CASE STUDY >
Time to get organized
Written by: Kateřina Zapletňuková
Photo by: Jan Vágner
ADK came into
existence thirteeen years ago thanks to one man's spirit of enterprise.
Today this tenacious firm's initials can be seen on leather accessories
carried by thousands of executives.
AT A CEBIT trade-fair in Hanover in 1990 Roman
Sviták was fascinated with the elegant leather organizers foreign
executives were carrying tucked away under their arm. A programmer
by education, Sviták started his own computer-related business
shortly after the Velvet Revolution in 1989. "I did not have
any device to organize my ideas and my time," the businessman
recalls. Watching foreign entrepreneurs inspired the awareness
that the newly emerged Czech market lacked this kind of accessory. "I
didn't have one personally, and I felt that this could become a
market niche," says the entrepreneur.
The main idea behind a time organizer is comprehensive schedule
planning. Sviták explains that the concept of time management has
evolved over four generations, which is reflected in the types
of organizers on the market. The first generation included a simple "what
to do" list, the second added "when" to the "what",
the third generation prioritized goals, and the fourth (or current)
generation is centered around a person's priorities, including
family, relations, work, etc. From this, Sviták started working
out a concept that would meet Czech consumers' needs. "Compared
to Germans Czech customers require more freedom; less precisely
defined tasks. We wanted our time management system to be as simple
as possible," explains Sviták. A foreign colleague offered
advice on the design, and after choosing the right materials, Sviták
created his first product in 1991 - ADK Classic. A year later he
set up a company bearing the same name.
Taking the risk
The new enterprise required an investment of CZK 10 million, which
covered design, materials and production. Sviták bought leather
from Italian suppliers, but used Czech manufacturers, thus keeping
the price of the product 50% lower compared to foreign brands.
ADK's products are manufactured once a year and sold during the
last two months of the year. "During this time it either
is a success and sales go well, or the product stays in a warehouse," says
Sviták, who was well aware of his do-or-die situation back in
1992. He still is grateful to Czech manufacturers who took the
main part of the investment upon themselves. "They believed
in this product and saw a good prospect for a new customer; thus
they helped finance production during the first year," he
recalls. Sviták adds that in 1992 doors to banks were closed
for a young company that had no history and no results to show.
By that time the entrepreneur, also a founder of the publishing
house Grada, had solid experience with marketing specialized
literature. That helped him choose the right strategy to target
a particular group of potential customers, and to precisely estimate
the number of pieces to be produced. In 1992, ADK sold the whole
run of 5,000 pieces and made a good return on its investment.
- finding a market niche
- precisely determining a target group
- creating a distinctive brand
- combining foreign materials with Czech manufacturing
- successful use of direct marketing
The first generation of ADK's time organizers targeted an elite
group of upscale customers. However, starting in 1995 the company's
target group shifted towards the "average" income group.
ADK produces about 25 kinds of organizers, with prices ranging
from CZK 700 to CZK 10,000. The company's most popular products
cost between CZK 2,000 and CZK 4,000, which is about half the
price of similar goods offered by foreign producers. "Our
main customers are, for the most part, managers or people who
are used to thinking and behaving in a systematic way. They want
to be in control of their environment," says Sviták.
Armed with knowledge about his customer base, Sviták chose a very
deliberate marketing strategy. "Our customers can be found
at trade fairs, and they read certain magazines. So we created
hand-out marketing materials to be distributed at presentations,
expos, and trade fairs." ADK sticks to direct marketing, every
spring sending an ADK catalogue to potential customers. Permanent
customers can become members of an ADK club and get discounts.
The club has been going strong since 1994 and includes about 30,000
members. Accordingly, the company tries not to change its contact
information, so that regular customers don't lose track. Sviták
estimates that ADK currently has about 100,000 customers, representing
about 70% of the Czech and Slovak markets.
The creators present ADK as a Czech brand. "It tells our
customers that this is not a super-expensive product, but the
quality is very high," says Sviták. "And contemporary
customers receive this more positively than if we pretended to
be an Italian product," he adds with a smile. ADK time organizers
are classical yet stylish. Company designers come up with new
models every year, and about one fourth of all models are eventually
phased out. However, some models have remained unchanged from
the very beginning, as a concession to more conservative customers.
In 1995 ADK launched production of goods other than time organizers. "We
calculated that it will be easy to offer our target group new
products through direct marketing, as we do it with our diaries," explains
the firm's owner. The ADK Fashion line includes mainly leather
travel accessories, which accounts for one third of the company's
annual turnover. According to Sviták, his products were originally
created to target men, but recent research showed that women
account for up to 35% of ADK's customer base. This inspired the
creation of a large collection of leather goods for women last
year, which turned out to be a great success.
In 1994-1995 ADK made an attempt to expand to foreign markets,
including Poland, Bulgaria and Russia. This step, however,
turned out a failure. Analyzing the reasons behind his bad
luck abroad, company owner Roman Sviták acknowledges that
at the time he did not have enough managerial experience
outside the Czech Republic and Slovakia. "Secondly,
people in eastern Europe don't attach so much attention to
time management and are typically satisfied with a regular
diary," he says. The enterprise cost ADK all its profits
for two years. Perhaps not surprisingly, Western markets
are not ADK's immediate aim either. "In order to compete
with international companies active there, we would have
to create an English or German language version, which is
expensive. Also, direct marketing would be difficult to carry
out across borders. We would have to change our policy and
become a producer for some wholesale dealer. We have no such
plans thus far," says Sviták.
ADK based its business model on foreign materials and a
cheaper Czech workforce. Company founder Roman Sviták also
concentrated on creating a brand name with outsourced production.
He remembers that in the beginning, most his agreements with
manufacturers were verbal and based on mutual trust. Although
Sviták says that supplier relations have always been very
good and cooperation worked well, he acknowledges that some
years ADK had to return up to one third of a production lot
due to poor quality. In 1997 the company started signing
very strict contracts with suppliers. According to these
contracts, ADK bears the financial risk but has the right
to return flawed products at any time. "I think that
the legal arrangement helped a lot. The quality improved
dramatically," Sviták affirms.