News Analysis: Chanel No 5 turns to Hollywood

It is the ultimate media placement. Viewers of the terrestrial TV premiere of the film Moulin Rouge, starring Nicole Kidman, on Channel 4 this Saturday will also see the full three-minute version of a new campaign for Chanel No 5 in its first break. The ad, like Moulin Rouge, is directed by Baz Luhrmann and features Kidman reprising her role from the movie.

Five months ago Chanel, working with Luhrmann's agent, approached Channel 4 suggesting the programme/ad deal. The agreement neatly dodges any regulatory issues, as ASA codes aimed at maintaining the separation of programming from ads do not apply to films. Arguably it also achieves the dream media buy - an almost seamless join between programme and ad.

Similarly, Chanel's media agency Mediaedge:cia, together with cinema sales house Pearl & Dean, has negotiated with cinema owners for the execution to be shown as part of the run of film trailers, rather than with the other ads. The three-minute cut debuted last Friday, the opening night of Bridget Jones: The Edge of Reason, with two-minute versions now appearing with other films.

This ambitious media strategy is a fitting environment for a blockbuster of an ad. Chanel artistic director Jacques Helleu, mesmerised by Moulin Rouge, approached Luhrmann with a view to recapturing the magic for its flagship brand. The fashion house also briefed its creative director, Karl Lagerfeld, to design five dresses for Kidman to wear in the campaign, including one with pink feathers and a 15ft train.

Staying ahead

Chanel is estimated to have invested £18m in the campaign (which also appears in magazines) to keep 83-year-old Chanel No 5, the world's market leader in premium fragrances, at the top.

Globally, Chanel No 5 has maintained a constant 3.2% value share of the women's fragrance market for the past three years, according to Euromonitor.

It is benefiting from a boom in premium fragrance sales, spurred by rising disposable incomes in regions such as Eastern Europe, the Middle East and Africa. The fragrance market is highly fragmented, but No 5 has managed to cling on to market leadership, staying well ahead of its nearest rival, Estee Lauder's Pleasures. Chanel's Allure is the third-biggest seller.

In the UK, however, the picture is a little different. Although No 5 is the top-selling women's fragrance, its share has fallen over the past three years (see box). The 2002 launches of Hugo Deep Red and Glow by J.Lo stole buyers from No 5, while Jean Paul Gaultier, Christian Dior's J'adore and Dolce & Gabbana Light Blue have all increased their share since 2001.

Chanel's challenge in the UK is to make the No 5 brand more relevant to a younger audience. Where their mothers may have preferred to stand by one signature scent, today's teens and 20-somethings prefer to have an array of fragrances on their dressing table.

They are also spending more per bottle. As teenagers and those in their early 20s grow richer they are inclined to trade up from mass-market fragrances to premium brands. 'It is the celeb-linked brands such as Glow by J.Lo that have done well to tap into this trend,' says Euromonitor account manager Claire Briney.

She predicts that this Christmas' launch of True Star by Tommy Hilfiger, featuring Beyonce, as well as next year's Britney fragrance from Elizabeth Arden, will continue this trend at the expense of the more classic perfumes.

Younger competition

Chanel has already launched two fragrance brands to capture this younger market. Coco Madamoiselle was introduced in 2001 and Chance in 2002, and both have done well, taking a 2.3% and 2% share respectively in their first year of trading.

Boots fragrance buyer Mary Green says that although the classic brands are aspirational, 'younger customers tend to go for Chance or Mademoiselle if they want Chanel'. She adds that young men, who account for half of all purchases of women's fragrances, are also starting to perceive Chanel No 5 as an 'older' scent.

Euromonitor's Briney feels price may also be an issue. 'The smallest available size of Chanel No 5 is a 50ml bottle, which is often too much of a leap for younger consumers. Elizabeth Arden has been able to attract this age group into its Sunflowers and True Love fragrances by reducing bottle sizes to a more affordable 30ml.'

So will the adoption of Kidman as the face of No 5 help boost the brand's appeal to its future core market? Interbrand chairman Rita Clifton is not convinced. 'Nicole Kidman is known for being quirky and interesting, but not necessarily acclaimed for being a great beauty,' she says.

However, Clifton points out that the Chanel brand as a whole has been bolstered by the popularity of its trademark tweed clothing this season, an effect which could feed through into the profile of its fragrances.

Whatever the long-term effect of the current campaign, the shelves in Boots are still likely to be bereft of No 5 come 25 December; the brand is notorious among fragrance retailers for being the first choice for 'panicky men hurtling around stores on Christmas Eve', according to Briney.

DATA FILE - PREMIUM WOMEN'S FRAGRANCES UK SHARE (%)

Brand Company 2003 2002 2001

1 Chanel No 5 Chanel 3.5 3.6 4.0

2 Eternity Unilever 3.1 3.7 3.4

3 Anais Anais Prestige & Collections 2.7 2.8 2.9

4= Hugo Deep Red Procter & Gamble 2.6 n/a n/a

4= Rive Gauche YSL Beaute 2.6 2.1 2.4

6 Jean Paul Gaultier Shiseido 2.5 2.3 2.1

7 J'adore Christian Dior 2.4 2.3 2.0

8= Truth Unilever 2.3 2.5 2.7

8= D&G Light Blue Euroitalia 2.3 2.2 1.8

10 Hugo Woman Procter & Gamble 2.2 2.9 2.8

Source: Euromonitor

This article was first published on Marketing