Table of Content

1.  Executive Summary.  4

2.  Introduction.  5

3.  The Given Environment.  6

3.1.  Our Target Market Hungary.  6

3.1.1  History.  6

3.1.2  Geography.  7

3.1.3  Demography.  7

3.1.4  Economy.  8

3.1.5  Legal Regulations, Especially Franchising  10

3.2.  YUM and Taco Bell  10

3.3.  Market and Competitors  12

4.  The Positioning  14

5.  Taco Bells Marketing Mix in Hungary  16

5.1.  Product Adjustments.  16

5.2.  Location  17

5.3.  Promotional - Mix  19

5.4.  Price.  21

6.  Distribution.  23

7.  Profitability  24

Appendix 1:  Questionnaire.  25

Appendix 2:  Results of the Questionnaire  26

Appendix 3:  Qualitative Interviews  30

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2. Introduction

People like “Taco Bell” because of its spicy food in a Mexican style. Also the Hungarians are used to eat spicy food. However, they don’t have Taco Bell in Hungaryat least until now.

Our work is concerning with the introduction of Taco Bell into Hungary. Or more specific: We want to estimate, IF and HOW Taco Bell can be successful in Hungary. Our first impression was, that it can work, because Taco Bell delivers spicy food and Hungarians love spicy food. This was the first reason which comes in our minds and through the research we found more.

To achieve this destination, we will use the methods of a questionnaire, informing about the company taco bell through Internet, did a qualitative research of Hungarian students, library research and observation in the field of the existing competitors. What we are doing is one of the typical challenges in International Marketing: We want to introduce a product, which is given in one country to another market. But we should avoid the fault that we manage the foreign customers in the same way as the domestic ones. We should avoid to simply copying the product Taco Bell from America. Its called ethnocentristic approach in opposite to an appropriate international marketing approach.

Rather we should adjust our product to the target market. That must not mean to develop a total different product, like the polycentric approach suggests. The right way will be in the middle. Therefore we will take basic elements as well as adjustments to the market.

To reach a successful launch, we have to consider foreign uncontrollable variables like geography and infrastructure, cultural-, political-, legal-, economic-, and competitive-forces as well as the structure of distribution. We can’t influence non of these variables, we can only adjust to them. The instruments to adjust are the four P’s, product, place, price, promotion. These are our controllable variables.

But not only the controllable variables have to fit to the uncontrollable variables, there is also an another task. The marketing-mix elements as well as their sub-elements have to fit to each other. In other words: They have to be centripetal. To sum it up: To introduce Taco Bell to Hungary, we have to answer following three points: We will mention strengths and weaknesses to introduce Taco Bell in Hungary. Furthermore, we have find the right connection to the existing environment of Hungary. Finally we have to find the right connection between the Marketing mix elements of Taco Bell. So: Let’s start.

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3. The Given Environment

3.1. Our Target Market Hungary

3.1.1 History

source: www.cia.com

Studying the country’s history is advisable, because it provides more tools to understand the culture and the market, so here it is a very briefly explanation: Hungary was part of the Austro-Hungarian Empire, which collapsed during World War I. The country fell under Communist rule following World War II. In 1956, a revolt and anno unced withdrawal from the Warsaw Pact were met with a massive military intervention by Moscow. Under the leadership of Janos KADAR in 1968, Hungary began liberalizing its economy, introducing so-called "goulash Communism." Hungary held its first multiparty elections in 1990 and initiated a free market economy. On may 1first of this year, Hungary, with other nine countries, will join the European Union, opening even more its borders and Economy to the Western world. As a result of this integration, lots of opportunities are being built, therefore, for achieving a profitable and sustainable result, it is really important to study the Hungarian market.

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3.1.2 Geography

Hungary is located in Central Europe and it has borders with 7 countries (Austria 366 km, Croatia 329 km, Romania 443 km, Serbia and Montenegro 151 km, Slovakia 677 km, Slovenia 102 km, and Ukraine 103 km). The country is “land-locked”, or in other words, it does not have access to any Ocean. It has a strategic location across main land routes between Western Europe and Balkan Peninsula as well as between Ukraine and Mediterranean basin. The country has a temperate continental climate, and in the graphic below it is possible to check the average daytime temperature along the year:

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - 2C° 0C° 6C° 12C° 16C° 20C° 22C° 21C° 17C° 11C° 6C° -1C° source: www.cia.com

3.1.3 Demography

Hungary has approximately 10.05 Mio. inhabitants, and in its capital, Budapest, one can find a population around 1 800 000. To make business in this country, it is extremely important to know the age structure of Hungarian population, for the reason that the company is looking for specific consumers. Therefore, the graphic below provides more info:

age structure of Hungary 2003

900

800

700

600

500 number of

persons 400

female

300

male

200

100

0

0-4 10-20-30-40-50-60-70-80-90-

14 24 34 44 54 64 74 84 age ranges

reference:Központi Statisztikai Hivatal (2003):Statistical year book of hungary 2002

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Sometimes, it is also important to discover the gender ratio - for example, if one company wants to sell lipsticks or underwear, it has to find out the potential market within the genders. In Hungary, the present gender ratio is 0.91 male(s)/female and there are slight differences inside the age structure. In addition, the ethnic composition is other considerable point; in the country, the majority of the population is Hungarian, followed by the Roma (Gypsi), as it is shown below:

Ethnicity

Romanian

Serb Slovak German Roma Hungarian

0,00% 20,00% 40,00% 60,00% 80,00% 100,00%

source: www.cia.com

This fact has a big impact in the spoken language inside the country; 98,4% of the population speak Hungarian. Nowadays, English is becoming more and more popular within the youth, as a result of the integration process.

3.1.4 Economy

Hungary has made the transition from a centrally planned to a market economy a few years ago and it continues to demonstrate strong economic growth and to work toward accession to the European Union in May 2004. The private sector accounts for over 80% of GDP. Foreign ownership of and investment in Hungarian firms are widespread, with cumulative foreign direct investment totaling more than $23 billion since 1989. Inflation has declined substantially, from 14% in 1998 to 4.7% in 2003; on the other hand, however, unemployment has persisted around the 6% level.

Its GDP is estimated in US$134 billions and has the following distribution:

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