Thai handbags that dare to be different
By Jon Fernquest[Introduction|Vocabulary|Article]
[Reading Questions|Answers]
 |
Today's article is about a Thai fashion company, Michelangelo International.
This company produces small collections of handbags and other leather goods with a unique style of decoration.
The company also has a well-defined set of strategies that they've used to become competitive in international fashion markets.
What unique and exclusive attributes do you appreciate in the products and services that you consume?
Could the company's strategies be applied to other important industries in Thailand such as the hotel, restaurant, and tourism industries?
How could you make the products and services sold in these industries more unique and exclusive?
Michelangelo was a famous Italian artist of the 16th century, so the very name chosen for the company evokes images of classic beauty such as the ceiling of the Sistine chapel in the Vatican at Rome.
Reading Questions
Here are some questions to guide your reading (See answers at end):1. Does Michelangelo International follow international fashion trends?
2. How long has Michelangelo International been successful in the Thai leather goods market?
3. What kinds of products does the company produce?
4. What color has the world fashion industry declared to be this year's color?
5. Is Michelangelo International following international fashion trends and producing most of its products in orange?
6. If the company doesn't follow fashion trends then what is it about the company that customers like?
7. What is one common reason for brand switching to their product from world class brands?
8. What provides the inspiration for many of the company's designs?
9. Give an example of how the company creates brand identity through unique decoration. Draw a picture, if possible.
10. Are sales margins greater for export or domestic sales?
11. What limits their production of exclusive collections?
12. Are the company's handbags expensive? Are they expensive for world class luxury product? How much do they typically cost?
13. What production pattern increases the incentive for the customer to purchase quickly?
Article
Dare to be different
The trendsetter who prefers not to follow fashion ARANEE JAIIMSINMany fashion producers believe that following international fashion trends is the most successful approach to drawing consumers' attention, but Michelangelo International Co thinks differently.
The leather goods of Michelangelo International have been popular in the local market for almost two decades due to a clear brand identity, says managing director Pichet Nitipaisalkul.
The company is now busy preparing new collections of leather goods, including wallets, purses, handbags and jewellery, to exhibit at the Bangkok International Fashion Fair (BIFF) and Bangkok International Leather Fair (BIL) 2006 from Sept 27 to Oct 1 at the Bangkok International Trade and Exhibition Center.
Surprisingly, only one design among the 10 new collections is in orange, despite the fact that the fashion world has decreed orange to be this year's colour.
Mr Pichet says that most purchasers of his products like their uniqueness.
"Many clients switch from world-class brands worth many thousands of baht per item to our products because they know it would be very rare to attend an event and meet someone with the same handbag," he says.
Many designs of Michelangelo were inspired by specific production materials, for example, leather, feathers, crystal and brass chains, rather than international fashion trends.
The company sometimes refers to fashion trends when choosing colours, although, in Mr Pichet's view, some colours simply don't appeal to Asians.
Brand identity is expressed through unique decoration, for instance, an exclusive pink handbag with a white Dalmatian motif. Black crystals represent the spots on the dog's skin, while two marine-blue crystals are used for its eyes.
According to Mr Pichet, a slowing economy and rising production-material costs have had a great impact on his business this year, though he is still forecasting 10% sales growth.
The sales margins of his general products dropped by 5-8% during the first six months of the year, he says, adding that margins of products sold in the domestic market averaged more than 40%, compared with 25% on exports.
To improve margins and increase sales revenue, the company aims to increase the proportion of exclusive collections to 30% from 25% of overall products at present.
"It isn't appropriate to raise the proportion of exclusive collections to more than 30% because our raw-material supply is limited," says Mr Pichet.
Michelangelo handbags cost from 8,000 baht, and other leather products between 5,000 and 8,000 baht.
Michelangelo International keeps raw-material stocks lean, for just a few months of production, in order to control costs.
"I am more tired than before because I have to travel more often to source new materials, as we develop new products almost every week," says Mr Pichet.
Nevertheless, the company benefits because clients are almost always able to purchase new products.
"Clients understand that if they don't buy the products they like as soon as they find them, they will lose the opportunity because the company produces each collection in small volumes."
Vocabulary (in discussion above)
brand switching - when people who usually use one brand start using a different brand (for example I start using a new brand of shampoo because my hair is too dry, the opposite is brand loyalty; see Wikipedia on Brand usage and loyalty)
incentives - some reward that gives a person a motive for doing something (for example if I buy the handbag now, I will be able to get one, in a short time they will no longer be available)
a clear brand identity - the name of the product is easy to recognize, the brand name stands out and is noticeable to people (the brand identity of Kleenex is not clear because the word is used for any tissue paper in the United States)
Bangkok International Fashion Fair (BIFF) - a major international fashion in Bangkok organized by the government Department for Export Promotion (See homepage for last year's show)
Bangkok International Leather Fair (BIL) - The annual trade fair for leather products in Thailand, sponsored by the Department for Export Promotion (See webpage for 2006 show)
Bangkok International Trade and Exhibition Center (BITEC) - one the main exhibition and convention centers in Bangkok, located in Bangna (See webpage)
decreed - official decision declared publicly
exclusive - not available to everyone (usually implies luxury, limited to people who have a lot of money or who belong to a high social class, like Paris Hilton, I guess)
Dalmatian - a white dog with black spots, famous for being a fireman's dog (See Wikipedia)
http://en.wikipedia.org/wiki/Dalmatian_(dog)
raw-material - the material that is used to manufacture a product from (for example leather is a raw material used in handbags and cement is a raw material used in buildings)
keeps raw-material stocks lean - only keeps small quantities of raw materials for production (to save money a "just in time" inventory strategy is used, that is raw materials only arrive at the factory "just in time" or exactly when they need to be used, it costs a lot of money to have working capital tied up in large inventories)
Answer Key:
1. Does Michelangelo International follow international fashion trends?
No, unlike most fashion companies the company does not believe that "following international fashion trends is the most successful approach to drawing consumers' attention."
2. How long has Michelangelo International been successful in the Thai leather goods market? Why?
Around 20 years, because they had a "clear brand identity."
3. What kinds of products does the company produce?
The company produces leather wallets, purses, and handbags, as well as jewellery.
4. What color has the world fashion industry declared to be this year's color?
Orange.
5. Is Michelangelo International following international fashion trends and producing most of its products in orange?
No, only one out of ten of this year's designs are orange.
6. If the company doesn't follow fashion trends then what is it about the company that customers like?
They like the uiniqueness of the products.
7. What is one common reason for brand switching to their product from world class brands?
If a customer buys their brand of handbag, it's unlikely that other people will have the same handbag when they attend important events.
8. What provides the inspiration for many of the company's designs?
Specific raw materials such as leather, feathers, crystal and brass chains.
9. Give an example of how the company creates brand identity through unique decoration. Draw a picture, if possible.
One example of creating a brand identity though unique decoration is a handbag design. The design is pink "with a white Dalmatian motif. Black crystals represent the spots on the dog's skin, while two marine-blue crystals are used for its eyes."
10. Are sales margins greater for export or domestic sales?
They are greater for domestic sales, 40% versus 25%.
11. What limits their production of exclusive collections?
A limited supply of raw materials (such as leather, feathers, crystal and brass chains, one could infer).
12. Are the company's handbags expensive? Are they expensive for world class luxury product? How much do they typically cost?
They are expensive, but not as expensive as world class luxury products (I would assume, we would have to ask women, I'm a man). The company's handbags typically cost 8,000 baht or more.
13. What production pattern increases the incentive for the customer to purchase quickly?
The company produces unique collections in small volumes, so if a customer does not purchase the products "as soon as they find them" they may not have another opportunity.
