Developing a “green field” chain
Written by: Martin Zika
Photo by: Jan Vágner
The Mountfield story could be a Hollywood film. Eleven years ago Ivan Drbohlav began selling lawn mowers from his garage. His company’s turnover this year is expected to exceed two billion crowns.
“AT THE BEGINNING, some people predicted that the firm would fail. They claimed that Czechs, who typically devoted themselves to their gardens and cottages during the socialist era, would drop these pursuits as the political system was changed,” says Václav Brom, a member of Mountfield’s supervisory board and PR director. But that didn’t happen. On the contrary, Czechs increased such activities, and with the relative improvement of the domestic economic situation, Mountfield’s clients are steadily increasing in number and becoming richer.
Prior to 1989, the company’s founder and current director, Ivan Drbohlav, worked as an employee of the foreign trade company Motokov in Great Britain, where he engaged in the trade of agricultural technology. His knowledge of a well-functioning market economy was a great advantage. At the beginning of the ’90s, the already experienced Drbohlav wanted to apply his knowledge to the domestic market. After considering the situation, he placed his bet on the strong cottage culture tradition in this country and decided to go into the garden equipment field. The market in Czechoslovakia was then largely underdeveloped; there were very few products, and the range of those on offer was skimpy. In 1991 Drbohlav received a trade license, and in the small central Bohemia village of Mnichovice his first store was established in a garage. “He was enormously lucky,” says Brom, “as clients were willing to extend credit to the company. This means that a client would come and put down an advance payment on a lawn mower that would be delivered a few days later.” In this way Drbohlav was building his reputation as a trustworthy businessman and laying the foundation for Mountfield’s future success.
As it happened, the company founders’ bet on Czechs’ love for their cottage culture paid off. From 1991 the company grew steadily, and Brom says that no serious problems forced him to lay off employees or close his store. Even the arrival of large do-it-yourself stores did not threaten his position, mainly thanks to his company’s specific position on the market and his relationship with his clients. In 1994 the twelfth store was opened, and two years later (still operating on Drbohlav’s trade license) the company’s sales exceeded CZK 1 billion. 1998 was marked by the formation of the joint-stock company. The firm currently has 49 stores throughout the Czech Republic, and as many service centers. It employs over 600 people and is the clear leader in the garden equipment market. Its suppliers include several Czech firms and a few renowned foreign companies, such as Castle Garden, a manufacturer of rotary mowers and tractors, and Briggs & Stratton, a manufacturer of small gasoline engines..
From mowers to mobile phones
One of the pillars of the company’s success is its strategy, based on the broadest possible diversification. Its product line was gradually expanded in accord with client needs, and the company no longer offers only garden equipment. Now bicycles, scooters, and mobile phones are on the menu as well. How were these seemingly disparate products chosen? Brom explains: “A bicycle? Why not – it’s for enjoying one’s leisure time. A scooter? Sure, if your cottage is isolated, you need to go to the village for food. And so on – these items are not a part of the business line, but in terms of lifestyle they are certainly related.” Eventually, the company even began selling swimming pools. “We managed to catch the trend, and last year we sold about 16,000 above-ground pools, which made us the largest vendor in the republic,” Brom points out. Mountfield currently sells about 400 sunken pools a year, for as much as CZK 1 million each. The company’s great advantage is that it “stands on two legs,” as Brom says. “One is green – i.e., mowers, weed-eaters and the like, and the other is blue – swimming pools.” In this way, the firm covers most seasonal eventualities. For instance, when there is a dry spring, people don’t buy much gardening equipment. But a cottage owner may be thinking about how to cool off. By selling a given customer a swimming pool, Mountfield can more than make up for the loss of sales in mowers or gardening tools in the same year. The company also offers convenient financial services to its clients. Consumer loans, purchases on credit cards, or leasing schemes are all available, along with helpful advice. Since 2001 Mountfield customers can also make purchases at the company’s online store (www.mountfield.cz).
According to Brom, the company’s future lies mainly in opening new stores and improving the existing ones, by expanding sales space, and so forth. Altough it could logically be expected of a strong, successful firm, Drbohlav is not considering expansion abroad. He doesn’t want to enter unknown waters, and furthermore, the market in countries like neighboring Poland is literally overflowing with competition. Brom feels that success there – or in similar foreign lands – would require an enormous effort, compared to his achievements at home.
– well-timed market entrance; exploited market niches
– maximum emphasis on post-sale service, system of long-term guarantees
– aggressive advertising
– wide range of products for the garden and cottage lifestyle, as well as for home-owners
– professional sales staff
Company representatives realized that success in their chosen market would rely highly on after-sales service. According to Václav Brom, Mountfield’s PR director, that is why the firm’s strategy is based on both sales and satisfaction – he wants clients to return to their stores.
“If you buy a product at a do-it-yourself store or from a brand dealer – which are our greatest competitors – you will find a list of repair shops on the guarantee certificate,” Brom observes. “After three years the equipment fails, and it is not unusual for the given address to be long since abandoned, forcing you to run around in circles. That’s something we wanted to do away with,” he adds. Brom believes that the customer must know that he will find high-quality service in the place where he bought the product. That is why a service center is an integral part of each store. In addition, the company provides a two-year guarantee on the products it sells, as is common in EU countries (but will not be required here until 2003). .
You can hardly find a person in the Czech Republic who doesn’t know Béda Trávníček. This animated figure with the voice of Jiřina Bohdalová is the main distinguishing feature of the company’s pervasive advertising. Last year, for instance, Mountfield spent CZK 110 million on advertising, and this year, according to the firm’s PR director Václav Brom, it should repeat this. In just the first six months of 2002, Mountfield spent nearly CZK 45 million, which places it 117th among large advertisers in the Czech Republic.
“Mountfield’s advertising is no doubt striking,” agrees Pavel Brabec, the president of the Association of Czech Adver-tising Agencies. We can think whatever we want about Béda Trávníček, but it is clear that the target group hears the message. Brabec also points out that the company is a pioneer with its consumer lottery, its Wheel of Fortune, which is a demanding matter in terms of both legislation and organization.
However, Mountfield, in its effort to gain customers, occasionally errs. Brabec says that was the case with this year’s campaign, the EU Aquamarin project, in which the company offered significant discounts to its customers. It was able to do so thanks to its German supplier, which received EU subsidies for ecologically friendly products within the 15 member countries. The problem was that an integral part of this Mountfield advertising was EU symbols, which evoked the impression that the company had received a contribution from official EU support funds (however, EC ambassador Ramiro Cibrian refuted this notion). The Council for Advertising classified this act as misleading and false advertising. “There are also many cases when advertising articles about Mountfield were not marked as advertising,” Brabec claims. “But this is not the company’s error, it is the problem of the given publisher. In short, the company goes where the media lets it go.”