MG5561 International Marketing

Introduction:

International expansion is used by the organisations to increase its business growth. Entering into an overseas market helps the company to grow faster by also extending its global footprints, experiences of new audiences on the product or services the organisation provides (Hilmersson et al. 2017). It might also lead to further expansion which will make the organisation a multinational company. In order to expand internationally it is very important for the organisation to have an international marketing plan which will help the company to move forward in an organised manner (Pattnaik, Singh and Gaur 2020).

This report will focus on international expansion of Nando’s food chain which is a South African brand that specializes in Portuguese- African food (Nando's, 2021). The organisation was founded in the year 1987 and it operates over 1,000 outlets in approximately 35 countries. Recently the brand has planned to move their business to Hungary which is one of the best places to have business operations in Europe. It is centrally located, has lowest corporate tax which is 9% and has a low cost of living. The main and purpose of this paper is to discuss the market conditions of Hungary and develop a marketing plan for Nando’s food chain so that it can expand into the market and have a smooth business operation.

Country Attractiveness:

The Republic of Hungary is situated between Balkans and Western Europe. Its population count is approximately 10 million and the capital is Budapest. Hungary’s location as well as the growth potential signifies that it is an attractive location for business growth opportunities. This part of the assignment will discuss the political, economic and cultural factors of the nation that will help the company of Nando’s food chain to identify the business opportunities it has while expanding.

Political factors-

The political system of Hungary follows a combined parliamentary democracy. It has occurred out of the former Soviet bloc Communist countries after the evolution process that took place between 1989 and 1990. Hungary has now become a stable democratic country but there are still some issues that constantly push the reliability of the nation. The current government which is Fidesz- Hungarian Civic Union, holds the two- third majority and it provides the party with sufficient power to push over the changes within nation’s constitution (Shatskaya, Komaristaya and Kafian 2017). The managerial power is collective and it includes executive, the legislature and the judiciary. The main focus of government is to maintain a strong relationship between the neighboring countries, to present improvements and to reinforce the incorporation of country into European Union.

Structural incorporations focus on enabling a long- term sustainability as well as to improve economy of the country with the external trade as well. In order to accomplish the shortfall in budget, the government is growing its revenue by cutting the expenses. The debated policies of Hungary like media law and changes within constitution in terms of ethical and moral standards can affect in global criticism from the other regions and it can also lead to a further parting among the right and left- winged parties of the nation (Antal 2017). The nation is facing several political encounters but it is predictable that these risks will reduce in the future for a mid and long- term.

Economic factors

The economic conditions of Hungary have improved in the last few years and it is now characterised by property rights, freedom of trade, freedom of business as well as freedom of investments which is a good factor for the companies who want to expand their business in the country such as Nondo’s food chain. In addition to this, there is liberalization going on into an open economy as well as steady changes towards the Western European nations. It takes at least 4 days to expose a new commercial in the country, but, the Organisation for Economic Co-operation and Development (OECD) takes at least 14 days.

The economic rules of government support the local consumption as well as the development of any business within the nation (Düerkop and Huth 2017). The republic of Hungary is a member of numerous global organisations which is one of the main factors to support the growth in international businesses. Hungary’s GDP rapidly increased in the year 2000 from 123.74 billion USD to 195.48 billion USD, but it was tracked by a drop in the year 20089 which was 184.32 billion USD (Statista, 2021). Hungary has a robust export- concerned economy it is therefore, reliant on the European countries like Germany for the export market. The inflation rate was 4.21% in the year 2009 and it rose to 4.84% in the year 2010. However, the deterioration in the external growth as well as the funding environment caused in a reduce of the nation’s rating with an undesirable outlook. Apart from this, Hungary is also suffering from a high rate of unemployment that varies provincially. In the western region, unemployment is low as there are major foreign investments but the rate of unemployment is high in the northeast and north.

Cultural factors

The ethnic groups in Hungary includes Romany, Magyar, German, Slovak, Serb, Romania. However, the ethnic Hungarians almost accounts for 90%. The country has a freedom of religion, whereas the Roman Catholics are the major group. The other religions like Lutheran, Calvinist, Hewish, Greek Catholic and some others signify a small share within the country. The demographics in terms of age shows that the aging population of the nation is a cause of worry and the main reason for this was a reduced rate of birth (Kiss 2019). This has resulted into a reduced workforce as well as a drop in the government incomes due to income tax loss. The people of Hungary are very literate and it is known as one of the highest across the globe. The government took several initiatives to improve education within the country (Angelusz and Tardos 2017). In addition to this, to retain the market share from the competitors from the Asian economies, that has lower costs, the nation needs to develop a more skilled industry as the basic skills alone will not help the nation to remain competitive.

Market Audit and Competitive Market Analysis:

The individuals in the marketplace does not automatically adopt the new products, rather firstly they make conscious decisions of whether they want to use one or not. The decision of customers to adopt an innovation is deliberate. The diffusion of innovation identifies five characteristics that determines the customers use of an innovated product.

Relative advantage: It will measure how improved the company of Nando’s is over their competitors within the country of Hungary. The potential customers must see that an innovation will improve their present situation (Lien and Jiang 2017). The improvements that can be done by the organisation of Nando’s food chain are providing a better service, decreasing the need of supply and equipment, improving the interface, increasing customizability and more.

Compatibility: It refers the level of compatibility that the products of organisation will have with their customers when they adapt into their lives. The potential adapts must need to know that the products of Nando’s will be compatible with the lives of customers (Zanello et al. 2016). The innovations achieve a greatest success when the customers are able to seamlessly adopt them whenever they replace an existing product for the innovated product.

Complexity vs. Simplicity: These refers to how difficult it will be for the customers to use a new product. Complexity slows the progress of a product. The more complex a new product will be, the more difficult it will be for the customers to incorporate it into their lives. If the product will be simple enough for the customers to understand, the more easily they will be able to adapt it.

Trialability: It explains how easily the customers can explore the new product that is provided by the organisation. Trialability is very critical to simplifying the acceptance of the new product. The potential customers have the urge to see what the new product is like and what it can do (Currie and Spyridonidis 2019). They can even give it a try before giving a commitment to the product. This is the main reason of why the organisation provide their customers with trial sizes for the tangible goods or products.

Observability: It is the extent to which the benefits or results of using the innovation will be visible to the customers. Not every customer adopts the new product or innovation immediately. There potential adopters clearly see the benefits of adopting the new product or innovation as well as using it.

The customers face several barriers the paralyse their desire to adopt the new innovations, and all these barriers can be grouped into two main categories: psychological barriers and functional barriers. The functional barriers are related to three areas: value of product, usage patterns of products and the risks associated with usage of product. All these barriers are likely to arise if the customers perceive a significant change from adopting the new product. However, the psychological barriers arise from two of the factors: norms and traditions of the customers as well as the perceived image. These barriers are created more often through the conflict with prior beliefs of customers.

Consumer Buying habits- The new generation are emerging faster than before, whereas those who belong to Generation X, were born across the span of over 20 years. Generation Y are the ones who have an age span of 13 years. And after Generation Y, two new generations have entered into the marketplace and the driving force behind generational shifts is technology, which has impacted the expectations of consumers greatly towards both products as well as services (Oravecz et al. 2020). However, Generation X has the largest share of purchasing power in the country of Hungary presently, but this is decreasing as the digital native generations are taking over.

As there is an increase in the urban population, the customers from Hungary are expressing a growing interest in the high- quality convenience food. This has initially stimulated an increase in demand of the fast and processed food products within the country, but the brand awareness related to health issues has also created an interest among the customers to consume healthy and organic foods (Fricz et al. 2020). According to a recent digital report, the social media usage penetration of the country is 62% as of the year 2020 and 94% of these users’ access through their mobile phones. The share of a total advertising audience on social media platforms is much higher for the users between the age group of 25- 34, followed by 35- 44 years. In addition to this, it has also been observed that the consumers of Hungary prefer to shop online more.

Competitor’s analysis-

The main food chain organisation in the country of Hungary is Burger King franchise, Jollibee outlets, KFC franchises, McDonald’s restaurants and more. These companies are the leading food chain restaurants who have gained a good customer base. Nando’s serve the crunchy almonds, cashews and macadamia nuts in a fiery Peri- peri seasoning, it also provides Burgers, Wraps, beverages, deserts and more (Kliestikova and Janoskova 2017).

However, the competitors of the organisation are also a fast-food chain of restaurants who have their own specialities. For instance: KFC provides chicken, burgers, snacks, beverages, desserts, combos and many more. The prices of the competitors are competitive yet they provide the best deals to their customers due to which they are attracted towards the brand. In addition to this, KFC uses social media platforms such as Facebook, Instagram, Twitter, YouTube and more for their promotions and advertising to reach out to their customers. KFC uses a direct distribution channel as it provides its products directly from the outlets to their customers.

In order to expand business in Hungary, no minimum capital is required in order to establish or operate an unlimited partnership. There is also no administrative permit is required in order to establish an organisation in the country. Therefore, it will be easier for Nando’s food chain company to operate their business in the country of Hungary.

Marketing Plan:

Mode of entry- An effective entry into the markets of Hungary will need a local representation as well as personal contact.

Marketing objectives-

• The target market will be tourists, younger consumers, households with children, working professionals and single individuals.
• The expected sale will be 0.5% and the others sales will be from fast service, convenience and self- service.
• The profit expectation for the company will be around 20% of the revenue.
• The company will reach about 30% of the marketplace within its first six months.

Product Strategy: The company of Nando’s must maintain the quality of its products and improve the taste with the help of Hungarian ingredients. The organisation will consider all the economic, political, social, technological, environmental, legal factors of the country. The packaging of food products will be done with an eco- friendly label, and additionally, the food as well as culture will play a vital role in adaption. The branding policy of Nando’s will reflect the values, norms as well as behaviour patterns of the targeted tourists and local markets.

Promotion Strategy: The organisation will adopt personal selling which will be driven by their employees, advertising and sales promotion will be dome through online and mobile. The main objectives of the promotional tool will be to teach different target market segments, create a mass awareness among consumers and let the consumer try sample fee meals. Nando’s is a global brand, therefore the company will use both global and local campaign strategies in order to reach the tourists as well as the customers.

Distribution Strategy: The organisation will have their retail outlet chain that will be spread in the main streets of the city to reach a maximum number of customers. The company will also build an infrastructure that will promote an ease of access for both the tourists and local customers. The restaurants will have a seating arrangement for the customers with self- service, fast service, vending machine and drive- through on a large scale of distribution strategy. Export will be selected as a mode of entry where air transport and port will be used as a means of convenience. Nando’s will provide attractive profit margins to the partners and potential franchisees. In addition to this, the organisation will also face a problem due to the presence of competitors who will provide a poor quality of chicken at low prices.

Pricing Strategy: The cost and profits will be measured in a low- cost strategy. The product suppliers, competition, labour cists and consumer habits will force the organisation to find a faultless balance in pricing. The organisation will adopt a low pricing strategy so that they can effectively fight with the fierce competition from the main competitors. Additionally, there are no control on prices from the government which will be a beneficial factor for the organisation. The low pricing strategy will help the company to acquire the market of Hungary easily and it will also allow their customers to try the new products.

Conclusion:

Lastly from the above discussion, it can be concluded that it is very important for the organisation to get prepared for an international expansion and analyse the factors of the foreign country that can have an impact on the business. Nando’s is a food chain company of South Africa that has built their presence in all across the world by providing delicious food to their customers. The organisation now has plans to move into the markets of Hungary. This report has analysed all the external factors such as political, economic and cultural factors that can impact the business but all the factors of Hungary shows that they are in the favour of business expansion and they are very welcoming for the international investments. Nando’s food chain will be favoured in the country of Hungary due to its presence in the other European Union states. The company will not have to face any such unfamiliar environment, behaviours, culture of tourist or spending patterns. In addition to this, the company must work on a better pricing strategy and product customization in order to launch in the markets of Hungary. Moreover, after analysing all the factors, it is believed that it is a good idea for Nando’s food chain to expand into the markets of Hungary and they have the potential to achieve success.

References:

Angelusz, R. and Tardos, R., 2017. Change and stability in social network resources: the case of Hungary under transformation. In Social Capital (pp. 297-323). Routledge.

Antal, A., 2017. The political theories, preconditions and dangers of the governing populism in Hungary. Politologický časopis-Czech Journal of Political Science, 24(1), pp.5-20.
Kiss, A., 2019. A dynamic interplay of weather, biological factors and socio-economic interactions: late 15th-century–early 16th-century crises in Hungary. In The Dance of Death in Late Medieval and Renaissance Europe (pp. 125-145). Routledge.

Currie, G. and Spyridonidis, D., 2019. Sharing leadership for diffusion of innovation in professionalized settings. Human Relations, 72(7), pp.1209-1233.

Düerkop, S. and Huth, M., 2017. Transportation under Threat–A PESTLE Analysis for Critical Logistical Infrastructures. ICTA2017, p.14.

Fricz, A.S., Ittzés, A., Ózsvári, L., Szakos, D. and Kasza, G., 2020. Consumer perception of local food products in Hungary. British Food Journal.

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Kliestikova, J. and Janoskova, K., 2017. Branding with understanding: how national profile of consumer influences brand value perception.

Lien, A.S.Y. and Jiang, Y.D., 2017. Integration of diffusion of innovation theory into diabetes care. Journal of diabetes investigation, 8(3), p.259.

Nando's, 2021. Nando's | The official worldwide home of Nando's. [online] Nandos.com. Available at: https://www.nandos.com/  [Accessed 13 May 2021].

Oravecz, T., Mucha, L., Magda, R., Totth, G. and Illés, C.B., 2020. Consumers' Preferences for Locally Produced Honey in Hungary. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 68(2), pp.407-418.

Pattnaik, C., Singh, D. and Gaur, A.S., 2020. Home country learning and international expansion of emerging market multinationals. Journal of International Management, p.100781.

Shatskaya, E., Komaristaya, E. and Kafian, K., 2017. The study of the hungarian car refinish market on the basis of pestle analysis. , p.54.

Statista, 2021. Hungary - gross domestic product (GDP) 1986-2026 | Statista. [online] www.statista.com/. Available at: https://www.statista.com/statistics/339869/gross-domestic-product-gdp-in-hungary/  [Accessed 13 May 2021].

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