InternationalMarketing: Chanel S. A
Almosteverybody in the contemporary world is affected in one way or anotherby product promotional activities such as advertising and personalselling carried out by organizations producing and/or selling suchproducts. Studies have shown that the aptitude of public, as well asprivate businesses efficiently and effectively communicating withtheir respective clients about their products and services is vitalfor their survival that is it increases product sales and customerloyalty that in turn provide revenue and support required forcontinued operations. As a result, business organizations arecurrently engaged in marketing/promotional activities of one form ofthe other to enhance their respective competitive advantage overtheir competitors for increased sales, market share, customer loyaltyand success at large. This paper investigates product promotionactivities of Chanel S. A. Company to provide knowledge forunderstanding and mastering advertisement and marketing concepts. Itcovers aspects such as marketing and marketing process, marketingstrategy and marketing mix, advertising environment and business ofadvertising. It winds up by presenting summaries and conclusions ofall the aspects discussed in the main body.
Inthe contemporary world, every business organization, whether publicor private, is engaged in one form or the other of marketing andproduct promotion that influences every consumer on the market place(O’Ginnet al. 12).This engagement is backed up by studies that have indicated thatmarketing and product promotional activities are critical for thesuccess and survival of business organizations in this turbulent,dynamic economic environment. For instance, Belchand Belch(3) assert that communication enables organizations createrelationships and brace up their effectiveness that leads toprosperity and growth. Communication with the customers createsproduct awareness to the customers and informs them of the product’sbenefits hence driving the sales up, and interaction with thecustomers through communication help the organization identifycustomers’ needs to target when designing and producing theproducts and/or services. This paper investigates the activities andprocesses accomplished by Chanel S. A. Company under marketing andadvertising in order to foster the understanding and mastery ofadvertising and marketing concepts.
Littleliterature is available as to the conclusive description of Chanel S.A. Company simply because most of the publications about the companydwell more on the company’s brand rather than the company itself.The privately owned company does not report its performance publicly,appear in industry conferences or publicly pronounce its strategiesno single person outside the company knows the precise informationabout the company. Only few common pieces of information are knownthat the company deals with luxury products, operates independentlyas well as in collaboration with other related companies and isprivately owned by the Wetheimer family. Moreover, it is more of aconsumer market rather than a business market company. It hasoperations worldwide.
ChanelSA is among the legendary names in perfumes, and the company hastransformed it high-status brand into a global number-one empire notonly involving perfumes but also other products such as leathergoods, handbags, jewelry and women’s fashion (Nagasawa 49). Thecompany was formed back in 1870 during the era of Bourjois, a Frenchtheatrical makeup company from which Ernest Wertheimer purchased someinterest after his relocation from Alsace to Paris. After thepurchase of interest, the company recorded rapid growth and commencedmanufacturing and supplying skin creams from its Rochester basedplant to the cosmetic industry giant Helena Rubenstein in the earlyparts of the 1920s decade that made it the largest fragrance andcosmetic producer in France. Although the Wertheimer family was incontrol of Chanel’s finances since the company’s inception, itscreative vision and impetus was propelled by Coco Chanel, adepartment introduced to Ernest’s son, Pierre, by the founder ofLafayette- Theophile Bader. After the introduction, for financialassistance, Ernest’s son established Parfums Chanel in which he,Bader and Coco Chanel constituted 70%, 20% and 10% ownership.
ParfumsChanel flourished during 1920s and 1930s adding a new fragrance, Soirde Paris, to its main, famous fragrance, Chanel No. 5 Perfume whileCoco Chanel managed a thriving separate company- fashion studio- inParis though selling the cloths under the name Parfums Chanel.Although the two separate entities were blossoming, the personalrelationship between Pierre and Coco Chanel was degenerating andeventually contributed to their separation. Coco Chanel engagedattorney’s services to have an increased share in Parfums Chanelbut the Wertheimer’s family successfully repealed the move on thegrounds of funding the establishment of Parfums Chanel and thefashion studio operated Coco collapsed on Nazis’ invasion inFrance. As a result of the war, the Wertheimer family fled France toUnited States of America and continued managing Parfums Chanelthrough a proxy. After the war, Coco Chanel surrendered her sharesfor a monthly stipend in return, and after her death in 1971, theWertheimer family assumed total ownership of Parfums Chanel togetherwith Coco Chanels’ rights.
Past and Present leadership
Pierre’sson, Jacques, assumed leadership of the Chanel from his father butwas not fully committed to it because of his involvement inmanagement of the family’s horse breeding and racing stableoperations. In 1975 Jacques was succeeded by his own 25-year old sonby the name Alain a succession the press claimed to be marred byfamily feuds and animosity despite the Chanel’s managementupholding that it was peaceful and friendly. Currently, the companyhas different management structure from the past years to necessitateits running because it has grown into a conglomerate. Such managementcomprises the president, global CEO and managers. This managementteam operates from headquarters situated in Neuilly, Paris, Franceand another strategic headquarters located in New York (Nagasawa 51).
Thepresident who is in charge of the Chanel S. A. operational company isbased in Paris headquarters whereas the global CEO in charge of theChanel Group (conglomerate) is based in New York. The three businessdivisions namely watches/jewelry, fashion and cosmetics/perfumes(Chanel,n.p.) are headed by division managers whereas each region across theglobe namely North America, Europe, Asia and Oceania andCentral/South America is controlled by regional head. The board ofdirectors is made up of the global CEO, the president, the divisionalmanagers and the regional heads. At the helm of the management sitsthe Wertheimer family with Alain Wertheimer as the chairman (Nagasawa51-52).
Marketingis usually considered by the activities making up the marketingprocess hence the likelihood of different definitions being presentedfor the concept. For instance, some group might think of it primarilyinvolving sales, other groups might think of it involving productplanning and pricing or retailing activities and advertising. Inessence, marketing involves diverse activities usually depending onthe objectives and activities of the business organization carryingit out. Hence, a suitable definition integrates all the possibleactivities that fall under the marketing function, for instance theone presented by the American Marketing Association. Marketing isdescribed as the process of developing and implementing theconception, pricing, distribution, and promotion ideas of products-goods and services- to construct exchanges that fulfillorganizational as well as individual objectives Belch and Belch 7).
Fromthe above definition, it is clear that marketing encompasses twoelements namely exchange and relationship building by integratingspecific factors (promotion, price, place and product) together. Forexchange to happen, there ought to be at least two parties eachwilling and able to give another something in return for the itemexchanged and a means to converse with each other. Throughcommunication enables the business organization to inform thecustomers of its product/service and convince them that theproduct/service has the capacity to gratify their wants/needs, on theother hand, communication facilitates the customers to inform thebusiness organizations their need/wants. More so, the exchange oughtto be not in return of tangible product it can involve intangiblebenefits. For instance, donors receive psychological and socialsatisfaction by responding to the marketing done by not-for-profitorganizations.
Underrelationship building element, the involved parties, especially thebusiness, strives to craft, sustain and improve long-termrelationships because they are these relationships that lead tomutual benefits between the involved parties. Chanel values hercustomers as indicated by the dedicated customer service departmentthat deals with purchase decisions and behavior of the customersthis department closely follows personal customer requests to ensurethat the needs of such customers are fully satisfied. This isimportant because customers have different individual needs tosatisfy. The third element, integration of specific factors, definesthe nature and means of interaction between the exchanging parties.Such factors ensure that the terms and conditions of interaction arefavorable to the parties- place (distribution), cost (price),satisfaction (product) and information (promotion).
Themarketing process involves four steps namely discovery, strategy,implementation and review. In the first step, discovery, the businessgathers information about the market to establish the metrics forproceeding with the process. Strategy step involve developing theblueprint of the process. Implementation involves putting theactivities identified in the blueprint into action. Review entailsevaluation of the process and taking appropriate measures.
Marketing strategy and marketing mix
Marketingstrategy refers to the model that permits a business to utilize itslimited resources on finest prospects to increase its sales thusgaining a competitive advantage over its competitors. This modelhelps in understanding competitors, complementors and market growthand size. Marketing mix, on the other hand, refers to the modelaligning the business’ marketing activities to its strategies. Themarketing mix comprises the infamous 4 Ps (Zineldinand Sarah 230).These Ps include price, product, promotion and place.
Theprice component ensures that the cost of the product falls within themarket’s (customers’) affordability bracket without leading thebusiness into losses that is the product does not cost beyond thecustomers’ financial capacity and that the business still makesprofit. The product component ensures that the good/service providedby the business fulfills the customers’ wants or needs whileremaining cost effective to the business. Chanel has a creative teamheaded by Karl Lagerfeld that ensures the company utilizes the latesttechnology to produce products that precisely match and satisfycustomers’ needs. As part of producing products meeting customers’needs the company has embraced industrial revolution introducingstate of art production methods to replace the old-fashionedfabrication techniques. With the production being monitored up to thesmallest detail, the creative team ensures that each new fashionseason starts with new products on the market.
Thepromotion element serves to direct and ensure awareness of thegood/service provided by the business to the customers informing thecustomers of the products benefits and capacity to satisfy needsand/or wants in the most accessible ways. Chanel boasts of a strongadvertising campaign in which it reaches her customers to make themaware of the company’s products- billboards, magazines, fashionshows, YouTube and television adverts. For instance, the companyinvites high-profile bloggers, fashionists and models to arouseinterest in and attract current as well as potential customers forattendance. The place element helps in availing the product at theright location at the correct time using the most appropriate meansfor the customers to have it as and when the need arises. Chanel SAoperates its own stores across the globe as well as collaboratingwith other retail stores such as Harrod’s, Bloomingdales and Macy’sto ensure that her products are at strategic places near hercustomers.
Market place and consumers
Amarketplace refers to a milieu of factors enabling interaction ofsellers and buyers and thus aiding the exchange of goods and/orservices between them. Consumers refer to the final users of thegoods and/or services provided by the businesses. Such final usersmay be individuals, households or other organizations.
Marketinginformation represents the results gained from marketing researchthat help in designing future product development and marketingactivities. Such results are obtained through the marketinginformation system that collects all relevant information concerningthe market (Blattberg,Pyŏng-do and Scott 36).Marketing information provides data that help in planning marketingstrategies as well as evaluating such strategies. It includes theconsumers’ consumption and buying characteristics, market share,competitors’ strengths and weaknesses, the business’ strengthsand weaknesses and the market trends. For instance, Chanel SA’smarketing information includes Tiffany & Co., Gucci Group N.V.,Puig Beauty & Fashion Group and Bulgari S.P.A as competitorsprivate ownership, competent management team as strengths andincreased competition as a threat.
Consumermarket is defined as a market involving sale and purchase of servicesand goods for final consumption and not facilitating production ofother products. In such a market, the consumers acquire the productat the market for personal use and resale or use in production ofother products. This nature typically explains the type of marketthat Chanel SA operates in selling its products to consumers forpersonal use the company’s products are not used as inputs forother products or in the production processes of other products.
Market segmentation and target marketing processes
Marketsegmentation refers to the practice of subdividing the market inwhich the business operates into different portions, each portionconsisting consumers having similar needs among them but differentneeds from those in other (Donnellyand Harrison 53).This process can be completed basing on different factors includingbut not limited to geographic, behavioral, benefits, demographic andpsychographic. On the other hand, market targeting entails evaluatingthe attractiveness of the portions created during market segmentationand deciding on which portion to serve (Donnellyand Harrison 54).Similar, to segmentation, targeting also has several ways ofaccomplishing it namely concentrated, differentiated andundifferentiated strategies. These two processes culminate intoproduct positioning where the business creates and offers its productin a manner that wins consumers’ minds thus separating it fromcompetitors’ products it can be either competitive positioning orconsumer positioning.
Marketsegmentation, target marketing and product positioning involve sixsteps, two steps under each process. Market segmentation involvesmarket research and marketing profiling to create the portions(segments) target marketing involves evaluation of the createdsegments and selecting the most promising one and productpositioning involves designing and producing the product for theselected segment and development of a suitable marketing mix(Donnellyand Harrison 52-58).These processes are evident in the marketing operation of Chanel SA.The business has separated its global market into regions thatcorrespond to segments namely North America, Europe, Asia and Oceaniaand Central/South America, and in every region it aims serving femalecustomers aged between 16 and 80 years by offering several productsclothes, jewelry and cosmetics. The company utilizes consumerpositioning as its products are modified to meet the needs of thecustomers, thus the whole process matches geographic segmentation,differentiated target-marketing strategy and consumer positioning.
Advertising and the product, price and place elements
Advertisingrefers to all paid-for marketing messages placed in various media toreach the targeted customers. It fall under promotion, one of the Psof marketing mix and it is utilized to promote the rest of the Psproduct, price and place. Through advertising, the businessorganization communicates the features and benefits of the product tothe customers. Such communication helps customers understand thevalue they will be getting in return of their money (price). Also,advertising informs customers of locations where the product if found(place) (Sanchezand Jörg).
The environment of advertising
Advertisingpractices have impact on the business, consumers and the market atlarge. Such impacts are diverse in nature and are felt by everyplayer in the market.
Economic impact of advertising
Advertisinginterferes with consumers’ choice-making as it differentiates andportrays the product offered by some business as superior to productsoffered by other business. As a result, brand loyalty is achievedwhich in turn leads to increased sales of the advertisingorganization. Second, advertising influences competition in that thesubstantial amounts spent by big businesses act as entry barrier tothe small business (Steenkampand Eric 631).Third, advertising contributed to increase in product prices as theadvertising businesses aim to recoup the incurred expenses throughcharging higher prices.
Social impact of advertising
Advertisingchanges the behavior of consumers. For instance, some consumers adopthabits such as drinking and smoking only because their favorite actorhas been shown doing so in an advertisement. More so, it influencesthe decision making process as it provides information, though notcomplete, about products available on the market (Wang594).
Regulatory Issues Affecting United States Advertisers
Twomajor issues affecting United States advertisers are consumer privacyand freedom of commercial speech. Courts have ruled that human beingshave rights and right for non-disclosure of personal information. Theadoption of internet and mobile phone marketing has complicatedexercise of these rights as it has become blurred on where to drawthe boundary limit beyond which infringement of the right isconsidered to have happened. Second, courts have also acknowledgedthe freedom of commercial, for instance, in CentralHudson Gas v Public Service Commissionand VirginiaState Board of Pharmacy v Virginia Citizens Consumer Councilcases. On one hand, such freedom promoted dissemination ofinformation on the other hand, it results into externalities thatnegatively impact the society hence creating a challenge toestablishing the best regulation balance.
The business advertising
Thebusiness industry comprises three major players namely clients,agencies and suppliers. Suppliers refer to the businesses sponsoringthe advertising messages in order to promote the goods and/orservices they offer to the consumers. Agencies are the organizationscarrying out the advertising activities on behalf of the suppliers.Clients comprise the people or organizations to which the advertisingefforts are directed towards. Activities in this industry are guidedby the advertising plan, defined as a detailed outline illustrating abusiness’ advertising campaign- set objectives and strategies andresources for achieving the set objectives.
Currently,every business, whether private or public, for-profit ornot-for-profit, is engaged in marketing activities. Such marketingactivities impact the market in one way or the other: socially oreconomically. Similarly, regulators of advertising activities face anumber of issues, for instance, freedom of commercial speech andconsumer privacy.
Marketingprocess encompasses many activities depending on the objectives ofthe business. However, it involves four basic steps namely discovery,strategy, implementation and review. It also involves concepts suchas marketing strategy, marketing plan, market segmentation andmarketing mix. The overriding theme of marketing is development oflong-lasting relationships for mutual benefit and exchange betweenthe business and other market players.
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