Brand Management in Luxury Brands, Luxury Branding During Recession - Term Paper Example

Chanel: Luxury branding during recession Marketing can be understood to be a social process by virtue of which individuals and groups attain the things that they require or want. This is done through the creation and exchange of products and values with others. (Kotler, 2002) Marketing can be understood to be the analysis, planning, implementation, and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for achieving organizational objectives. The process is heavily reliant on designing the organization’s offering in terms of the target markets’ needs and desires, and on using effective pricing, communication, and distribution to inform, motivate, and service the markets.   Brand management is the best way to create loyal customers who become brand marketers voluntarily later and without cost, the customers stick to a brand because of trust and expectation that they have from the brand (Upshaw, 1995). They know what the brand offers and most people like to stick to what they know. The unique and the differentiating factors of the website thus need to be highlighted. The name, the logo should be identifiable and clearly distinguishable from the crowd. This would mean that the idea of a vacation experience for every need would be the underlying feature of the campaign. What this would do is that it would be in keeping with the broad nature of the market segment that has been targeted. Along with this the facilities and the value added products that come along with the chain must be put in focus. Brand management in luxury brands: History and evolution To the uninitiated, the world of branding in case of luxury brands could be understood as one that is characterized by great paradoxes. The world is one, where the models of custom and creativity collide. Where ancient founders and youthful models meet and make magic together. For luxury goods, brand identity is a very important element of the business. In certain ways it can also be a constraint; it is not possible to launch a product that is outside of its sphere of legitimacy. Interestingly enough, the luxury brand sector, with a brand value of nearly €47 billion ranks only fifth in the 100 most valued brands in the world. This is in fact a smaller amount that the stock market value of the major luxury groups.Brand equity is in essence the level of awareness that is created about the brand in a given market. Brand equity would mean, first, the creation of a strong base of customer oriented relationships that are created and maintained through the usage of virtual communities (Kossecki, 2007). The idea to help in the creation of a brand reputation that is based in essence on the growth of brand identification with certain qualities. Second, it means the value that the company attributes to its consumers by referring to their loyalty. The idea characteriseing brand security at places like Chanel would be the greatest key to success as a brand was the recognition by the management that the company, in order to be successful needed to be a brand that was a destination site where surfers lingered and perhaps stayed. Brand equity and it maintenance in the case of Chanel has undergone a change with the evolution of the company over the years govern the fact that the emphasis has changes from quantity to quality. This means in essence that loyalty of customers was given greater priority than the quantity of customers. This was in essence an application of the idea of idea of Customer Lifetime Value.   Recession: Threats and Challenges The trend in the past two years has dominantly been focused on the fact that there is an overarching threat to the survival of luxury brands, given the credit crunch that affects their consumers and suppliers. This threat tends to place in danger the very survival of brands such as Dior, Gucci, Prada and Este Laudier among others. The problem, simply places is that in the light of the recession, there is a tendency for people to be sacred of spending-job cuts and reduced incomes add fuel to fire increasing these fears. The focus during a typical recession shifts from luxury shopping to basic shopping. A typical Dior or Chanel wearer might for example have to settle for a lesser brand because of a problem with the cash flow. There are those that assume that the infected economy tends to have reshaped the purchase pattern of the consumers all over the world relative to all type of inferior or sumptuous goods. There has been a considerable impact on the lavish consumption by the recent downturn of commerce. In any discussion spanning the place a luxury brand would have in an economy characterized by recession, one would have to work, first and foremost from the assumption that in an economy that is thriving and growing customers would have a tendency to be free spenders. Thus, in a position characterized by a brand position that is increasingly becoming unclear, the idea for brands such as Chanel would be to ensure that while the brand might not be at not optimum during the recession, it would be wrong to just work under the assumption that the brand is going down (Young, Weiss and Stewart, 2006). Brand Management: Theory Brand equity is in essence the level of awareness that is created about the brand in a given market. Brand equity would mean, first, the creation of a strong base of customer oriented relationships that are created and maintained through the usage of virtual communities (Kossecki, 2007). The idea to help in the creation of a brand reputation that is based in essence on the growth of brand identification with certain qualities. Second, it means the value that the company attributes to its consumers by referring to their loyalty. The idea characteriseing brand security at places like Chanel would be the greatest key to success as a brand was the recognition by the management that the company, in order to be successful needed to be a brand that was a destination site where surfers lingered and perhaps stayed. Brand equity and it maintenance in the case of Chanel has undergone a change with the evolution of the company over the years govern the fact that the emphasis has changes from quantity to quality. This means in essence that loyalty of customers was given greater priority than the quantity of customers. This was in essence an application of the idea of idea of Customer Lifetime Value.     In studying where the brand itself derives its value from, it would be interesting for one to refer to Bernard Dubois and Patrick Duquesne, who found that the value of the brand came from elements such as the mythical element, which tends to incorporate the reason and how representative it is of its time. Also the brand would also have an exchange value. This is in reference to the best value for money that the brand would incorporate which in itself incorporates the mythical elements already mentioned. The brand would also have an emotional and an ethical; value attached to it, both of which would deal with emotions of the buying audience and the image that the brand would have in front of them. The name of the brand and its logo is an important part of the a more complex reality-this tends to provide the mediation between the essential values of a luxury company-its identity and the perceptions its consumer have of its image. The idea therefore is that a luxury brand such as Chanel is a a contract, one that is implicit in nature and that governs the relation between a given company and its consumers. This relationship tends to be two dimensional-it is not just economic in its nature, but also, over time, creates emotional ties that often, tend to be intense. Where luxury brands such as Chanel are concerned, according to the theorists of brand management, it is essential that the managers of these brands comprehend the fact that consumers are engaging with their luxury brand on each of the above mentioned dimensions. Only that understanding can help managers develop a customer oriented luxury brand strategy. For example, consumer may engage with a luxury brand as it may be associated with it a symbol of success and achievement. However, there could be some brands with which consumers associate ostentation and show-off. Chanel: Response to challenges Chanel, a private company based in Switzerland, does not communicate any sales of profit data. The business is built largely around the Chanel brand, but in the fashion filed, incorporates Holland & Holland and Eres. The group also deals with the Bourjouis brand, which positioned as a middle-market brand in France, but which is higher market abroad.  “Its shop windows lack inspiration, the new collections are a little too derivative and the clientele looks older to me on each visit. Whisper very softly, but I think Chanel is getting dusty”.   One of the primary charges that have been leveled against Chanel today is that the brand is becoming old- the styles are no longer contemporary-it is becoming dusty-a charge that brand management analysts tend to classify as being “devilish”. The charge must be taken with a pinch of salt. Given especially the fact that brands such as Chanel tend to cater to crowds that are much older than the clients they currently target. The idea for brands such as Chanel therefore is that there is a need for the brand to continuously revitalize itself. This is a process wherein the requirement stretches across the spectrum demanding the brand to walk a tightrope between balancing centuries of heritage with contemporary rule breaking. Should a luxury brand ever slow down in the latter category, it rapidly becomes dusty. Much of Chanel’s lost brand value can perhaps be explained by the company’s reluctance to enter China. While brands like Omega and Armani focused heavily and early on the new empire rising in the east, Chanel held back. As global chief executive Maureen Chiquet admitted five years ago when the topic of China first emerged: Chanel, as a brand has been known as the traditionally leading force where luxury brands are concerned. It was Chanel that announced change in strategy marking attempt to deal with the recession when in October 2008, it decided to slash US prices by 7-10 per cent. The cut was attributed by the company’s US president John Galantic, to the fact that the dollar continued to be strong which allowed Chanel to pass on greater value to customers. Furthermore, managers should also try and profile their consumers on the basis of their personal orientation such as are these consumers predominantly hedonistic or materialists. It is important to understand the difference in this personal orientation. Similarly many luxury brands are marketed and bought for uniqueness as well as high-quality associated with them. Consuming such goods may provide a social advantage. Moreover, in recessionary times consumers may become price conscious and that may have an increasing effect on the overall consumption decision and value proposition. Each of these value dimensions would have a distinctly different effect on consumer engagement and resultant consumer behaviour. Managers need to understand the motives of luxury consumption. For example, an Armani suit bought by a consumer may be bought because s/he is attending an important event of importance and therefore it has more of social (status and conspicuous) aspects associated with it. On the other hand, the person may put-on a high-end luxury fragrance which may reflect more of a hedonistic attitude. One of the biggest steps in brand building would have to be brand identification (Aruda and Dixon, 2007).  One saw in the Chanel strategy an immense capability for weathering the storm of the recession. The recession ideally was a time where one would expect the luxury goods segment to suffer maximum damage given the fact that recession periods are characterized by the tendency among people to cut back on luxury and focus on subsistence. Despite this fact, one saw in Chanel, the extraordinary ability to weather the storm which characterized the financial sector. One has to understand the fact that in times characterized by difficulty such as the recession, most people tend to remain loyal to brands such as Chanel, or a Gucci, and would in fact tend to take comfort from these very brands, symbolic of better times. While in 2008, Chanel, went on the defensive, in the past six months, with the ebbing recession, one has witnessed an upsurge, with Chanel having hiked prices, surprisingly at accessories stores-seem more often than not as the more affordable manner in which one could buy into a brand. This means that for an average consumer, a new Chanel bag now tends to cost more than an astounding £2800, and despite this upsurge is still in demand. Also, the idea behind the management of the Chanel brand has been to highlight the fact that people afford to buy luxury items are choosing to spend their hard earned money on quality over quantity in order to justify their spend and are prepared to purchase items that will last not only a lifetime but are also timeless in style. One could, for example take the case of the quintessential Chanel brand-the quilted Chanel 2.55. the style, signature of the Chanel house, was inaugurated first by Madem CoCo Chanel herself, over 5 decades back, and has still stayed Chanel’s best selling and most sought after style. It is known for its immediately identifiable chain handle, turn-style lock in the heart of the interlocking “C’s”. if one were to try and switch to the ones that are mere replicas, it could almost be guaranteed that one would want the real one, sometime later. it could therefore be understood, as not even a coincidence that Chanel seems to be eyeing the two major movies for a revitalization of all things Breton lined, the jackets of tweed jackets and the strings of endless pearls. What becomes obvious is that this could be seen as a clear signs for the fact that Chanel is trying to project itself as the brand is the classic brand in hope of loyalty from consumers that would continue to come back decade after decade. So what one sees in the advertisements is that there is a tendency to highlight the value additions that owning a Chanel could bring to a closet-typical of the requirement that the market fraught with recession necessitates. the brand of old luxuries is being complimented a promise to the customer about the benefits of the brand that would be counted as three fold. The idea is that like antiques Chanel pieces are unique and one of a kind, that would set the wearer apart from the crowd. Also the fact that these are more affordably priced given the recession than it would be earlier would also be an incentive to buying products such as the Chanel bags. Finally the most attractive quality of all is that despite the recession, Chanel is still the same brand-one associated with style class and elegance. The retention of the value and the fact that these products would tend to be kept in excellent conditions would also add to the lure that consumers would have for the brand. Hence, despite the fact that the world was in the grips of the worst recession since the Great Depression of the 1930s, the brand management at Chanel ensured that Chanel was proving itself as being recession-proof. There were blogs on the internet that exalted the virtue of the Chanel accessories claiming that if one were to buy just one bag in the season it had to be original Chanel over fakes and replicas. Chanel was the classic heritage brand-more affordable that manner of ensuring one invested in something worthwhile. The look promoted was the ‘impossibly chic and iconically stylish’. Conclusion Although, it is correct to assume the fact that in times of growth the weaknesses characterizing the brand are less obvious, given especially the fact that the customer tends to be less price-conscious, it would be wrong to assume that the weaknesses of the brand are un-forgiven during the recession. While it is true that recession tends to drastically alter the spending habits of the customer changes in a dramatic fashion, the idea should be that the opportunity at growth should be recognized and accepted. When others tend to loosen purse strings, companies like Chanel tend to increase spending and tightening emotional engagement with customers ensuring that the long term plan fulfillment of increasing long term loyalty is maintained. With negative news percolating from all media avenues the consumption fear sets in and they require much further motivation for spending. In recessionary times, consumers, not only spend less overall, but they become far more selective in how they spend. They gravitate away from brands that fail to provide a clear, meaningful, relevant and emotional engagement. Again, the current transformation of isolated state-dominated economies into market-driven globally integrated economies is creating business challenges and opportunities around the globe (Gupta and Govindarajan, 2001). Superficial advice would focus on the need for Chanel, to overcome the focus on the developed markets and recognize the potential and Eurasia, converting, global presence into global competitive advantage and cultivate a greater global mindset in order to recognize and exploit good ideas wherever they arise. Chanel, being a global corporate it has established its presence in the markets of integrating the global economy. Based on this assumption it would seem like a simple fact that there need to be further attempts made to expand its presence in the markets of Europe and Asia through further growth oriented plans. Reference: Aruda W and Dixon K, 2007, Career Distinction, pub, Wiley Publications, pp33-48 Kotler P, Pfoertsch W and Michi I, 2006, B2B Brand Management, pub, Springer Books, pp106-120  Silk, A, 2006, What is marketing?, published, Boston, Harvard Business Press  Gupta A K and Govindarajan V, 2001, The Quest for Global Dominance, pub, Wiley John and Sons, pp288-300  Kossecki P, 2007, The Brand Equity– Marketing and Financial Approach, pub, International Microconference on Computer Science and IT, ISSN-1896-7094  Luxury Brands Stand Their Ground. Retrieved October 26, 2010, < http://www.brandingstrategyinsider.com/2009/07/luxury-stands-its-ground.html> Marketing Week. (2010). Chanel’s dream turning to dust. Retrieved October 26, 2010, < http://www.marketingritson.com/documents/markritson110810467.pdf> Young R A, Weiss A M, and Stewart D W, 2006, Marketing champions: practical strategies for improving marketing’s power, pub, Wiley Publications, pp26-28  Global Luxury Brands’ Strategies to Fight Recession. Retrieved October 26, 2010, www.seriquarterly.com Read More