Chanel's products represent a very heterogeneous mix. Indeed, Chanel has developed multiple skills, allowing us to define five homogeneous strategic business areas or SBAs.
Haute Couture
-Clothing
Chanel is present in all categories of designer clothing brands including swimsuits.
Accessories and leather goods
-Leather goods (handbags, luggage etc)
-Shoes
-Accessories (glasses, fabrics etc.)
The whole range of products is provided by the brand Chanel.
Fragrances and cosmetics
Perfumes
Make-up
- Beauty care products
Chanel is present in the perfume and cosmetics segment through its sister company Bourjois.
Jewelry and watches
- Watches
- Jewelry
Skiing equipment
- Clothing
- Accessories
- Equipment (skiing and snowboarding)
The functional analysis: This analysis aims to address various business functions by assessing their strengths and weaknesses.
Marketing and distribution functions:
Strength:
-It is rare to have access to a selective distribution area reserved for all the products in the luxury segment. Chanel sells exclusively through its single-brand stores, such as in Tokyo, but is also present in perfumery outlets.
-The location of its stores is strategic, as they reflect the image of Chanel. Thus it is established on the Place Vendome in Paris, an area known for its luxury brands.
Weakness
-Lack of international presence compared to its major competitors, particularly in new growth markets (China, Russia, Middle East).This lack of presence can pose a shortfall in profits at this level.
Production function:
Strengths: Chanel ensures quality control and perfection of its products, by the acquisition of suppliers who are recognized for their talent. In 2002, the brand bought five exceptional artisans to obtain a complete hold on the luxury sector the world over. This acquisition also enabled them to achieve economies of scale, particularly in the areas of logistics, communications and production.
Research and development function:
Strengths:
- The company invests heavily in the market for perfumes and cosmetics, mainly for the filing of patents, and new research techniques.
- Chanel is also innovative in its product ranges, as is evident by its diversification into the area of sport through its skiing line.
Tags: Chanel, research and development, perfumes, cosmetics, logistics, communications, production, marketing and distribution
[...] The Star activities are present in the segment of perfumes and cosmetics which constitute an immense strength for the brand, especially with the perfume Chanel No which is the company's best-selling product worldwide. Moreover, the forecast for the sector looks encouraging for 2005, and justifies its position in light of the fact that it is a flagship event, and that the SBA is still evolving. As for the SBA for leather goods and accessories, we must note that this is a branch of luxury goods which are widely exported. [...]
[...] Moreover, skiing is considered a luxury sport, and this image is in line with that of Chanel, and in tune with its strategy of diversification. The SBA of jewelry and watches is relatively recent compared to the previous SBA but not developed enough to justify being labeled a star activity. However, this branch has delivered increasing growth rates which indicate a bright future. Thus, Chanel has taken advantage of market opportunities with a diversification strategy that follows the logic of establishing roots in an environment of luxury, as is evident in the introduction of a range of products offered to skiers. Since [...]
[...] Wirth respect to its strengths, we may say that the brand has a complete range of products, which allows it to measure up against giants such as LVMH, Gucci etc, especially through its purchase of five new suppliers. Its selective distribution is an asset, and must be retained even if it expands internationally, as luxury is inevitably equated with rarity. Finally, communication is an important asset. Its commercials have always stood out for their originality. Strategic analysis Position analysis As we have seen in the first part, Chanel has 5 distinctive SBAs. [...]
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