Term Paper on "Hungary"

Term Paper 9 pages (2714 words) Sources: 1+

[EXCERPT] . . . .

Hungary

(a) as we will be discussing further below, we are addressing a certain category of consumers. In this sense, both socially and culturally, our consumer segment is very well defined and the new perfume will be designed to best match their needs. From a social or cultural point-of-view, we are not expecting to be influenced by changes in these factors, mainly because of a strict set of consumers that our product is addressing.

A b) Hungary is among the most successful countries in Eastern Europe that succeeded a substantial transition from the centralized Communist economy to a capitalistic structure. The initial economic difficulties after 1989 were surpassed and Hungary had counted consistent rates of economic growth in the late 90s, with a 2.9% GDP growth in 2003. Infrastructure has encountered serious development after 1989, as several important expressways have been built, linking Budapest to the Eastern and Western boarders. There are nowadays 438 km of expressways in Hungary, the main ones being M1 (Budapest-Vienna), M3 and M7. For any business and this includes launching a new product, a solid infrastructure is essential, because it ensures a facile communication with the country and a prompt delivery of the products offered. In the case of perfumes, however, because these are not goods that expire, this is not necessarily essential.

Hungary's accession to the European Union in 2004 is equivalent to its inclusion in the European common market, with all the benefices that come with this. This includes the implementation of the European legislation, with strong laws for the protection of intellectual property, which will ensure a diminishment of perfume falsification risks.

Hungary has quickly opened its market to technological innovations after 1989, partially recuperating the technological deficit from Western Europe through assimilation. As an example, there were 1.6 million Internet users in 2002, to a population of 10 million inhabitants, which is a significant proportion. The extensive use of Internet ensures a good system of communication and e-marketing for the new perfume may be further analyzed in this case.

Otherwise, in terms of equipment and machinery needed to produce the perfume, the level of technology is not that important, as most of it can be easily imported, free of import taxes, from Germany or Austria.

A d) the most important competitors can be divided, in my opinion, in two categories. First of all, we have the traditional perfume producers in Western Europe and here I am of course referring to the French perfume producers. The fact that Hungary is now a member with full rights of the European Union means that perfumes can be imported tax free from France or elsewhere in the European Union and this will lessen their price on the Hungarian market, bringing thus a double quality-price competition.

The second category of competitors is represented by the "falsified" perfumes, which are inherent in this business. Renowned marks of perfume can be thus commercialized at much lower prices in the streets and will provide serious price competition.

A e) Hungary has a functional democracy, with a system of political parties that alternate to power. In this sense, there is no political risk involved. The legal environment has become much more stable in the last couple of years, mainly because Hungary has been preparing for accession to the European Union and, as such, it needed to be able to fully adopt the legal framework of the European Union. In our case, this is essential in regulating issues such as competition or intellectual property rights.

2. (a) in my opinion, age, sex and income are the most important demographic segmentation variables for the new perfume. Let's analyze each in part. First of all, the perfume addresses women. Its combination of rose essences and ylang-ylang are soft and discrete and are destined for women. Second of all, in terms of age, this is not a perfume for teenagers. Indeed, we have determined an age segment from 25 to 50 years to which the perfume is addressed. Finally, in terms of income level, this is not a cheap product. We have estimated that persons with an average income level between $10,000 and $30,000 will be buying it. We need to make a brief comment with regards to income. Hungary has an average income level of around one half that of countries like Germany or France. However, we may estimate that there is a solid category of well-to-do upper class citizens that will likely purchase the product.

A b) Attitudes and personalities seem the best psychographic variables we can use here. Indeed, the perfume would probably address cosmopolite, open persons, who like to attend parties and meet with their friends.

User status seems an important behavioralistic variable. Indeed, in the case of a high class perfume, we would be addressing a group of consumers that will become regulars in the future. The perfume industry is excellent for such users, because we may assume in general that people tend to adopt a certain type of perfume. In this sense, the brand loyalty variable is also something we need to look into when launching our product. We are not interested in one time buyers, but in customers that will be using this type of perfume for several years to come.

A d) in terms of benefit segmentation, as we know, refers to the benefit each customer seeks from the product. In our case, this would be social status. Indeed, a perfume tends to aim a drawing attention to your person in society and to gain a certain social status.

A e) the segmentation variables we have used are directed towards configuring a certain targeted market. Indeed, because we are referring to a new perfume, this will address women of young to middle age, with a generous yearly income (at least in Hungarian terms), who enjoy showing themselves into society in order to gain social reputation and status. We will be able to evaluate on this target market issues referring to competition by analyzing companies that produce the same category of perfumes, while the growth potential may be estimated by projecting the growth of Hungarian economy in the future and by evaluating the odds of an increase of the number of people with the social status we are addressing.

3. (a) a large proportion of the Hungarian population, 67,5%, is Roman Catholic, with 20% Calvinists, 5% Protestants and 7,5% atheists or others. The decades of Communism have turned part of the population away from religion.

A b) in my opinion, marketing a new perfume is not in any way influenced by religion. Of course, it may have been so with the existence of certain sects that discourage use of artificial products. In Hungary, with less than 7,5% included in the others category, there is no danger in this sense.

Communism has attempted to create a collective society and a collective spirit in Hungary. However, in my opinion, this has not fully succeeded, due to several reasons. First of all, the Hungarian history supports a proud people, with an individual inclination. Second of all, capitalism led Hungary to a new perspective in which individual gains and capital accumulation became more important.

However, collectivism remains, in my opinion, quite strong in the countryside, in rural communities. The sense of appurtenance to the community is stronger there. The fact that individualism seems to be the characteristic of the Hungarian society, this may prove a positive aspect, mainly because perfumes and the perfume industry generally address strong individuals, with goals such as promotion and personal accumulation. Marketing may address segments of consumers that aim higher in there career.

4. (a) Ethical issues such as corruption remain an important aspect in the Hungarian society, partly because of the Communist period, when bribery was common for any kid of favors, and of the influence from the East, especially from Turkey (with the traditional peshkesh).

The problem with marketing and commercializing the new perfume in Hungary, as it is related to corruption, is that, almost for sure, several legal approvals and acts will be needed to start the business and sell the product. These are generally given out by state authorities, paid from the State budget and having small to average salaries. As such, a small bribe will be needed to regulate the process, especially if we consider the large bureaucratic system inherited from the Communists.

Unfortunately, recommendations on corruption and bribery are less ethical as they are practical. One simply has to give in on this issue in order to be able to get the job done. Otherwise, refusing to adapt to a system where corruption is at a certain level will mean serious impediments in starting and operating the business.

A b) Personally, I don't agree with bribery, mainly because it seems to exclude rational and legal arguments for a material one. Why should someone who offers money be able to obtain the necessary acts in less time than someone who goes with the lawful process? We have to admit that, in… READ MORE

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