14 Pages
3449 Words
Introduction Of Luxury Brand Management & Storytelling
Luxury can be described as the great comfort that is received at great expense. Luxury can be of innumerable types and is usually materialised through items and products. The study here will outline a luxury brand named Chanel which is one of the most relevant and famous luxury brands in the world. The company is famous for dealing in the latest unisex fashions, apparel, eyewear and exclusive fragrance selections. It has been found that the company is also dealing with shoes as their latest addition to the industry. However, the market or the industry of luxury brands has received adverse impacts during and after the period of pandemic of COVID-19. Like every other industry, the luxury industry too faced difficulties in the beginning and faced financial losses. However, the industry was among a few of them who recovered quickly and its sales rose high once more. The industry, however, drastically transformed forever, as it comprehensively shifted its services to online portals. The major clients of the luxury brands and industry, in general, are usually Gen Z, Millennials and the financially acclaimed.
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The Selection of a Brand
In the retail industry, Chanel is one of the enterprises that offer beauty and fragrance products to clients and customers. The company has also implemented boutiques in different cities including Paris, New York, London, and Tokyo. The company also participates in Fashion Week in Paris to showcase its products. The brand has popularity and attention through offering luxury and sophisticated products to customers. The company has an employee strength of 20,000 with a net revenue of $ 11 billion. According to the demographics of employees, the company has 71.2% female employees and 47% ethnic minorities. Even though CHANEL personnel are diverse in other areas, the company's political diversity is absent. The Democratic Party is represented by 82.0 per cent of the company's workforce, which is much more than the average for similar organizations (Working At CHANEL: Employee Reviews and Culture, 2020). The workplace is otherwise varied, yet the majority of its members are members of the Democratic Party. The employees seem to like working in this environment. The average length of employment at CHANEL is 4.3 years, making it one of the most successful companies in terms of employee retention. At CHANEL, the average annual salary for employees is 32,963 dollars (Working At CHANEL: Employee Reviews and Culture, 2020). In contrast, some of its most lucrative rivals, such as TOM FORD, pay $44,934, while Saks Fifth Avenue pays $37,866, and Bare Minerals pays $37,506, respectively.
The Analysis Process
The haute couture collections that Chanel creates often include designs and features that are innovative and reminiscent of dreams. Chanel's creative directors and designers infuse their collections with aesthetic influences, unique materials, and new designs. Chanel is a luxury fashion house. They can investigate fantastical topics, use surrealist aspects, and design garments that defy conventional expectations of what constitutes acceptable fashion.
When it comes to the creation of new items and the expansion of existing product lines, Chanel uses business logic. To discover potential areas for expansion, the firm analyses current market conditions, customer preferences, and the nature of the competition. By doing this study, Chanel can assess whether goods have the potential to be commercially successful and are consistent with its brand image. In the case of the launch of new handbag designs, perfumes, or beauty goods, for instance, this would include determining the market attractiveness of the items, as well as pricing strategies, manufacturing costs, and the possible profitability of the venture.
Chanel demonstrates its dedication to social responsibility by encouraging the use of fair labour practices, providing for the health and well-being of its workers, and promoting diversity and inclusion among its employees. The organization abides by all international labour regulations and collaborates with its vendors to guarantee that its employees are treated ethically (Bruce, 2021). Additionally, Chanel makes investments in the instruction and development of craftsmen and workers, with the goals of conserving traditional handicraft skills and assisting the neighbourhoods in which it operates.
The Environment
Internal Environment
SWOT analysis
SWOT analysis is a tried-and-true management paradigm that brands like Chanel can use to measure how they stack up against the competition.
Fig 1: SWOT analysis
Source: (Shaw, 2017)
| Strengths |
The company's success and the things that contribute to that success are defined by its strengths. Here are a few of Chanel's many admirable traits.
- Effective use of social media platforms - When it comes to Chanel's social media, the brand takes centre stage. There are more than 80 million of its social media fans. By providing its followers with compelling and innovative material, it has become the most popular fashion brand on social media. Check out Ideas Social .
- Top-Ranked Product - Everyone is familiar with the name "Chanel" since it is such a recognizable brand. The brand is now worth $7.2 billion, placing it at No. 80 on the list of the world's most valuable brands (Xaif, 2022).
- Manufacturing Excellence - This fashion icon consistently provides high-calibre products. It specializes in making high-end goods and never settles for used or cheap materials.
- Customer dedication – Over the years, Chanel has built trust with its clientele, which has allowed the company to expand and gain new devotees and it managed to win over their allegiance (Solikhah, 2022).
- Credible Brand Reputation - Over more than a century in business, Chanel has established a solid reputation as a leading fashion house, built a dedicated fan following, and become one of the world's most recognizable brands.
- Style - It's well-known for producing stylish, comfortable clothing. The majority of their collection consists of classic, enduring designs.
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| Weaknesses |
The progress of Chanel is hampered by its weaknesses. Here are the channel's flaws that require fixing if they want to keep its current standing in the market:
- Price considerations - It seems that Chanel's high prices are also a point of criticism. When compared to its competitors, its items are the most expensive on the market (Yao, 2022).
- Similar Items on the Market - Practically all of the rivals offer fundamentally the same products and services for around the same price range.
- Virtual Mapping - Hermès ranks highest in the mind maps when it comes to exclusivity, the brand's major priority.
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| ????rtunities |
Opportunities are the elements that contribute to a company's growth. The market often has such elements. Chanel has to be prepared to seize such chances and make the most of them. Here are a few examples of game-changing possibilities for Channel:
- Previously untapped markets and niches - Chanel may anticipate other mergers and acquisitions that will allow it to expand into lower-price categories while maintaining its premium market presence.
- R&D expenditures and innovation - New product development may now commence at ch?n?l. It's generally regarded as a brand that appeals to the youth market. If they investigate what the demographic wants and then provide those goods and services, they may be able to affect change.
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| Threats |
- Counterfeits – The counterfeit market is growing rapidly, which is bad for the company's security and image. Although consumers know that counterfeit goods aren't as good as the real thing, they nonetheless often buy them due to their cheap cost (Pereira, 2021).
- fierce competition There might be fierce rivalry in this industry. Their primary competitors are LOUIS VUITTON, GUCCI, VERA CUE, H & M, and HERMS (Xaif, 2022). Because of the niche nature of this industry, there is little room for growth.
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External Environment
PESTLE analysis
The PESTLE analysis is a method for assessing the potential effects of environmental variables on an enterprise.
Figure 2: PESTLE framework
Source: (Gandhi, 2020)
The political, economic, sociocultural, technological, legal, and environmental spheres are the focus of this analysis. Let's take a closer look at how each of these elements affects Chanel:
| Political |
As a worldwide luxury label, Chanel is affected by political developments both at home and abroad. Government stability, trade rules, taxation policies, and political stability are examples of these. Political upheavals, such as changes in government policy or rules about foreign commerce, might have an impact on Chanel's operations (Patel, 2020). |
| Economic |
The economic climate has a significant impact on Chanel's capacity to run a profitable company. The demand for Chanel's luxury goods may be affected by economic growth, inflation rates, currency rates, consumer buying power, and the general state of the economies in which Chanel operates or sells its products (Sobel, 2021). Retail sales for Chanel might take a hit if the economy experiences a downturn. |
| Social |
Societal and cultural factors have a significant impact on Chanel's business performance. The demand for Chanel goods may be influenced by factors like consumers' views and lifestyle choices, current fashion trends, population characteristics, and societal standards. The company's continued success in the dynamic fashion sector is predicated on its ability to identify and respond to shifting customer preferences (O'Toole, 2022). |
| Technological |
Technological Factors Both Chanel and the High Fashion Industry as a Whole Have Been Affected by Recent Technological Developments and Innovations. As e-commerce, social media, and digital marketing continue to grow in popularity, Chanel must adapt to the preferences of its customers. Chanel's supply chain management and manufacturing processes rely on technology to maximize productivity and quality (Pretorius, 2022). |
| Legal |
The legal environment in which Chanel works is intricate on both a national and international scale. Intellectual property rights, labour rules, consumer protection regulations, advertising standards, and environmental restrictions are just a few of the many facets that fall under the umbrella of "legal factors." Chanel must follow several laws and regulations to safeguard its image, treat its employees fairly, and avoid any negative publicity. |
| Environmental |
Chanel recognizes the importance of environmental sustainability and ethical practices in the fashion business. Climate change, carbon footprint, waste management, depletion of resources, and sustainable practices are all examples of environmental considerations. Chanel has made efforts to improve the environment by using renewable resources, decreasing their carbon footprint, and embracing more moral manufacturing processes. |
Because of the importance of understanding external factors and adapting strategy appropriately, Chanel and other comparable organizations often do PESTLE investigations.
The Omnichannel Approach and Storytelling
Omnichannel is a process by which customer satisfaction and generation of integrated customer experience are done. It is a strategic tool that businesses use to underline the success of the business in the competitive business environment. It is known as the “next-level channel integration” as it impacts organisational performances (Hajdas, Radomska, & Silva, 2022). Omnichannel has been extremely beneficial for luxury brands including Chanel as it determines extensive customer experience, integrated customer satisfaction, a brand experience to the customers, and a seamless engagement on behalf of the company. This has been found in all the luxury brands including Chanel and this feature alone makes the luxury industry one of the most monopolistic markets. It has been found that omnichannel generates greater customer satisfaction due to the seamless and constant engagement of the companies and the consistent brand experiences (Salsano, 2020). Another essential issue that can be described here in the omnichannel section is the that tech revolution has opened new horizons for the development of luxury brands including Chanel to experiment and understand. The tech revolution or the process of digitalisation has overwhelmingly emerged in the world of the luxury industry since the outbreak of the pandemic. Technological advancements help in the development of omnichannel in various ways, which include enhancing customer engagement, online store experience and shopping options to the customers, and a dominant presence in the market via media channels. Chanel has been using digital media like Instagram to target their clients like Gen Z (Alonso, 2018). This company also takes up the usage of celebrities and makes them promote the items. However, the integration of brands' various touchpoints is only possible with omnichannel that has been digitalised (Karadag, & Erdogmus, 2020).
Chanel is a pioneer in the fashion and luxury brand industry. It is the French fashion house, that has its inception dating back to the inspirations from the French Revolution. The propounder, Coco Chanel brought no less than a revolution in the fashion industry as her products and items were redefining femininity and feminine fashion (chanel.com, 2022). The House reflected and still does with world-class fashion and luxury items. Apart from its extremely popular clothing sections, the company is also extremely well-known for its internationally acclaimed perfumes. The revolutionary Chanel No. 5 is an instance of such world-class perfume as it emanates luxury and workmanship at the same time (chanel.com, 2022). The brand depicts its all-inclusive theories and undertakings including its role in the issues of women's empowerment and redefining femininity. Chanel was famous and is still extensively relevant in the global industry of fashion and luxury items.
Strategy
This section of the study will emphasise the various strategic implication that has been taken up by this luxury brand of Chanel. Chanel has been using digital strategy as a part of their marketing or business strategy. It has been mentioned that the company here has been using social media platforms as a way to communicate, connect and engage their customers, especially Gen Z customers (Alonso, 2018). Instagram has been in the use of Chanel with a tactical analysis and they recently used the digital application to start a campaign called we love coco (Alonso, 2018). In this campaign, Chanel users were requested to post pictures of any luxury brand items that they are using. This increased the brand's reach and made it more accepting of social media influencers. Currently, Chanel is known as one of the most influential luxury brands in social media alongside Versace, Prada and Gucci (ibsproduces.com, 2019). This has been formulated by the usage of a strategy called the Celebrity strategy. Chanel has been using celebrities, social media influencers and lifestyle /fashion influencers to promote and advertise their old and new collection of different items. This is immensely attracting the Gen Z population. Chanel also uses a luxury strategy that enhances the brand influence and awareness in the industry by making itself more competitive than others. This strategy is comprehensive along with the other two mentioned above, as the luxury strategy targets the younger generation and advocates for more innovative and creative products (Fang, & Zhang, 2020).
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Conclusion
The study here has followed several sections of the required materials and information about the luxury brand Chanel. The luxury brand has been described in detail alongside certain analytical discussions. The environment of the brand has taken place here in greater detail including theoretical frameworks of SWOT and PESTLE. Along with that, the study here has underlined the factors of omnichannel and its relevance in the luxury industry. The strategic development of the brand of Chanel has also been analysed here. The study thus takes place to understand the landscape of luxury brand management against the light of Chanel.
References
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