black gold handbag, is an excellent choice for showcasing
women's elegant charm with its high-quality leather material, exquisite metal chains, and unique
double C logo. In the field of skin care, Camellia series skin care products are highly praised for their
excellent moisturizing and anti-aging effects, which can improve skin texture and enhance skin gloss.
Chanel has been committed to handmade sewing for a century, cultivating specialized luggage
craftsmen and clothing tailors with traditional craftsmanship. The handmade method with brand
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patents insists that each product has a certain processing time, and Chanel insists that only products
that have undergone the necessary processing time can ensure product quality.
3.2.
Price
All worldwide Chanel products' prices follow a premium pricing strategy since Chanel's pricing
has consistently met the fashion needs of upper-class aristocrats and satisfied the human appetite for
beautiful things [7]. In the luxury goods industry, Chanel has maintained relatively high product
prices due to its excellent quality and unique design philosophy. Taking the highly anticipated classic
flip bags and other classic styles as examples, these designs not only represent the essence of the
brand, but also the darling of the fashion industry. However, in recent years, with the rise in raw
material costs and the increase in brand value, the prices of these classic styles have also increased.
Some handbags even retail for over $10000, which undoubtedly further highlights Chanel's high-end
positioning. Chanel's ready-made clothing prices are also higher than other brands in the industry,
which brings both advantages and challenges for Chanel. From an advantageous perspective, higher
prices are often associated with higher quality and more unique designs, making Chanel bags a
symbol of status that can bring prestige and status to those who own them.
However, excessively high prices have also become a factor that hinders some people from
purchasing Chanel products. For some consumers, they may not be able to purchase these desired
bags due to budget constraints or insufficient purchasing power. This undoubtedly limits the market
expansion and potential consumer base of the Chanel brand. Therefore, Chanel needs to weigh the
pros and cons in its pricing strategy, maintaining the brand's high-end positioning and product
uniqueness, while also considering consumer purchasing power and market demand. Only by finding
this balance can Chanel maintain its leading position in the fierce market competition and achieve
sustainable development.
3.3.
Promotion
Chanel spent over a billion dollars in advertising and promotion during 2020-21 It cut the total
marketing budget by 23% from a $1.77 bill in mid-2019 to a $1.36 bill in mid-2020 to account for
the 18% discount in revenue reported during this period [8].
Despite cutting these budgets, Chanel remains committed to promoting its products through high-
end fashion magazines, targeting a mature customer base. Watches, perfume and cosmetics are
particularly popular advertising categories for Chanel because they bring considerable revenue to the
brand. It is worth noting that Chanel sells its products globally, but it only operates approximately
310 active boutiques worldwide. This limited retail presence, coupled with the limited number of
products released each year, creates a sense of exclusivity. Recently, Chanel introduced a quota
system that limits the number of products customers can purchase each year. Although this strategy
may reduce customer traffic and pose challenges for online shoppers, it enhances the brand's
exclusivity and perceived value [9]. By creating a sense of scarcity and providing a unique shopping
experience, Chanel has successfully raised the price of its products while maintaining strong demand.
This is evident in the sales of Chanel handbags, and even a significant price increase has not
dampened consumer enthusiasm. For example, last year, the price of Chanel's iconic flip handbag
increased several times within a year, but demand remained strong. Despite the challenges posed by
the pandemic and its distribution strategy, Chanel has managed to maintain its position as a leading
luxury brand. Its focus is on creating unique and exclusive brand experiences, coupled with its
strategic marketing efforts, enabling it to continue to thrive in the fiercely competitive luxury goods
market.
3.4.
Place
Chanel's distribution or location is limited to offline stores. During the coronavirus pandemic, all
physical stores were blocked and Chanel refused to open an online store. Chanel is an outstanding
brand with a century long history, with stores located in prime locations in major cities around the
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world, providing customers with an immersive shopping experience in each store. In China, Chanel
has opened 29 stores and is deeply loved by consumers. However, the sudden outbreak of the
epidemic forced these stores to temporarily close, and sales also experienced an unprecedented
decline. To address this challenge, the brand had to adjust its strategy and stabilize its annual sales by
increasing the price of individual products. But this decision also brought certain side effects, leading
to some customer loss. With the continuous development of the market, new marketing methods such
as new media have emerged like mushrooms after rain, bringing new challenges and opportunities to
brands. As a traditional luxury brand, if Chanel cannot keep up with the times and increase brand
exposure, it may soon be forgotten by the market and replaced by other brands. At present, the
interaction between Chanel and consumers is not close enough, relying too much on traditional offline
stores. In this era of informatization and digitization, brands need to build more comprehensive and
multifunctional communication channels, engage in frequent interaction and contact with consumers,
and enable brand information to be effectively disseminated through various channels. However, due
to the characteristics of the brand itself and the impact of external emergencies, Chanel is facing the
problem of traffic loss and weakened influence. To address this dilemma, brands need to seek new
strategies and methods, strengthen their connections with consumers, increase brand exposure, and
ensure that they maintain a leading position in the fierce market competition.
4.
Chanel's Strong Integration of Online and Offline
Chanel's strong integration of online and offline is one of its important marketing strategies. As a
high-end brand, Chanel's strengthening of online and offline integration is one of its important
marketing strategies in the digital age. With the risk of digital media, Chanel has also shifted its
attention to it, and Chanel's advertising is as simple and effective as under Gabrielle Bonheur Chanel;
at the same time, offline physical stores provide a realistic touch and try on experience, allowing
customers to personally experience the texture and comfort of the product. It is worth noting that the
traditional boutique is Chanel's best distribution outlet as it provides the rich customer experience
[10]. In addition, combined with AR or VR technology, Chanel can also provide consumers with an
immersive online shopping experience, allowing them to preview the product display and shopping
environment of offline physical stores online. In terms of marketing activities, Chanel can
synchronize online and offline, such as limited time discounts, new product releases, etc., and widely
spread through online platforms to attract more consumers to participate. Offline physical stores can
set up dedicated activity areas to hold themed parties, fashion shows, and other events, providing
consumers with a unique shopping experience, thereby enhancing their brand awareness and loyalty.
Finally, in terms of data sharing and operational optimization, Chanel can collect and analyze
consumer data, including purchase records, browsing behavior, etc., through the integration of online
and offline methods, to more accurately understand consumer needs and preferences. Based on these
data, Chanel can develop more precise marketing strategies, optimize product design and production
processes, and improve sales conversion rates and customer satisfaction. In summary, strengthening
Chanel's online and offline integration strategy requires starting from multiple aspects such as product
display and experience, customer service and interaction, marketing activities, and data sharing and
operational optimization. Through the implementation of these measures, Chanel can better meet the
needs of consumers, enhance brand value and influence, and maintain a leading position in the fierce
market competition.
5.
Conclusion
Firstly, from the research results, Chanel has successfully shaped a high-end and elegant brand
image in its product strategy with excellent creative design and quality control, attracting many loyal
fans. In terms of pricing strategy, Chanel maintains a high price point, effectively ensuring the brand's
sense of luxury and profit level. However, this has also led to some potential consumers being
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hindered by price barriers, limiting the brand's market expansion. In terms of channel strategy, Chanel
has expanded its brand influence through global layout and online expansion. In terms of promotional
strategies, Chanel is relatively conservative and has not fully utilized promotional methods to increase
sales and consumer stickiness. Based on the above research results, the Chanel brand has exposed
certain limitations in its marketing strategy while maintaining its high-end image. To further enhance
brand influence and market competitiveness, Chanel needs to consider adjusting its pricing strategy
moderately while maintaining product innovation and quality to meet a wider range of market
demands. In addition, Chanel needs to strengthen online and offline integration. Through the
implementation of these measures, Chanel can better meet consumer needs, enhance brand value and
influence, and maintain a leading position in fierce market competition. This study fills some gaps in
Chanel brand marketing strategy research and provides valuable references for relevant enterprises
and scholars. Meanwhile, the research results are beneficial for Chanel brand to better understand
market demand and competitive trends, optimize marketing strategies, and achieve sustainable
development. However, there are also certain shortcomings in this study, such as the limitations of
data samples and the singularity of research methods. Future research can further expand data sources
and research methods to provide a more comprehensive and in-depth analysis of the marketing
strategies of the Chanel brand.
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