Marketing Strategy Assignment (2012) - Chiến lược marketing cho sản phẩm Chanel No5
1 Chanel No5 Marketing Strategy in Vietnam Market Chanel SA, 2011 2 Table of content EXECUTIVE SUMMARY 3 INTRODUCTION . 4 CURRENT SITUATION 5 I. Overview about Chanel SA . 5 II. Unique Selling Position – Chanel No5 5 III. SWOT of Chanel No5 in Vietnam Market . 6 IV. Differential Strategy 7 V. Comparison performance 8 VI. PESTEL 9 d. Technological factor . 10 e. Environmental factor . 10 f. Legal factor . 10 RECOMMENDATION . 11 I. Segmentation – Targeting – Position . 11 II. Marketing Objective . 13 III. Marketing Strategy and program . 13 1. Product – Customer solution . 13 2. Price – Cost to satisfy . 15 3. Place – Convenience 15 4. Promotion - Communication 15 CONCLUSION 17 REFERENCES 18 APPENDICES . 21 Appendix 1 – All about Chanel No5 21 Appendix 2 – Vietnam Perfume Data . 26 Appendix 3 – Further analysis of PESTEL . 28 Appendix 4 – Chanel No5 Review . 32 Appendix 5 – Chanel No5 Review Sample . 33 Appendix 6 – Cosmopolitan Survey about Fragrance Study 2008 . 36 Appendix 7: Information about model Xuan Lan 42 3 EXECUTIVE SUMMARY Recently, Vietnamese perfume market is develop very quick due to the Vietnamese’ perception of beauty. Chanel SA is a famous luxurious fashion company in the world; its products are variety from clothes, shoes, handbags, fragrance and perfumes. Chanel SA has just been penetrated in Vietnam since April 2011. However, Chanel No5 perfume product series has already existed in Vietnam for longer time. Chanel No5 is facing the decline in international market, and in terms of product life cycle model, it is located in mature part in Vietnam market. With the marketing experience in international market in general, and Asia market in particular, Chanel SA believe that Chanel No5 will develop in Vietnam, which has stable policy and rapid economy of growth. The company will still focus of high income women, but also widen the targeted customer to upper class women over 35 years old with the income more than USD300/month. Chanel at first will gain the brand awareness of consumers by using popular media means, inviting celebrities for advertisement, sponsoring for popular beauty reality shows. In long term, Chanel SA will cooperate with other beauty company – or ally products with those companies to add more value to Chanel No5 and benefit for the company. 4 INTRODUCTION Vietnam is a developing country with the rapid economic growth. Since 2007 when Vietnam officially joined in WTO, the government has been encouraging international enterprises developing in Vietnam market, which may lead to the higher income for the Vietnamese in general. The higher living standard and education level, Vietnamese people aware of the importance of their appearance, especially through the charming of perfume scent. As the demand of purchasing perfume and fragrance increases, Vietnam perfume market has developed, which attract many international perfume firms starting business in Vietnam. Among those firms is Chanel SA with the famous product series Chanel No5 – one of the most popular luxurious perfume products of Chanel SA. This report investigate the current situation of product range Chanel No5 – one of the most popular products lasting for long time of Chanel SA by SWOT, USP, and performance with Vietnamese context. The report also gives some recommendation about marketing strategy for Chanel SA to develop the market for Chanel No5 in Vietnam market. Most of the information in this report is secondary source which will be referenced adequately. 5 CURRENT SITUATION I. Overview about Chanel SA Established from 1009 – 1010 by Gabrielle Coco Chanel, Chanel is one of the leading luxurious fashion brand in the world, and is also of the French’s pride. Chanel is famous for fashion products in different areas: clothing, accessories, shoes and handbags, cosmetics, and perfumes. The current target customers of the firm are successful people with stable high income. Recently, Chanel’s competitors in the international market are: Gucci, Prada, Christian Dior, etc. Currently, Chanel has the wide distribution networks all over the world with 310 boutiques (Funding Universe, 2008). The first retail store in Vietnam was established in Ho Chi Minh City in April 2011. Chanel SA also planned to develop its network in Hanoi and Danang in the near future. However, along with dealing with fake products from China, Chanel has to face the severe competition with other perfume brands which are operating in Vietnam market for longer time (i.e. Lancome, Shiseido, etc) II. Unique Selling Position – Chanel No5 Staying focus on the target customer: high income successful people, Coco Chanel decided to produce perfume. ―The earliest trademark application for the inaugural No. 5 perfume is on Thursday, 1 April 1926. No5's status is registered, renewed, and owned by Chanel, Inc‖.(Wikipedia) 11 . Until now, Chanel No5 is always the luxurious product brand only served for luxurious people. Chanel No5 concentrates on quality, and the long lasting scent for users. Besides high recognition of brand image, niche customers also one of the competitive advantage of Chanel no5. Along with advance technology, Chanel No5 only uses ingredients from nature without chemical to make the scent which not only bring to consumer the charming scent but also protecting their skin. Besides, when penetrating in Vietnam market, Chanel No5 sold by Chanel official stores might have lower price (at USD64) than the other private stores have been selling (at USD 150). However, in order to attract more people to buy, Chanel should lower the price more, or have some promotion gift with Chanel No5. 6 III. SWOT of Chanel No5 in Vietnam Market STRENGTHS - Long history (since 1921) + high recognition all over the world. - Strong brand image. - Strong finance. - Clear target customers: high income people. - Impressive advertising campaign worldwide (celebrities: Nicole Kidman, Catherine Deneuve, Audrey Tautou, and Marilyn Monroe) WEAKNESSES - Small distribution network: only one official store in Vietnam. - Compete with other Chanel’s product range: Coco Chanel. - High price. - Few advertising campaign in Vietnam. - Only for women above 30 years old. - No changes for long times: appearance, scent. OPPORTUNITIES - Expanding market and distribution networks. - Expanding target segment and customers: young people, middle income people. - Leading the trend in Vietnam. THREATS - Severe competition with other competitors operating in Vietnam for longer time and now still expanding: Gucci, Escada, Lancome, Shiseido, etc - Fake productions from China. - Threats of new entrants: from Korea, Japan, etc. - Threats of substitutes: middle price perfume – Miss Saigon, Avon, Oriflame, etc. 7 IV. Differential Strategy Comparing the target segment in Vietnamese market, Chanel No5 and other perfume product series of other brands (i.e. Tresor – Lancome, Issey Miyake, Shiseido Energizing) are similar. However, they all have different marketing strategy for their products. In the international market, since the first launch of Chanel No5, Coco Chanel had worked out the specific period of marketing strategy for this product. The first marketing campaign called ―The first truly solo advertisement of Chanel No. 5, as the most important Chanel perfume, comparable to her legend as a couturiere, ran in The New York Times on June 10, 1934‖. (Mazzeo, Tilar J) 8 . ―Chanel’s collaboration with the enemy during wartime menaced her with the exposure of her treasonous activities. In an attempt at damage control, she placed a sign in the window of her rue Cambon boutique, announcing a give-away— bottles of Chanel No. 5 were free to any and all American GIs for the asking‖.(Vaughan, Hal) 27 . 10 years from now, Chanel No5 series has been located at maturity and decline in the product life cycle declining as the sale volume is decreasing in the world economic crisis 2010. Therefore, Chanel SA is searching for new market at the developing countries which have the high economic growth rate like Vietnam. Besides that, Chanel continues to launch advertising campaigns with celebrities to promote for Chanel No5 (Appendix 1, pp 23). Has been appeared in Vietnamese market for long time, but Chanel SA officially established new store in Ho Chi Minh City since April 2011. At the moment, Chanel is applying the market development strategy at three big cities in three areas of Vietnam: Hanoi, Ho Chi Minh city, and Da Nang in order to help Vietnamese customers approach product faster. To develop in the new market like Vietnam, Chanel has to know more about the performance of competitors. Further analysis and performance comparison will be mentioned in the next part. 8 V. Comparison performance This part of the report will discuss about the comparison between Chanel SA in general and Chanel No5 product range in particular with others perfume brands in Vietnam market including: Tresor – Lancome, Shiseido Energizing – Shiseido, and Issey Miyake – Issey Miyake in term of share in period of 2006 - 2009. The numbers were retrieved from Euromonitor International. Figure 1 - Women's Premium Fragrances Brand Shares by GBN 2006-2009 4 As mentioned in the previous part, Chanel No5 is listed in the premium perfume for women. The figure above shows the women premium fragrances brand share by GBN 2006 – 2009. Although the total market share of Issey Miyake Inc (3% - 2009) was lower than other companies, and was 1.7 times less than Chanel SA (5.2% - 2009), the Issey Miyake product range had the brand share which was much higher than other luxurious perfume products in Vietnam market. The highest brand share rate of Issey Miyake was 15.1% in 2007 which was 4.7 times higher than Chanel No5, 5 times higher than Tresor – Lancome, and 18.9 times higher than Shiseido Energizing. Chanel No5 from 2006 to 2009 was only sold in some private cosmetics and perfumes stores in Vietnam, but the product series had achieved 3.4% brand share in 2006, and always the second highest brand share among four brands in the figure above. Figure 1 also shows the decline from 2008 of Issey Miyake brand shares even though this brand share was much higher than the other four. It was decrease from 15.1% in 2007 to 14% and 12% in 2008 and 2009, respectively. Similar to Issey Miyake, Tresor brand share also went down from 2006 to 2009 even Lancome had wide distribution network. Different from the two brands above, Shiseido Energizing had a stable share growth although the percentage was the lowest in four product ranges. Chanel No5 had the decline of share from 2006 to 2008, but then increased gradually in 2009 and was forecasted to increase in the future. 3.4 3.2 3 3.13.1 3 2.8 2.7 0.8 0.8 0.9 1 13.2 15.1 14 12 0 2 4 6 8 10 12 14 16 2006 2007 2008 2009 Chanel no5 Trésor Shiseido Energizing Issey Miyake 9 The problem recently is that there are a lot of fake Chanel No5 come from China. Besides, price for one of this product is high which is not suitable for the majority of Vietnamese people who have middle income. Therefore, to increase the brand share for Chanel No5, Chanel SA should investigate carefully the Vietnamese market, searching for opportunities to expand the market. VI. PESTEL a. Political factor Since 2007 when Vietnam officially joined in World Trade Organization (WTO), the government has always encouraged international trade. Besides, Vietnam politic is quite stable, which ensure the long- term business environment for all international and domestic companies in Vietnam. b. Economic factor Vietnam is a developing country with high economic growth rate. According to the Vietnam Economic Committee at National Assembly 8 th Convention in 2010, GDP 2010 of Vietnam until October 2010 was 6.7%, 0.2% higher than the beginning plan, and 1.4% higher than GDP 2009; while the total GDP of East Asia and Pacific was 9.2%, and world GDP was 4.2% in 2010 (The World Bank, 2010). Until 21 st December 2010, the total registered FDI is Billion 17.23 USD. It is why Vietnam is an attractive place for investment. c. Social factor In term of democracy, in 2010, Vietnamese population was 87.8 million, and increasing to approximately 90.5 million people in July 2011. The Vietnamese population is young, but it is believed that the population is turning to old. There are 38.3% of people from 25 – 50 who are the target age customers of Chanel No5 (Statistic Vn, 2010). GDP per person is VND22.8 million (1140 USD) in 2010 (GSO, 12/2010). Chanel No5 is sold in private cosmetics stores at USD147 – USD150 while in international market is USD115. Therefore, people can afford one Chanel No5 product. In term of customer behavior, Vietnamese people now care more about appearance and brand name of product. Besides, they all care about the quality of the product equal to high price of product. Chanel No5 as reviews from many Vietnamese women is the symbol of charm and luxurious although it is expensive. 10 d. Technological factor As increase in standard of living, almost all Vietnamese families have TV cable and internet at home and at work. They will easily adapt information about Chanel and its product through searching on internet. This is also one way to promote for Chanel No5 in Vietnamese market. e. Environmental factor Environment is always one of the concerns for the Vietnamese. Most of Vietnamese people prefer using product from the companies which make no harm for the nature and environment. Green – Eco is becoming objective of every firm in Vietnam. Promotion relating to protect the environment may enhance the brand image of Chanel No5. f. Legal factor With the attractive economics growth rate and the increasing in demand for fashion in general and perfume in particular, many international fashion companies have joined and developed in Vietnamese market. It creates the severe competition for all the corporations in terms of perfume products ranges. Therefore, in order to develop and success in perfume/fragrance market, Chanel should have precise and suitable marketing strategy along with the current strategy: market development. The next part will show the recommended strategy and tactics for Chanel No5 product rages in Vietnam market.