Business Philosophy & Business Strategies used

Coco Chanel's humble beginnings were also a blessing in disguise. Most of us are aware of the rags to riches story of Chanel's life. Born in lowly circumstances and raised in an orphanage, Chanel changed her name from Gabrielle to Coco supposedly in honour of a song she performed in cabarets. In time, she raised the capital to start her own fashion business. Her circumstances forced Chanel to literally create the story and the philosophy of the brand from scratch. She was perhaps the first celebrity designer; the first person to turn herself into a living embodiment of her philosophy in order to highlight her work. She was one of those rare people who understood how and why what appealed to her would also work for others. She drew on her instincts, talent and preferences to create lines that were timeless, intriguing, daring and aspirational. Her personality bestrode her work, and yet it avoided being self-indulgent. That story is still very much part of the way that Chanel conducts its business.

Coco Chanel’s marketing strategy can be summed up in her belief that ‘a girl should always be two things: Classy and fabulous’.

When Chanel began to make her mark in the world of fashion, one of the first things she did was challenge the conventions of the clothing world by cutting her hair short and wearing baggy shapeless clothes, as opposed to the trend of long hair and tight corsets. Chanel was always changing and was also a little different - so too was her marketing strategy.

Chanel wanted to create an image for her brand and did so by using six strategies, ensuring:

1 Excellent quality

2 High prices

3 Scarcity and uniqueness

4 Attractive Aesthetics

5 They had an ancestral heritage and personal history

6 Her garments were superfluous and spectacular.

Chanel has always ensured that its creator’s persona is very evident in the brand and the logo for Chanel has not changed since its inception and so has created a world recognised brand. Chanel’s marketing strategy has always been one of innovation, in spite of her unchanging label; Coco Chanel has regularly re-invented herself to align her fashion with current trends. Upon her first foray of success, Coco Chanel introduced a selection of different items. Her three piece suit, which is still modern today, was the first of its kind. Chanel’s innovation and penchant for re-invention and moving into new markets saw her release perfumes and move into the area of dress jewellery. This expansion into new markets helped the Chanel brand to grow and prosper. Another fine example of Chanel’s marketing strategy and constant determination to keep up can be seen in how she handled her return to limelight after a hiatus during the 1940s.

Upon her return, fashion had seen a new star in its firmament, Christian Dior. Chanel accepted this challenge by one again re-inventing her clothing lines and re-designing her haute couture clothing, three piece suits, and perfume and costume jewellery in line to meet to meet modern to meet wants. In fact she even introduced men’s fragrances and aftershaves, unheard of for a woman designer to do at the time. It is this constant reinvention and fearless ability to change with the times that saw Chanel and her marketing strategy succeed. Chanel’s personal ability to keep up with the times while maintaining an individualism and recognition of her brand along with her drive, have ensured that the Chanel brand is still at the fore today.

Achievements attained in terms of products

The classic designs she left behind include No.5 perfume， tweed, two-color shoes, little black dress, etc. The classic assesory is the leather tote bag with metal chain, designed to set free women’s hands. Her beloved camellias is still blooming in the relief pattern in satin evening bag.

Although Chanel began from designing costumes, she started to produce, early in 1925, a small amount of blusher, lipstick and skin care products for herself and her guests, only displayed in Chanel boutique. But as these products are marked with CHANEL name, No.5 perfume appeared on the market in 1921, and began to develop in the area of perfumes and cosmetics.

Picture of Product(s)

Profile of the Entrepreneur

Chanel was born in Saumur, France. She was the second daughter of Albert Chanel and Jeanne Devolle, a market stallholder and laundrywoman. Her birth was declared by employees of the hospital in which she was born. They, being illiterate, could not provide or confirm the correct spelling of the surname and it was recorded by the mayor François Poitou as "Chasnel".[3] This misspelling made the tracing of her roots almost impossible for biographers when Chanel later rose to prominence.

Her parents married in 1883. She had five siblings: two sisters, Julie (1882–1913) and Antoinette (born 1887) and three brothers, Alphonse (born 1885), Lucien (born 1889) and Augustin (born and died 1891). In 1895, when she was 12 years old, Chanel's mother died of tuberculosis and her father left the family. Because of this, the young Chanel spent six years in the orphanage of the Roman Catholic monastery of Aubazine, where she learned the trade of a seamstress. School vacations were spent with relatives in the provincial capital, where female relatives taught her to sew with more flourish than the nuns at the monastery were able to demonstrate.

When Coco turned eighteen, she was obliged to leave the orphanage, and affiliated with the circus of Moulins as a cabaret singer. During this time, Chanel performed in bars in Vichy and Moulins where she was called "Coco." Some say that the name comes from one of the songs she used to sing, and Chanel herself said that it was a "shortened version of cocotte, the French word for 'kept woman'," according to an article in The Atlantic.

According to Chandler Burr's The Emperor of Scent, Luca Turin was told that Chanel was "called Coco because she threw the most fabulous cocaine parties in Paris".

Product Concepts

Today, Chanel stands out in just about every category—couture, ready-to-wear, accessories, jewelry, shoes, and fragrances. What began as a no-nonsense approach to fashion, designed to let women be comfortable while looking dignified, has been translated into classic, tailored style, especially in ready-to-wear, where the traditional tweed Chanel suit with a nipped-at-the-waist cardigan jacket remains one of the most popular—and most copied—fashion staples. Evening gowns tend to have an understated sex appeal and a bit of whimsy, and appear in luxurious fabrics with lots of embellishments. Yet, there is always an undeniable element of the house's founder. "A girl should be two things: classy and fabulous," Coco Chanel once said. Fitting, since that's the absolute embodiment of the label even a century after it was founded.

How the business started?

Coco Chanel didn’t have much money but many of her friends were rich and successful. She borrowed money from a rich friend and started her first hat shop in Paris in 1910. Women were happy to buy her stylish hats and asked her to design clothes for them. In 1913, Coco borrowed money to open a second shop in the French seaside town of Deauville. Women from all over Europe were soon buying her clothes.

With the arrival of the First World War in 1914, women were doing various jobs and Coco designed clothes for them. In 1915, Coco opened another shop in Biarritz in the south of France. Rich people went there to escape from the worries of war and women were looking for beautiful clothes that allowed them to enjoy themselves. In the 1920s, Coco expanded her clothing business around the world. She also began dealing with jewellery and cosmetics.

Coco’s Chanel No. 5 became the most successful perfume of the past hundred years. While many people suffered from the stock market crash of 1929, Coco continued to design expensive products. In the mid 1930s, some of the workers in her factories stopped work and demanded better treatment. In 1939, with the start of the Second World War, Coco closed her factories. After the war, she moved to Switzerland. However, in 1953, she returned to the fashion business. By the late 1950s, she was back at the top. She designed clothing until her death in 1971 at the age of 87.

How the business gained success?

Chanel is one of today’s best known and most highly sought-after fashion brands, and has been one practically since it was founded by Coco (Gabrielle) Chanel in 1909. Her big break hit when she opened a small shop in Paris in 1910 where she sold her hats. And by 1913, after asserting disdain for resort wear, she launched sportswear: Her take was simpler—flannel blazers, jersey sweaters, and women in trousers, all of which were decidedly against twentieth-century culture memes. Chanel was trendsetting before there were trends. 

Her post–World War I look gained attention, as she brought on modernism in fashion through beaded dresses in the twenties, the infamous little black dress, as well as a two- or thee-piece suit, which is still a signature Chanel look. By 1921 she introduced Chanel No. 5, and was once quoted as saying "A woman who doesn't wear perfume has no future." No. 5 went on to become one of the best-selling fragrances of all time. After a period away from Paris, Chanel returned after the Second World War in the fifties, a time when Christian Dior was touted as Paris's premiere couturier. 

However, Chanel rose again with the launch of her chain-link belt and quilted leather bags—today with the interlocking C's—reestablishing Chanel as the definition of classy glamour with an edge. Coco passed in 1971, but the brand continued, even launching their first ready-to-wear collection in 1978. Yet without a lead designer to be the face of the brand, the house struggled to maintain its enchanting reputation for luxury. That is, until Karl Lagerfeld joined in 1983 to revive it to its elite status, which he did with added glamour and sexiness.

The ups/downs of the entrepreneur & her business.

In 1939, at the beginning of World War II, Chanel closed her shops. She believed that it was not a time for fashion.During the German occupation Chanel resided at the Hotel Ritz, which was also noteworthy for being the preferred place of residence for upper echelon German military staff. She also maintained an apartment above her couture house at 31 rue Cambon. During that time she was criticized for having an affair with Hans Günther von Dincklage, a German military intelligence officer who arranged for her to remain in the hotel. Chanel was herself a Nazi intelligence operative, Abwehr Agent 7124, code name “Westminster".

World War II, specifically the Nazi seizure of all Jewish-owned property and business enterprises, provided Chanel with the opportunity to gain the full monetary fortune generated by "Parfums Chanel" and its most profitable product, Chanel No. 5. The directors of "Parfums Chanel," the Wertheimers, were Jewish, and Chanel used her position as an “Aryan” to petition German officials to legalize her claim to sole ownership. On 5 May 1941, she wrote to the government administrator charged with ruling on the disposition of Jewish financial assets. Her grounds for proprietary ownership were based on the claim that “Parfums Chanel “is still the property of Jews”…and had been legally “abandoned” by the owners.“I have,” she wrote, “an indisputable right of priority…the profits that I have received from my creations since the foundation of this business…are disproportionate…[and] you can help to repair in part the prejudices I have suffered in the course of these seventeen years.”Chanel was not aware that the Wertheimers, anticipating the forthcoming Nazi mandates against Jews had, in May 1940, legally turned control of “Parfums Chanel” over to a Christian, French businessman and industrialist, Felix Amiot.

Ultimately, the Wertheimers and Chanel came to a mutual accommodation, re-negotiating the original 1924 contract. On May 17, 1947, Chanel received wartime profits of nine million dollars from the sale of Chanel No. 5, an amount equivalent to some nine million dollars in twenty-first century valuation. Further, her future share would be two percent of all Chanel No. 5 sales worldwide. The financial benefit to her would be enormous. Her earnings would be in the vicinity of twenty-five million dollars a year, making her at the time one of the richest women in the world. Chanel’s friend and biographer Marcel Haedrich provided a telling estimation of her wartime interaction with the Nazi regime: “If one took seriously the few disclosures that Mademoiselle Chanel allowed herself to make about those black years of the occupation, one’s teeth would be set on edge".

In 1943, after four years of professional separation, Chanel contacted Lombardi, who was living in Rome. She invited Lombardi to come to Paris and renew their work together. This was actually a cover for "Operation Modellhut," an attempt by Nazi spymaster Walter Schellenberg to make secret contact with Lombardi's relative Winston Churchill. When Lombardi refused, she was arrested as a British spy by the Gestapo. Chanel was later charged as a collaborator, but avoided trial due to intervention by the British Royal family.

Haute Couture suit circa 1960, designed by Chanel. Chanel was a very close friend of Walter Schellenberg to the extent that when he died of cancer penniless in Turin, Chanel paid for his funeral. Some references suggest that Coco Chanel had close contact with another Nazi, Walter Kutschmann, who was responsible for the murder of thousands of Poland's Jews early in World War II. He was transferred to France in 1943 where he became Chanel's Paris SS contact. Kutschmann made frequent trips to Spain with Chanel with large sums of money passing between them.

Key Factors contributing to the success of the business.

This is the success Lessons from Coco Chanel:

Be Different

“In order to be irreplaceable one must always be different,” said Chanel. “People laughed at the way I dressed, but that was the secret of my success: I didn’t look like anyone.” Chanel disliked the look of corsets and felt that women were taking on too much discomfort in the name of fashion. “Luxury must be comfortable, otherwise it is not a luxury,” she said, and replaced the corset with comfort, casual elegance, and a feeling of hidden luxury. She mixed up the vocabulary of male and female clothes. Her fashion themes included simple suits and dresses, women's trousers, costume jewelry, perfume and textiles.

Be Daring

Chanel was willing to take the risks she needed to in order to reach the top. From day one, her career had been characterized by her willingness to defy convention time after time. When Chanel first introduced her jersey and tweed suits for women, she was rebuked by the European critics. But, Chanel gave no matter. “The most courageous act is still to think for yourself,” she said. “Aloud.” She ignored the critics and continued embodying her bold vision of fashion and femininity. She designed and wore open-necked shirts when everyone else was buttoning theirs up; she wore trousers and created her signature scarlet lipstick. “Success is often achieved by those who don't know that failure is inevitable,” said Chanel.

Leave a Strong Impression

Chanel understood the importance of appearance to getting ahead in the business world. “Dress shabbily and they remember the dress,” said Chanel. “Dress impeccably and they remember the woman... It’s best to be as pretty as possible for destiny.” It takes 30 seconds to make a first impression. Chanel believed that time must be filled with elegance and class. She wanted women to be beautiful so that they could become someone and to do something important.

Never Give Up

During the World War II Chanel had to shut down her fashion business, but she never lost faith in herself. Despite having to overcome her age and her ruined reputation.

How the product got its name?

Gabrielle Bonheur Chanel is her full name. She was the second daughter of Albert Chanel and Jeanne Devolle. The product of 'Chanel' come from her father family's name.