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.
|Knowing one’s limitsIn 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.|
|Contracts for qualityADK 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.|