09 Feb 2010

Sample Essay: Globalization Of Chanel

“Fashion has to do with ideas, the way we live, what is happening.”

Gabrielle “Coco” Chanel

History of the Chanel Brand

The success of Chanel as one of the leading luxury brands in the world could be traced back to the humble beginnings of its namesake’s founder, Gabrielle “Coco” Chanel. She had revolutionized fashion and had literally liberated women from restrictive clothing and ostentatious accessories through introducing a whole new look that she had started from her own sense of style and freedom. Her designs have greatly appealed to several women from high societies in all ages – but were likewise much imitated by the lower class. She popularized the use of jersey as an haute couture material and her name later on became one of the prominent symbols of elitism, wealth and class[1].

The success of the luxury brand could be attributed both with the manner for which it has adapted to the changing modes of the society and with the way it stood ground and faithful to the original meaning of Chanel “classics,” and in remaining true to the fact that fashion is a conglomeration of ideas – an apt reflection of the way people live and of the events that inspired such way of life. It is not an entity to stand for itself; it is not with the promotion of downright ostentatiousness, but rather with the celebration of femininity and fluidity of motion.

Competition with Other Brands through the Years:

The years 1914 to 1918 saw several socio-economic changes during the First World War There was a growing recognition on the changing roles of women in the Parisian society and the flamboyant manner of dressing became seemingly inappropriate after the onset of war. Thus, Chanel’s introduction of the “flapper style” in the 1920s became in tune with the growing social consciousness that was evidently resulted from the Parisians’ war experiences. Women were finally liberated from their corsets and short sleek hair became the fashion for women who were already asserting their newly found freedom. Chanel became the epitome of the 20s style as the masculine, flat-chest silhouette of couture became synonymous to style and liberation[2]. Much of Chanel’s success was likewise attributed to her partnership with Pierre Wertheimer and to the introduction of Parfums Chanel in the luxury market.

However, the female form returned in the 1930s through the introduction of clothing from Madeleine Vionnet and Mainbocher. Chanel perfume likewise found a very stiff competition with the advent of a new line of perfumery from Elsa Schiaparelli. Yet, Chanel managed to prevail as she was chosen to dress the most influential women of that period – Katharine Hepburn, Grace Kelly, and Elizabeth Taylor. Coco Chanel established a successful fashion studio near the museum of Louvre in Paris, France. Coco Chanel also started her set of jewelry line that was initially used for her daytime sportswear collection[3].

The Chanel perfume line likewise thrived as Chanel No. 5 became the dynamic equivalent of upper class fragrance in the late 1920s. In 1929, Chanel’s partner, Pierre Wertheimer introduced Soir de Paris to gain access to a much general market. This partnership has thrived and became one of the leading industries of the upscale market in spite of the growing differences of the personal relationships of Wertheimer and Chanel. Chanel felt that the Wertheimers were exploiting her talent through not adequately providing her with her fair share in the income of the company. The Wertheimers however, maintained that they have solely financed Chanel’s business ventures and were it not for their help; Chanel would not be able to gain prominence and wealth[4].

The onset of World War II and the invasion of the Nazi forces to France prompted Chanel to close her shop. As the Wertheimers fled to the United States, Chanel tried to gain full control to Parfums Chanel but has failed to do so as the Wertheimers had already anticipated that move.

In the 1940s, Chanel went into exile in Switzerland after France gained victory over the Nazi forces. Chanel allegedly had an affair with Nazi officer Hanz Gunther von Dincklage. Because Frenchwomen who were said to have been supporters of the Nazi forces received unjust social stigma, Chanel decided to go to Switzerland and temporarily continue the closing of her shop[5].

At this time, it was said that one of Chanel’s fragrance engineers, Beaux invented a series of perfumes then called, “Mademoiselle Chanel.” As Chanel attempted to ship the perfumes to the US, Wertheimer was forced to settle into an agreement with her. Mademoiselle Chanel thus disappeared after this alleged agreement.

The 1950s saw the emergence of a new fashion voice from the teen-ager groups, who – prior to 1950s have been following the fashion trends of the middle aged population. There was also a dramatic increase in the population due to several pregnancies after the war. At this time, Marks and Spencer’s ready to wear items were much in vogue as well as Christian Dior’s post-war opulent fashion. Different from the resulting reactions of the public after the World War I, the women at this period felt the need to dress more ostentatiously after experiencing deprivation on fabrics and rich and fashionable clothes during the war. Chanel was angered when she saw this change upon her return from self-exile in Switzerland. She felt that fashion should not be regressing but must continue to embody the fluidity of motion that comes with the passage of time, particularly during the post-war years. But because of the rise of the number of pregnant women, Chanel’s shapeless designs regained its popularity[6].

Chanel asked for financial backing from Wertheimer in exchange of the rights to the Chanel products, which would no longer be exclusively confined to perfumes. This proved to be an excellent business decision as Chanel was able to regain its competitive edge in the luxury market. With the successful inclusion of the classic Chanel 2.55 bag and the Chanel suits, Chanel once again secured its position in the market of the upper echelons of society.

In the 1960s, the television played a major role in the course of the fashion industry. The Beatles and rock and roll provided heavy influences in the manner for which the younger generations dress themselves. The concept of mod fashion was introduced and skirts have dramatically diminished their lengths. Pierre Cardin and Paco Robanne became the leading stylists of this era. Chanel, however, resented this. She felt that the ugliest part of a female body is her knees and must therefore be covered for most of the times. At the end of 1960s, floor length “Maxi” dresses became the fashion rave[7].

Chanel re-engineered classical fashion through the innovations that she introduced in her Chanel suits and pillbox hats. As a matter of fact, there has been no other suit that could rival then first lady Jackie Kennedy’s famous pink Chanel woolen suit, which embodied her feminine style and power.

Chanel’s death in 1971 ended Coco Chanel’s reign as Chanel’s chief designer. She was replaced by Karl Lagerfeld, who were said to have introduced significant changes in the Chanel line while at the same time remained faithful to Chanel’s definition of elite classicism. In 1974, the house of Chanel launched a new eau de toilette, Cristalle which was designed when Coco Chanel was still alive. When Jacques Wertheimer took over in 1974, Chanel No. 5 was starting to be regarded as an outdated perfume and was less favored than Yves St. Laurent’s Opium. He then started to change this conception by banking on the brand’s classicism and exclusivity. The sales of Chanel No. 5 dramatically increased through high-caliber endorsements from the likes of Catherine Deneuve in 1970, renewing the Marilyn Monroe classic endorsement of Chanel No. 5 in the 1950s[8].

In the 1980s, Princess Diana gained prominence as a fashion icon and thus powered dressing and tailored look became the prescribed mode of style. Aside from this, shoulder pads became the latest trends and the TV soaps Dynasty and Dallas became the most influential dictators of fashion. Chanel responded into this by launching the Chanel line of brocade jackets and just above-knee short straight skirts. Quilted Chanel bags became the representatives for vogue clutch bags with colors that match the footwear[9].

The early 1990s was a period of recession. However, Chanel remained to be a global leader in terms of fragrance and in marketing. In the mid-1990s, Chanel further undertook boutique expansions and ventured on skin care line, sunglasses and watches.

In the 2000s, Chanel was able to acquire assets and businesses in the luxury business. Its acquisition of A. Michel et Cie, an exclusive hat maker complemented the company’s existing fashion industry holdings on flowers, feathers and buttons.

Marketing Strategies and Further Expansions:

The company has ventured further as a 2,400-square-foot Chanel boutique was opened in Hongkong , and paying nearly $50 million for a building in Japan’s Ginza shopping district. With the present economic recession, this proved to be a wise venture as the shifting economic trends are now being centered to Asian countries such as Japan, China and India.

Chanel’s legacy on upper-classicism and elitism became one of the reasons why it did not lose its competitive edge against upper-class rivals like Bvlgari, Cartier, Christian Dior, Versace, Louis Vuitton, Tiffany & Co., Gucci and Prada. Time Magazine had several features accounting Coco Chanel’s success and the empire that she has left, that managed to stand amidst periods of global economic crises and recessions[10]. Much of Chanel’s success is due to her unwavering personal style and an adamant refusal to be dictated and be reduced as a mere follower of societal norms, without losing sight of the inherent timelessness in her designs.

In the same manner, Chanel was also able to free the women from the shackles of restrictive clothing without compromising class and elegance and at the same time popularized her clothing philosophy among the masses that could easily imitate her designs. Though imitations, these prove to be Chanel’s measurement of success and further helped the company gained further international recognition.

Marketing strategies that are more aggressive compared to other companies provided the company with a fat profit margin – particularly in the industry of perfumery. In 2005, Nicole Kidman became the face of Chanel No. 5 and more recently, Audrey Tautou became the powerful embodiment of the Chanel credo. The company was willing to take risks and infused so much capital, even at times of economic difficulties. This provided them with positive results and further enabled them to expand to other high-end product lines. Aside from this, the company had successfully shifted its market focus and that proved to be adaptive and expansive in nature. In the late 1980s, Chanel focused on dominating the US market. Presently, Chanel is already focusing its market strategies to Asian countries, which now have the bigger capacity to pay for high-end products.

Chanel became the first perfume company to treat advertising as a project comparable to the making of a film. As a matter of fact, Chanel has its series of short films that effectively brings the viewers into context while at the same time advertise their products. These proved to be an effective as well as an original strategy. Chanel’s short films were oftentimes depicted through the lives of the rich and the famous – banking on the notion that every woman’s dream is to attain what Coco Chanel has attained in her lifetime – prominence and wealth and the desire of whoever men she has chosen. As in every short film, the journey of brining the viewers in the context also marked the beginning of a romantic and an escapist fantasy. The choices of models that would perfectly advertise the brands, which include Marilyn Monroe (1950s), Catherine Deneuve (1970), Nicole Kidman (2005) and Audrey Tautou (2009), were an embodiment of feminine beauty and sensuality. Who would ever forget Marilyn Monroe’s classical Chanel No. 5 advertisement, as it gained similar fame and prominence as Marilyn Monroe herself? Chanel No. 5 became a symbol for certain facets common to all women – exquisiteness, timelessness and even the difficulty of attainment. Choosing Audrey Tautou as a present endorser may have been a symbol for Chanel to finally asserting its Parisian uniqueness and slowly abandoning its all-American imagery.

In 15 August 2002, Media Business published that Chanel shifted its market to target women in younger age brackets through the launching of its new fragrance – Chance. Chance has received “the biggest marketing push in the company’s history – with an introductory budget of more than $12 million. Chanel therefore found new competition in this line with the already established Happy by Clinique and CK One of Calvin Klein. This effort is apart from the launching of Allure in 1996 and Coco Mademoiselle soon after, which was targeted for the younger population too. This maybe attributed to the growing number of wealth distribution in the younger ages.

Businessweek, in its January 29, 2007 issue published that Chanel is taking aggressive measures to appeal to a younger set of consumers further by selling Chanel products in independent high-end boutiques such as Jeffrey’s in New York and Maxfield’s in Los Angeles. These aggressive marketing measures were even more heightened upon the launching of Chanel No. 5’s internet film campaign in 2005, with its new style icon, Audrey Tautou.

Compared to other brands like Louis Vuitton and Gucci, Chanel provides autonomy to its regional heads and is more decentralized in order to maximize its marketing potentials amidst competition.

Chanel made an Asian statement when it erected a 10 floor retail facility in the Ginza district in Tokyo, Japan. This is Chanel’s largest store in the world which showcases not only retail stores but high-end restaurants in conjunction to the classic Chanel theme. It also showcases a hall for concerts and exhibitions to further provide rich cultural experiences to the shoppers. Chanel would be opening its new Shanghai boutique after it has received strong sales in China for the past years. The first Chanel store in mainland China was opened in 1999 in Beijing[11].

Presently, Chanel operates 42 boutiques in the Asia-Pacific – 8 in Hongkong and 5 in mainland China making a total of 151 Chanel boutiques worldwide, while one of its closest competitions, Gucci, has 425 stores[12].

Chanel in Times of Recession

In spite of the seeming invincibility of Chanel, its resiliency is being tested by the present financial crises. Chanel had to downsize in order to adjust with poor economic gains. Its much funded worldwide tour was postponed into an indefinite period of time in order to offset losses[13]. However, Chanel managed to retain its status through marketing strategies that promoted its products “as luxurious yet attainable investments, while all the while trying to remain above the scrum of middle-class consumer culture”[14]. As a matter of fact, Chanel continued to promote itself as the embodiment of Parisian elegance through bringing Coco Chanel’s history come to life, in spite of the fact that its highest selling store was situated not in Paris but in a shopping mall in Waikiki, Hawaii.

Fighting Product Imitations:

Though earlier, Chanel said that she does not want to undertake any effort to combat the piracy of her products, the company today already took a stand against such piracies, owing to the fact that products are already gaining their respective “investment” statuses. Like any luxury brands, Chanel products were now bought not only for their functionalities but also for their promised uniqueness and exclusivity.

These changing perspectives may have been derived from the growing efficiencies on technological breakthroughs. Right now – particularly in developed countries such as the United States of America, France and England, with the growing affluence of the middle class in Asia, consumers already find it relatively easy to obtain the products that they need. They now seek for uniqueness and for exclusiveness – for the opportunity to own something that others could not readily obtain. This has undoubtedly paved further prominence of luxury items – particularly of Chanel, which from viewing history remained “different” from the fashion addiction of the mainstream public. As a matter of fact, Chanel recently placed serials in all of their products to further promote the “uniqueness” of one product from the other.

This “exclusivity” may have been affected by the counterfeit Chanel products and may be one of the reasons why Chanel already took a stand against piracy. However, as with any other products, the existence of counterfeit items becomes one of the primary bases for measuring the products’ success and popularity.

While the black market could be tolerated, the gray market poses a bigger threat to luxury products such as Chanel. The gray market tends to sell genuine products through non-affiliated and non-endorsed channels at a much cheaper rate. This ultimately damages the brand’s high-end image – particularly to the upper class, which patronizes these products most.

Projected Sales and Performance[15]:

Chanel has been very discrete in revealing its annual revenues and its over-all performance. As a matter of fact, because of its non-disclosure, it was not included in the Forbes Magazine’s most recent to 2000 companies of the world. However, one could be able to arrive at the closest estimates by looking at Chanel products’ performance compared to its other competitors such as Christian Dior. Presently, the owner of the Chanel fashion house – Alain and Gerard Wertheimers of Paris hold a tight rein in the over-all management of the company. In spite of the company’s reluctance to reveal its over-all finances, its owners – Alain and Gerard Wertheimers ranked 55th in Forbes’ 2009 list of world billionaires with a net worth of $8 billion. ¬†According to Gilbert Harrison and Robin Andrea Harris, founder and vice-president of the fashion industry investment firm Financo, and Mitch Hara, managing director in Peter J. Solomon Co.’s merger and acquisitions groups in an interview entitled, “Buying Chanel (All of it),” published in www.portfolio.com and written by William Dutge (2008), Chanel’s 151 boutiques worldwide may be worth $10.3 billion to $14.8 billion.

In arriving at this assumption, Harrison, Harris and Hara looked at Chanel’s performance in the fashion business, in its perfume lines and its other acquisitions. According to them Chanel’s annual revenue runs between $2.3 billion and $3 billion in terms of its fashion products sales making its estimated value between $5.6 billion to $7.7 billion. In the lines of perfume and cosmetics, considering that it has an average performance compared to its competitors – Clarins, Estee Lauder, and L’Oreal, its annual revenue may range from $180 million to $240 million making its added value $3.1 billion to $4.1 billion. In spite of the fact that the average luxury-goods stock is off 40 percent due to economic recessions, it is deemed that Chanel is able to hold up better than other high-fashion lines. This added value may range from $2.2 billion to $3 billion.

Forbes magazine recently published a list of most desirable luxury brands using the online survey of Nielsen in 48 countries worldwide. Chanel came in second to the list while Dior came in fifth. As Dior announced its revenue of around $6.5 billion in the first quarter of 2008, posting an average of 5% growth, Forbes estimated that Chanel maybe earning a total of $8.67 billion[16].

Presently, Chanel No. 5 holds 6 percent of the worldwide fragrance market share[17]. A variant of Chanel perfume, Coco Mademoiselle holds 3 percent of the market shares in Britain, which is indicative of how Chanel survived the changes in the upper market preferences through the years. The launching of the movie “Coco Avant Chanel” starred by its endorser Audrey Tautou undeniably educated the new consumers about the exquisiteness of Chanel and its namesake designer.

Conclusion:

These developments would provide the reasonable conclusion that Chanel has survived the market and has been globally recognized because the company, as a whole kept on re-inventing itself without losing sight of its real identity. Chanel continues to dominate the market in spite of increasing competition and changing preferences, because, as Coco Chanel herself pointed out, it is an embodiment of woman of the world.

References:

Coco avant Chanel. Dir. Anna Fontaine. With Audrey Tautou, Benoit Poelvoorde, and Alessandro Nivola., May 2009

“Chanel.” Accessed 10 December 2009 from www.referenceforbusiness.com

“Chanel to Open New Shanghai Boutique.” 12 October 2009. Accessed 07 December 2009 from www.luluscouture.com

“International Directory of Company Histories.” Vol. 49, St. James Press, 2003

“The World’s Billionaires.” Forbes’ Magazine. March 11, 2009. Accessed 10 December 2009 from www.forbes.com

Betts, Kate. “Coco Chanel.” Time Europe. 13 November 2006. Accessed 07 December 2009 from www.time.com

Davies, Lizzy. “Chanel Sheds 200 Jobs as Sales of Luxury Items Decline.” The Guardian. December 2008. Accessed 07 December 2008 from www.guardian.co.uk

Dutge, William. “Buying Chanel (All of It).” May 2008. Accessed 10 December 2009 from www.portfolio.com

Weston-Thomas, Pauline. “Flapper Fashion 1920s.” 2007 Accessed 07 December 2009 from www.fashion-era.com

Weston-Thomas, Pauline. “1930s Fashion History, Costume Images and Social History.” 2007 Accessed 07 December 2009 from www.fashion-era.com

Weston-Thomas, Pauline. “1940s Utility Clothing.” 2007. Accessed 07 December 2009 from www.fashion-era.com

Weston-Thomas, Pauline. “1950s Fashion History, Costume History and 50s Social History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

Weston-Thomas, Pauline. “1960-1980 Fashion History.” 2007. Accessed 07 December 2009 from www.fashion-era.com


[1] “International Directory of Company Histories.” Vol. 49, St. James Press, 2003

[2] Weston-Thomas, Pauline. “Flapper Fashion 1920s.” 2007 Accessed 07 December 2009 from www.fashion-era.com

[3] Weston-Thomas, Pauline. “1930s Fashion History, Costume Images and Social History.” 2007 Accessed 07 December 2009 from www.fashion-era.com

[4] “International Directory of Company Histories.” Vol. 49, St. James Press, 2003

[5] Weston-Thomas, Pauline. “1940s Utility Clothing.” 2007. Accessed 07 December 2009 from www.fashion-era.com

[6] Weston-Thomas, Pauline. “1950s Fashion History, Costume History and 50s Social History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

[7] Weston-Thomas, Pauline. “1960-1980 Fashion History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

[8] Weston-Thomas, Pauline. “1960-1980 Fashion History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

[9] Weston-Thomas, Pauline. “1960-1980 Fashion History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

[10] Betts, Kate. “Coco Chanel.” Time Europe. 13 November 2006. Accessed 07 December 2009 from www.time.com

[11] “Chanel to Open New Shanghai Boutique.” 12 October 2009. Accessed 07 December 2009 from www.luluscouture.com

[12] “Chanel.” Accessed 10 December 2009 from www.referenceforbusiness.com

[13] Davies, Lizzy. “Chanel Sheds 200 Jobs as Sales of Luxury Items Decline.” The Guardian. December 2008. Accessed 07 December 2008 from www.guardian.co.uk

[14] Weston-Thomas, Pauline. “1960-1980 Fashion History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

[15] Dutge, William. “Buying Chanel (All of It).” May 2008. Accessed 10 December 2009 from www.portfolio.com

[16] “The World’s Billionaires.” Forbes’ Magazine. March 11, 2009. Accessed 10 December 2009 from www.forbes.com

[17] Weston-Thomas, Pauline. “1960-1980 Fashion History.” 2007. Accessed 07 December 2009 from www.fashion-era.com

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