Introduction
Chanel is one of the leading fashion shops in the United Kingdom. Started out as a simple fashion shop on a brick and moter basis, this shop has grown to become a giant shop that operates an online shop, besides its physical shops. The management of this firm has been keen on adopting new market trends, which has ensured that the firm remains relevant in this industry.
The fashion industry is very competitive and very sensitive. The majority of those who visit these shops are from the upper class. This group is always very sensitive on issues of quality.
They do not have any problem with the price, but they do not tolerate substandard or outdated products (Ulaga & Chacour 2001, p. 67). Chanel has come to realize this and has been keen on providing its customers with products of desirable quality.
This company has been named as one of the leading shops for fashion products. The company stocks such items as bags, designer perfumes, designer wristwatches, jewelry, and shoes, among an array of fashion products. The firm has a market share that spans in the entire United Kingdom.
The marketing team of this firm has ensured that the firm’s products find the right value proposition, an act that has seen Chanel products become popular (Andreson, Narus & Rossum 2010, p. 56). The brand Chanel is very strong within the markets of United Kingdom. Although the firm’s effort to assert its presence has bore good fruits, the brand is not very strong within the international market.
The management has tried to capture the markets currently dominated by large online market firms such as the Amazon, with very little success. However, the gain made by this firm is an assurance that has made it possible to gain the market share beyond the United Kingdom.
Competitor Analysis
The fashion industry is one of the most developed industries in the United Kingdom and by extension, the entire world. Those who patronize these shops are individuals who are rich and willing to spend a lot of money on any single item needed from the shop.
For this reason, many investors have gained interest in this industry, as it is considered one of the most lucrative industries within this country (Barnes, Blake, & Pinder 2009, p. 89). Competition is very stiff. With a market that has free entry and exit, there has been a huge influx of firms, some of which are international companies with, other branches in several countries.
Most of these international firms are well developed, having been in this industry for several years. Competition has been taken a notch higher. Many of these firms have adopted different competitive strategies. With price not being a major competitive tool, many of the firms have considered such other services as home delivery of the products to their customers who purchase their products online.
Others have considered to stock custom made products for specific customers. They would get a special order from such customers and then send those specifications to the manufacturers. As such, Chanel has to manage this competition, with focus being on maintaining or even expanding its current market share. This is very tricky because in this industry, maintaining the current market share alone is not easy.
Many firms have developed very strong strategies for competition, threatening to eat into Channel’s current market share. As Ahmed and Rafiq (2002, p. 46) say, in industries where competition is very stiff, a firm’s focus should not be increasing but maintaining its current market share.
In this industry, competition is rife, and there are signs that it may even get stiffer. Many large American firms that had withdrawn from this industry due to the recent recession are coming back stronger and with better strategies. Other new entrants are also coming with new strategies that are superior to many of the current firm’s strategies.
Some of the leading apparel shops in this country include Absolute Vintage, Ace Collection, Ad Hoc Boy, Agnes B, Ahadi Shops, All Saints, American Apparel, Butterfly, and Caroline Charles among others. This list is very long and yet many more firms are coming into existence (Best 2009, p. 78). As can be seen from the above list of apparel shops, American firms are back to this industry and they are competitively strong.
A firm like American Apparel has international coverage. It has branches in many other countries other than United Kingdom. As Woodruff (1997, p. 153) states, this firm has been very strong in this fashion industry, a fact that can be contributed to its international experience.
Most of the top management of this firm, according to Eggert & Ulaga (2002, p. 153), are people who have held managerial positions in various other countries before and therefore have a wide experience in this industry. They understand the market forces and as such, are in a position to withstand pressures of the market.
Another very strong firm in this industry is Absolute Vintage. It also has a market coverage going beyond United Kingdom. Within the country, this firm is one of the market leaders as it has its presence felt in almost all the major cities in the kingdom.
Going against this strong competition may need this firm to develop strategies that would make it a superior firm. The firm must design its marketing strategies to give it a competitive edge in the industry. The brand Chanel, although not very strong in the markets beyond the United Kingdom, has managed to penetrate the local markets. It brand has managed to gain fame within its London branches.
This would give it a competitive edge because this region has a large number of customers. Despite other firm’s strength in this region, Chanel can start its expansion plans from this region by developing superior marketing strategies.
Basic Segmentation Analysis for Chanel
Chanel, as a company and a brand, falls under the fashion industry. This firm has several lines of products falling in several market segments within the industry. The products are presented to the market under a similar brand name that is, Chanel.
This firm has four major segments for its wide range of products. The segments are the Foundation, Chanel make-up segment, Chanel Fragrance and Chanel fine jewelry. In the Foundation, the firm stocks new products that have just been introduced into the market. These products may fall under different categories, but because they are new in the industry and to the firm, they would be put under this category.
Customers would go to this section to know some of the new products that are currently available in this market. The motivation behind this section was to help not only in advertising the firm’s new products, but also enable customers fashion trends. Through this, they would be in a position to know which products are new in the industry and the competitive advantage they have over other existing products.
This section also helps the firm inform the market that it is out to ensure that it provides new and better products at a relatively close interval to ensure constant satisfaction. This segments targets customers from across the genders and age group. In Chanel Makeup segment, this firm stocks such items as eyeshades, lipsticks, and other makeup products. This segment targets women of various ages.
Men make a very small percentage of the customer base here. In the Chanel Fragrance, the firm stocks perfumes and other such products. Just like the Foundation segments, customers here are of both genders and all the ages. In the Chanel Fine Jewelry section, this firm stocks wristwatches, bangles, golden, and diamond chains among other precious items.
Though the market for this segment is female, a considerable number of male customers also frequent its stores (Dubois, Jolibert & Muhlbacher 2007, p. 76). Segmentation is done to make it easy for the customers to locate desired items.
When the customers visit the firm’s website, they would have a clear sense of direction of where to go when searching for new products, instead of navigating from one section to another guessing that by chance he or she would bump into the desired product.
The Role of Change in Technology
Technology has proven to be a major competitive tool for this firm. With a neck-break competition, which has seen many firms exit this industry, emerging technologies have proven to be the only way through which this firm can manage the current market competition.
As Flint, Woodruff and Fisher (2002, p. 90) notes, technology is a double-edged sword. It has both negative and positive effects in equal measure, depending on the approach that a firm would give it. Not all technological inventions are appropriate for a firm such as Chanel. Some technologies are irrelevant and some are completely disruptive.
However, there are those that are very important if a firm seeks to gain a competitive edge. Lindgreen and Finn (2005, p. 29) say that, although it may not be easy, current firms have no otherwise but to ensure that they shift emerging technologies for relevance and applicability.
Shifting in this case refers to analyzing the technologies to determine which of them can be implemented and which can be ignored. The basis of this is to ensure that the firm identifies which of the technologies are worth implementing and which would be avoided so that the firm would avoid scenarios where the wrong technologies are implemented at the expense of the right ones.
Piercy (2009, p. 78) explains that there are three categories of technology adapters. The first category is the innovators, then technology enthusiasts, early adapters, late adapters and finally the technology skeptics. Chanel has been so keen with adoption of emerging technologies. It has avoided being the innovators or technology enthusiast. It has been an early adapter of technology.
This has a number of advantages (Ward 1999, p. 90). Although early adapters always find other firms already in use of the technology, they are better positioned to determine how relevant a given technology is. They can do this by taking time to analyze the technology or simply monitoring the effect of such technology on other firms Payne & Holt (2001, p. 103). This way, it would be easier to know which way to go.
Chanel shops around the United Kingdom show strong signs that the firm is keen on adapting emerging technologies. The entire shop at the Hertford Road branch and other branches within various cities in this country are installed with current technological devices.
The CCTVs, the sensors, automated tellers, the lighting systems are all signs of emerging technological innovations (Eggert, & Ulaga 2002, p. 56). The use of internet marketing is also another sign of adoption of emerging technologies.
The Role of the Internet for the Company
Internet plays a very important role in ensuring that this firm remains relevant within this industry. Competition in this market has gone a notch higher and all firms are trying to outsmart each other using all the available tactics. The internet has been one of the tools that have been put on use. Internet has been used on many fronts. The website is the first front. Chanel has designed a website, which is very interactive.
By following the link, www.chanel.com/en_GB, one is led to the rich accessories that this firm stocks. A customer is able to easily navigate this website and have a look at the products stocked at various stores of this firm. The website has richly employed the use of graphics in this website.
A customer is able to communicate with the company easily through its website, a fact that has seen it increase its interactivity with customers (Fifield 2007, p. 98). Although the website is yet to allow direct purchase of products on-line, the current capability has made this firm to be known to many customers. Moreover, this website would direct customers to the nearest shops where the products of the firm can be found.
Another way through which internet has been of benefit to this firm is through internet marketing. Social media marketing has gained relevance in the near past. Face book has a fan base of over half a billion, most of who are from the upper class citizens, who can afford internet connectivity in their houses (Kotler, Keller, Brady, Goodman & Hansen 2009, p. 39).
In the United Kingdom alone, over two thirds of citizens are regular visitors of Face book. The majority of this group is the youths, who make the most attractive market segment for Chanel fashion shop. By advertising on this site, this company has been in a position to ensure that it reaches its targeted market. Another media that has gained relevance very rapidly is the YouTube.
Because it supports heavy graphics such as videos, the youths have become addicted to it any moment they visit the internet. Although Chanel has not been able to utilize this media to its full potential, it poses good opportunities for this firm. Many of the youths cannot avoid the allure to be in this site.
They are able to watch movies and share videos through this site. Chanel therefore stands a better chance of reaching them out through this site.
Chanel has considered advertising its products using this media. Twitter has also gained popularity. As Woodruff (1997, p. 72) notes, many firms are moving away from traditional forms of advertisements, which heavily depended on mass media. It has come to their realization that not many people are currently able to read the entire newspaper or listen to news or soap operas that carry advertisements.
However, these individuals cannot ignore the allure of the internet. The best way to reach them therefore would be through the internet that they could not avoid (Holbrook 2003, p. 38). Chanel has realized this and is making the best out of it.
Conclusion
Chanel is operating in a very competitive environment. It has been able to manage market competition but with a lot of difficulty. This industry is well developed and some of the competitors that Chanel has been facing are international firms with worldwide market coverage. This firm has had to ensure that it protects its current market share are protected as it tries to gain more.
This has not been easy as the market is full of competition. However, because of the large capital base that it has been able to amass, the firm has been able to introduce new products at close intervals following market research. It can be concluded that the Chanel faces both threats and opportunities. This can be attributed to among other factors, the strengths and weaknesses it.
The main challenge is how to balance the strengths and against the weaknesses. In this regard, the management has a role of identify those technologies that are suitable and apply them in strengthening the firm. Emerging technologies may be the best solution for this firm because the dynamism of this industry. The firm should also conduct market research to establish the opportunities that can strengthen its market share.
List of References
Ahmed, K & Rafiq, M 2002, Internal Marketing tools and concepts for customer-focused management, Butterworth Heinemann Elsevier, Oxford.
Andreson, JC, Narus, AJ & Rossum, W 2010, “Customer Value Propositions in Business Markets”, Harvard Business Review, Vol. 1, no. 3, pp 91-99.
Barnes, C, Blake, H & Pinder, D 2009, Creating & Delivering your Value Proposition, Kogan Page, London.
Best, RJ 2009, Market-Based Management Strategies for Growing Customer value and Profitability, New Jersey, Pearson.
Dubois, P, Jolibert, A & Muhlbacher, H, 2007, Marketing Management A Value-Creation Process, Basingstoke, Palgrave Macmillan.
Eggert, A & Ulaga, W 2002, “Customer-perceived value: a substitute for satisfaction in business markets?” Journal of Business & Industrial Marketing, Vol. 17, no. 2, pp 107-125.
Fifield, P 2007, Marketing Strategy: The Difference between Marketing and Markets, Elsevier Butterworth Heinemann, Oxford.
Flint, DJ, Woodruff, RB & Fisher, GS, 2002, “Exploring the phenomenon of customers’ desired value change in a business-to-business context”, Journal of Marketing, Vol. 66 no. 4, pp 102-117.
Holbrook, MB 2003, “Customer value and auto ethnography: subjective personal introspection and the meanings of a photograph collection”, Journal of Business Research, Vol. 58, no. 1, pp 45 – 61.
Kotler, P, Keller, KL, Brady, M, Goodman, M & Hansen, T 2009, Marketing Management, Prentice Hall, Harlow.
Lindgreen, A & Finn, W 2005, “Value in business markets: What do we know? Where are we going? Industrial Marketing Management, Vol. 34, no. 2, pp 732- 748.
Payne, A & Holt, S 2001, “Diagnosing Customer Value: Integrating the Value Process and Relationship Marketing”, British Journal of Management, Vol. 12, no. 2, pp 159 – 182.
Piercy, NF 2009, Market-Led Strategic Change, Butterworth Heinemann, Oxford.
Ulaga, W & Chacour, S 2001, “Measuring customer-perceived value in business markets: a prerequisite for marketing strategy development and implementation”, Industrial Marketing Management, Vol. 30, no. 6, pp 525 – 540.
Ward, K 1999, Cyber-ethnography, and the emergence of the virtually new community, Journal of Information Technology 14: 95-105.
Woodruff, RB 1997, “Customer Value: The Next Source for Competitive Advantage”, Journal of the Academy of Marketing Sciences, Vol. 25, no. 2, pp 139-154.
Appendix. Chanel SWOT Analysis
The best way of understanding a firm from its internal front is to conduct a SWOT analysis on it. Through this, it would be easy to determine if the firm is in a position to manage the current market forces and if it is in a position to experience market growth. Chanel fashion shop can be understood through this analysis.
Strength is the abilities of a firm that makes it be in a position to manage the market forces and compete against other firms favorable. They are factors that make the firm stand out among the rest, as the preferred firm.
Strength of this firm arises from a number of facts. One such fact is that this firm has been in this industry long enough. Chanel has been operating in various United Kingdom cities for a number of years and has therefore developed a deep understanding of the market.
Through this understanding, it has been very easy for this firm to predict the market forces that would play off in different seasons. As such, Chanel has mastered the products to stock in different seasons, making it one of the popular shops in London. Many customers admire it because they feel that this firm knows how to predict what they need and then provide products in the best ways possible.
The firm has also amassed a huge financial base following several years of financial prosperity. Because of this, the firm is able to adopt emerging technologies, without straining its finances. The brand Chanel is also popular within the entire country, making it even stronger in this market. Because of this, the firm has been in a position to manage competition in this industry.
Weaknesses refer to the inability of the firm to perform certain functions that are expected. These factors make a firm vulnerable to other firms in any given market. Chanel has a number of weaknesses. One great weakness of this firm is the fact that its website does not have a direct access to the shop.
Currently, people have been absorbed so much in their profession to an extent that they rarely find time to go shopping. Online shops were created upon this basis. They allow customers to shop from the convenience of their sitting rooms.
Chanel therefore risks losing its customers to its competitors that have their shops online. Having a beautiful website as it does is not enough. The website should allow its customers to shop online. Another weakness of this firm has been its pace of adapting emerging technologies.
Although this firm has been able to make use of the current technologies, the pace has been rather slow. This can be very dangerous for a firm operating in such a competitive firm. Other firms might easily overtake it since competition is rife. In this industry, firms seem to adapting technology fast.
Opportunities refer to the market forces that a firm stands to gain by its presence in a given industry. They are external factors that the firm cannot either control nor have little control over them. Chanel stands to benefit from various opportunities due to its existence in this firm.
Currently, the country has recovered from the recession and the upper class can now consider spending on such items as jewelry and other goods of ostentation. This means that business would be booming for such firms as Chanel.
The recent recession that took place in the United States saw many American firms withdraw their operations from a number of countries in order to concentrate on the domestic markets while specializing on jewelry and other fashion products. This was a relief to firms in the United Kingdom such as Chanel. Chanel can now capture markets that were previously held by these American firms.
Threats refer to those external factors that may hinder a firm from achieving its set objectives. A firm may not have control over them. In this industry, Chanel faces a number of challenges. The biggest threat that Chanel faces in this industry is competition.
Chanel faces high possibility of being eliminated from the market. Although some firms quit this industry during recession period, it has not been easy for Chanel to manage the level of competition because there are still numerous other firms in this industry that have taken substantial portion of the market share.
This makes it very difficult for this firm to expand. The increasing cost of living is making a section of the market reconsider the need to buy such expensive items as fashion wears.
Many people currently consider leading modest lives that allow them to live within their means. Technology, inasmuch as it is a tool of prosperity for this firm, has been a major threat that Chanel has had to deal with.
Emerging technologies have been a challenge to this firm, as it has been very difficult to predict appropriate technologies, and the ones that should be disregarded. As such, Chanel has always found itself lagging behind in adoption of many emerging technologies. This has a threat of making it a weaker firm in the face of competition.