High visibility

Visibility was a problem for Nelson and Cherry Yau when they put up Chanel Manufacturing Co. (the nearest to both their names that they could manage) in 1990.

"We came up with 10 t-shirt designs and brought them to Shoemart. Maybe because he thought we were not serious about the business, the purchaser asked us to show him an advertisement of our brand, Molecules. We couldn’t show him any," said Cherry.

Undaunted, the couple placed a series of ads in a national newspaper and then returned to the purchasing department of SM. They were asked to make samples. Nelson was then interviewed by Teresita Sy-Coson, who asked, among other things, his stockholders’ profiles and his business plan. Of the 10 designs submitted, the department store chain gave purchase orders for seven.

Celebrity endorsers

Getting into SM was, however, not enough. "For SM to reorder, we needed to help SM push sales. We needed people to look for and buy our products," said Nelson, who thought about using a local celebrity endorser.

Yau’s shareholders balked at the idea. They felt the money used to pay a celebrity endorser could be put to better use in the factory.

After a lot of lobbying, Yau got his board’s blessings. Chanel signed up Joey de Leon, a TV host in a highly rating noon time show.

With a face to go with the brand, Yau put De Leon wearing a Molecules shirt or holding Molecules paper bags on giant billboards and in strategic areas in malls. "We were lucky that Joey wore our t-shirts on TV. Most celebrities preferred to wear foreign brands but Joey was loyal to our brand," he said.

Yau’s shareholders didn’t question him when he decided to get actress, Claudine Baretto, to be the image model for Particles, Chanel’s line of clothes for women. Soon after, Rico Yan, the off-camera sweetheart of Baretto, replaced De Leon as Molecules’ endorser.

Marketing strategy

As a marketing strategy, Baretto and Yan are never photographed together in advertising materials and billboards. "We didn’t get Rico and Claudine for the love angle. We wanted two people whose individual personalities – independent, smart and confident – best represent our products," said Yau.

Billboards currently account for 80% of Chanel’s advertising budget. It has five billboards in Metro Manila and one in Davao.

"Through trial and error, we’ve learned where to strategically place our billboards to push sales. It’s important to be located in a high-traffic area like EDSA," said Cherry. Chanel’s billboard near Guadalupe, for example, has helped drive sales in nearby malls.

The investment return on less frequented C-3, along A. Bonifacio going to Blumentritt, is breakeven. The return on locations like Bicutan where a lot of smaller-sized billboards compete with each other for visibility is negative.

Factory

Chanel is located in Dagat-dagatan Tondo, with most of its 120 workers living nearby. It makes between 36 and 40 new designs each month for its three brands, Molecules for men, Particles for women and Pretty Particles for sub-teens.

"As part of our contract, we provide our celebrity endorsers 36 shirts a month," Cherry said. "Many of our customers see the t-shirts on TV and look for them the next time they go to the mall. We have some customers who buy almost all our designs, one shirt for every day of the month."

To keep up with increased orders, Chanel now uses sub-contractors, nine of whom are former Chanel workers. In part, the increased orders could be traced to Chanel’s 10% price cut last year and in part to small giveaways like key chains.

This month, Chanel will launch a cologne line in the provinces. Initially, the colognes, which will carry the Chanel brand names, will be made by a toll manufacturer. "We’re piloting the product line and ironing out the kinks before we bring it to Manila," said Cherry. – MJGrey