K-mart is expanding beyond the shores of America and our team has determined Hungary to be a

suitable location to open a store. This report examines the situation analysis, communication

objectives, target group, creative strategy, promotion strategy, media strategy, budget allocation

and control & evaluation that this undertaking will involve.

K-SmartLaunching K-mart in Hungary

By

Rebeka Selmeczki, Rina Razali, Elizabeth McCrudden, Aaron Ho (Jin), John Brennan & Danielle Dalla

Table of Contents

Executive Summary....................................................................................................................... 4

Situation Analysis........................................................................................................................... 4Mission and Vision.................................................................................................................................... 5Kmart in Australia..................................................................................................................................... 6Kmart Community Program 2010....................................................................................................... 6Past Failures................................................................................................................................................ 7Past and Current Kmart Communication Campaigns...................................................................8Hungarian Retail Market........................................................................................................................ 9SWOT Analysis............................................................................................................................................ 9

Competitor Analysis.................................................................................................................... 10Hungarian Hypermarkets and Supermarkets..............................................................................10Tesco........................................................................................................................................................... 11Louis Delhaize Group............................................................................................................................. 13

Country Selection......................................................................................................................... 14

Country Overview: Hungary..................................................................................................... 17

Market Environment.................................................................................................................. 19Retail in Hungary.................................................................................................................................... 19Trends in the CE Retail Market...........................................................................................................20

Consumers prefer larger shop formats.........................................................................................................20Retail sales are constantly growing................................................................................................................20Discount stores push super- and hypermarkets out of their position............................................21Cities are reaching the point of saturation..................................................................................................21“Polarization” of customers is continuing....................................................................................................21

Communication Objectives....................................................................................................... 22

Target Audience........................................................................................................................... 24

Message & Positioning............................................................................................................... 30Main Message........................................................................................................................................... 30Justification............................................................................................................................................... 30Competitor Comparison....................................................................................................................... 31Global Image............................................................................................................................................. 32New Positioning....................................................................................................................................... 32Single Selling Idea................................................................................................................................... 33

Media............................................................................................................................................... 35Competitive Environment.................................................................................................................... 36Tone............................................................................................................................................................. 37Non-traditional Media........................................................................................................................... 38

Advent Calendar......................................................................................................................................................38St. Nicholas Day Mail Out.....................................................................................................................................39Loyalty Cards............................................................................................................................................................39Kmart Wishing Tree.............................................................................................................................................. 40

Audience Appeal...................................................................................................................................... 40Action Prompts........................................................................................................................................ 41

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Differentiation Points............................................................................................................................ 41Cultural Considerations........................................................................................................................ 42Rules and Regulations........................................................................................................................... 43Tag Line...................................................................................................................................................... 43

Evaluation...................................................................................................................................... 44

References:.......................................................................................................................................................... 45

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Executive Summary

For this report , what will be found inside is a brief situational analysis of K-mart ,

some of their success and failures over the past few years, mission & visions, and

many more.

In this report, we are launching K-Mart into Hungary , and what is expected to be

found inside is information on the Hungarian retail industry, strengths & weakness of

K-Mart and major competitors in Hungary. This will also help explain the market

environment on how it is sustaining over there.

This report also help explains why we have chosen to enter in the country of

Hungary , why we target specific groups, why we launched during Christmas and

most of all how we are going to target the Hungarians during the launch of this

campaign.

The media tools will also be included in this report , in which it will explain some of

the different types of media tools used and why it was selected to be used to

advertised in Hungary specifically.

Situation Analysis

Kmart is a US hypermarket, which is currently the third largest in the US behind Wal-

Mart and Target. Kmart was first established in 1918. It expanded its operation

throughout the United States and into Canada in 1929, and Australia in 1968. It is a

mass merchandising company. As of January 30, 2010, Kmart operates a total of

1,327 Kmart stores across 49 states. Kmart became famous in the US for its "Blue

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Light Specials." They occurred at surprise moments when a store worker would light

up a mobile police light and offer a discount in a specific department of the store.

The phrase "attention Kmart shoppers" became so infamous that entered into the

American pop psyche and quoted in a number of movies. Kmart sells name-brand

and private-label goods mostly to low and middle-income families along with a

portfolio of exclusive brands and labels. The Company's stores are usually single

floor, freestanding units, in sizes from 40,000 to 190,000 square feet. Kmart stores

are usually free-standing or located within shopping complexes.

Mission and VisionMission Statement:

Kmart will become the discount store of choice for middle-income families with

children by satisfying their routine and seasonal shopping needs as well as or better

than the competition (Kmart.com)

"We are committed to improving the lives of our customers by providing quality

services, products and solutions that earn their trust and build lifetime relationships."

The Five Key Pillars of Our Strategy

1. Creating lasting relationships with customers by empowering them to manage

their lives

2.  Attaining best in class productivity and efficiency.

3.  Building our brands

4.  Reinventing the company continuously through technology and innovation.

5. Reinforcing “The SHC Way” by living our values every day"

What is the image and personality of the brand?

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Kmart’s personality and image are explicably linked. Kmart’s image is that of a family

friendly, convenient and an affordable store. They cater for the many needs of a

family and the individual and aim to create lasting relationships with their consumers.

The image presented to the public is affordable and quality products and service.

The personality of Kmart is created through their advertisements. This personality

focuses on families and wholesome fun. Kmart also positions itself as a part of the

community through creating and sponsoring events and organisations within

individual communities. This re-enforces its family orientated image and personality.

Kmart in Australia

Kmart currently operates one hundred and eighty two stores throughout Australia

and New Zealand. Currently Kmart has a wide range of philanthropy efforts to re-

enforce its family orientated image and personality.

Kmart Community Program 2010

The Kmart Community program is committed to building strong partnerships with

individuals and organisations that will help create better lives for Australian and New

Zealand families (REF). It aims to support the issues that are important to the

communities that surround individual stores. Kmart finically supported over 1000

small community groups during 2008 and 2009. The Kmart wishing tree is one of the

most well known philanthropic efforts and collected over 400,000 gifts and $90,000

in 2008/2009.

Kmart has focused on the need to not only be differentiated in each country, but also

to do so in each community. It has recognised that the local communities around

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each of its stores face their own unique social challenges. With this in mind, the

community program allows each store to work directly with its own community on

relevant social needs or issues. Thus “creating lasting relationships with customers

by empowering them to manage their lives”, which is one of the five key pillars of

Kmart’s strategy.

Past FailuresIn 2002 Kmart filed for reorganisation under Chapter 11 of the U.S. Bankruptcy

Code, closing almost 300 stores. The company’s lack of set goals and

communication objectives led to many of their problems. Most of these problems

were ill-conceived expansion initiatives and communication strategies. Kmart began

to run into trouble when the company started to implement elaborate diversifications

in its overall business plan. These large-scale attempts, such as the purchase of the

Sports Authority and Builders Square, distracted Kmart from its primary business of

being a discount retail store. Although Kmart had a successful vision, it lost track of

where it really stood in the marketplace. The communication efforts of the business

became inconsistent and confusing to consumers. Kmart’s slogan during the mid

1990's was “Low prices and extras you won’t find anywhere else”. Consumer

research showed that the advertising led consumers to expect to find great deals, a

pleasant shopping atmosphere and a good selection of merchandise. Shoppers had

difficulty matching the advertising with the reality of a Kmart store. This ultimately led

to a rapid decline in the store’s credibility.

From this failure several key lessons have been identified:

1. Concentrate on brand identity and perceptions of Kmart. Stay consistent.

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2. Ensure that advertising is a real refection of the image and personality of the

store. Highlight the positive experiences and feelings consumers have of the

brand.

3. Reinvent and diversify Kmart in Hungary, whilst maintaining the key aspects

of the brand identity.

4. Deliver on promises to consumers.

Past and Current Kmart Communication Campaigns

One of Kmart's most successful campaigns in the US used celebrity endorsement.

This campaign was created shortly after Kmart came close to bankruptcy. In an effort

to drive up sales and re-establish credibility Kmart used Rosie O’Donnell and Penny

Marshall in their advertisements. This campaign proved to be a huge success. The

campaign spanned several years. In the second year of the campaign sales

increased 2.9 percent and the overall earnings almost doubled from the previous

years. Rosie O’Donnell and Penny Marshall where successful endorsements as they

were figures consumers could relate to and trust.

In 2002 Kmart established a new brand positioning as a store that understands

family values in an effort to strike an emotional chord with shoppers. The ads were

first shown during the 2002 Olympic closing ceremony. Kmart aimed to be "the store

that understands what really matters in life." It aimed to focus on how the retailer

appreciates values important in shoppers' lives (such as putting family first) and

showing an appreciation for money and practicality. Steven Feuling, Senior Vice

President of marketing at Kmart stated "Kmart's goal with this campaign is to build

an emotional bond with the consumer by re-establishing the role Kmart plays in its

shoppers' lives,” (http://findarticles.com/p/articles/mi_m0FNP/is_5_41/ai_83805296/)

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Hungarian Retail MarketThe majority of Hungary’s retailers are foreign owned. However there are a number

of large domestic business including CBA and Coop. Tesco is the leader in the

hypermarket chains with 164 stores in Hungary. The share of hypermarkets in the

retail market is increasing at the cost of small local corner shops. The rising

affluence in Hungary has affected how people purchase their goods and the channel

in which they do so. Retailing in Hungary follows the German and Austrian model,

with very few retail outlets opened in the evenings or on a Sunday. However, in

recent years there has been an increase in the number of convenient store outlets

operating extended trading hours. Hypermarkets in Hungary account for

approximately 22% of all fast moving consumer goods spending (FMCG). It is

anticipated that the market share of hypermarkets and supermarkets will continue to

expand.

SWOT AnalysisStrengths

- Cheap/affordable – inline with

Hungarian values in shopping

- Differentiated poisoning from

competitors

- Central location and convenient size

- 'One stop shop'

-Success in a variety of foreign markets

in the past

- Hungarian retail hypermarket is

expected to continue expanding

Weaknesses

- New Brand

- No brand loyalty

- American brand – may have some

negative views towards it

- Limited diversification to local wants

and needs and products

- Kmart’s values are brought in from the

US, rather than developed in-country,

means they are set at a global, rather

than local level - can restrict local

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adaptation

- Ineffective Supply Chain Management

Failure in Prague

Opportunities

- To diversify product lines to local

market

- Create loyalty schemes

- Design the store to be more organized

and attractive

- Chance to learn from past mistakes

Threats

- High amount of established

competition

- Language and culture barriers

- Hypermarkets account for less than 40

percent of retail market in Hungary

- Highly successful competitors

- Consumers holding adverse attitudes

towards foreign business

- Misunderstanding of Hungarian culture

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Competitor Analysis

Hungarian Hypermarkets and Supermarkets

(http://www.pwc.com/en_GX/gx/retail-consumer/pdf/hungary.pdf)

Tesco

Tesco is the current market leader in Hungary. It first opened in 1995 and currently

has 164 stores and 21, 365 staff. Hungary has been the most successful market for

Tesco in Central Europe. Tesco’s largest store in the world is in Budaors, Budapest.

It is 15,000 sq m which is the equivalent of 72 tennis courts.

Unlike many other retailers Tesco aims to appeal to all segments of the market. It

achieves this through the use of its own-brand products. This includes the up market

"Finest" range of products, a mid-range Tesco brand and low-price "Value" range.

These encompass several product categories such as food, beverage, home,

clothing, Tesco Mobile and financial services. Tesco's main advertising slogan is

"Every little helps". This slogan has been translated appropriately for the Hungarian

market.

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Their core purpose is to create value for customers and to earn their lifetime loyalty.

Tesco has a large focus on people, stating that:

“Our success depends on people: the people who shop with us and the people who

work with us. If our customers like what we offer, they are more likely to come back

and shop with us again. If the Tesco team find what we do rewarding, they are more

likely to go that extra mile to help our customers”.

Tesco’s Value and Mission statement is “Creating value for customers, to earn their

lifetime loyalty”. Tesco strive to fully understand their customers, be the first to meet

their needs and act responsibly for our communities. Tesco in Hungary offers a

clothing line and personal finance services. This finance service is in line with

Tesco’s mission to create value for customers and to earn their lifetime loyalty.

Tesco has created an “Every Little Helps” International Strategy. With more than ten

years of experience overseas, Tesco has evolved an international strategy based on

six elements:

1. Be flexible - each market is unique and requires a different approach.

2. Act local - local customers, local cultures, local supply chains and local

regulations require a tailored offer delivered by local staff.

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3. Maintain focus - we understand that customers want great service, great choice

and great value. To become established as the leading local brand is a long term

effort and is not about planting flags in map.

4. Use multi-formats - no single format can reach the whole of the market. A whole

spectrum from convenience to hypermarkets is essential and you need to take a

discounter approach throughout.

5. Develop capability - it's not about scale, it's about skill - so we make sure we

have capability through people, processes and systems.

6. Build brands - brands enable the building of important lasting relationships with

customers.

Louis Delhaize Group

Louis Delhaize currently has six hypermarkets in Hungary and is working on the

construction of another three hypermarkets across the country. All of the group's

stores in Hungary target the Budapest area and the larger eastern region. The

consumer goods stocked by Louis Delhaize include food and 'near-food' goods, i.e.

products such as toiletries, cleaning products and other hygienic products bought. In

addition, it also provides non-food products such as cloths, sport equipment,

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household electronic appliances, etc. The stores are located on the outer locations of

towns/cities, often up to a thirty minute drive. Louis Delhaize has a strong brand

affiliation with eco-homecare products. The Belgium company has committed itself to

enlarging and promoting the set of eco-friendly product ranges within their points of

sale from 2009 to 2012. 

Country Selection

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For this campaign, we have shortlisted 2 countries that we decided would be the

best selection to launch our Kmart store. The countries are Malaysia and Hungary.

In order to make the selection, we had to go through various kinds of research, find

out information on both countries and make comparison on which would be the best

country for our Kmart campaign.  

This research seeks to provide a broad picture of the economic, social and cultural

background to the country selected, as well as highlighting the challenges and

opportunities for retail and consumer goods companies, like Kmart, wishing to invest

there. 

The template of this research was structured around three main investigation topics:

1. Economic overview and regulatory environment;

2. Demographics and consumer behaviour;

3. Retail & consumer goods sector: performance, challenges, opportunities

and emerging trends. 

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Source: PwC Country reports, Observatoire Vigie 

Among all the countries listed, the study pinpoints both our choices; Malaysia and

Hungary as being safe investment destinations which represent general

opportunities for development in the short or longer term. 

Increasing consumer demand and the existence of a burgeoning middle-class make

Malaysia an extremely interesting destination for investment. In addition, a young

population, low unemployment and a growing modern retail sector all contribute to

this country’s extremely attractive investment climate.

On the other hand, Hungary is in the first group of countries to have acceded to the

EU and Budapest, its capital, has a tradition of being a financial and managerial hub

in the region.

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Although it has a fast maturing retail and consumer market, there are still

opportunities left for investment there for hypermarkets, convenience stores and

specialised outlets especially outside the capital.

In order to launch our investment programmes for the long-term, we have to be

aware of the current regulatory constraints in the retail sector and always bear in

mind the unstable political climate in the selected countries. Malaysia has some

constraint and potentially low risk to that as opposed to Hungary, which has non-

significant constraint on the regulatory and has no risk, which puts Hungary slightly

ahead as a choice.

Country Overview: Hungary

Population: 9.9 million.

The main cities are Budapest (1.7mn),Debrecen (204,300), Miskolc (175,700) 17

(IGD, 2008). 

Official Language: Hungarian (also known as Magyar) 

Currency: Hungarian Forint

€1 = 261 Forints

(ECB, October 2008) 

Economy is one of the weakest among the new EU countries. 

Huge budget deficit (10% of GDP),rising inflation (due to foreign exchange

differences), and tax hikes forecast

(IMF, 2007). 

Unemployment rate

The percent of the labour force that is without jobs is 10.8% (2009) It is at no. 121 in

comparison to the world.  

Disposable income

Hungarians have an average of €5,549 per year at their disposal. Budapest is by far

Hungary’s most affluent city with an average per person disposable income of

€7,503, an amount around €1,000 more than the neighbouring county of “Budaors”,

whose inhabitants have a purchasing power of €6,568. Despite Budapest’s high-

ranking position within Hungary, its inhabitants still only have half as much money at

their disposal as Germany’s poorest county. Even so, 21 of Budapest’s 23

municipalities are among Hungary’s 40 most affluent. The most affluent municipality

“Budapest 12” – boasts a purchasing power of €8,988 per person.

(GfK Purchasing Power Europe 2008/2009)

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Market Environment

Retail in Hungary

Retail market structure Top 10 

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Source: IGD Analysis, Country Presentation, Hungary 

Share of shop types in sales of daily consumer goods in Hungary (%)

Source : GfK Consumer Tracking and GfK expert estimate 2013

 

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Trends in the CE Retail Market

There are currently several major trends in Central European retail that are to a

certain extent common to all CE countries, such as Hungary: 

Consumers prefer larger shop formats

The market share of small businesses, groceries and local markets is constantly

declining in favour of the homogenised supermarkets, hypermarkets and discounts.  

Retail sales are constantly growing

Retail sales are likely to continue growing at a substantial rate despite last year’s

slump in some countries. This growth is especially significant in Hungary where,

according to data analyst Mintel, sales are estimated to triple between 2000 – 2010.  

Discount stores push super- and hypermarkets out of their position

Discount stores with their aggressive marketing are succesfully attracting increasing

numbers of customers. Partly because of lower levels of income, price is still a

determining factor for a large part of customers in CE. Discount stores are likely to

gain bigger shares of the market and to expand further into more CE countries.

Cities are reaching the point of saturation

As the retail market in major cities is nearing saturation, retail chains are exploring

opportunities further afield in more rural areas, bolstering sales and converting

consumer habits.  

“Polarization” of customers is continuing

Despite the determining role of price in consumers decisions described above, the

number of shoppers who choose the best quality products instead of the least

expensive is increasing. More customers are also beginning to better appreciate the 21

quality of services provided as well as ease and comfort of shopping instead of

simply the value for money factor. 

The demand for premium products and convenience are the driving factors behind

value growth across the Hungarian retail industry, with consumers increasingly

viewing their purchases as status symbols. Yet, local consumption patterns vary

significantly according to income, with the average wage of US$19,985 being much

lower than professional salaries. The government’s austerity programme, which has

reduced consumer expenditure, also means that many consumers are extremely

price-conscious

Communication Objectives

What we will be trying to achieve with our communication efforts is to launch our

campaign whilst promoting brand awareness among Hungarians. Since K-Mart is an

unknown brand in Hungary, there will be few pre-existing attitudes towards the

company in consumer’s minds. This can be both positive and negative. We will be

entering the Hungarian market with a strategic marketing plan centered on family

and value for money. This approach is grounded in research confirming that

Hungarians are price sensitive shoppers, who treasure their family values and

community spirit. ( Emerald Insight )

Hard discounted shops and hypermarkets are on the rise, and there is a huge

opportunity for stores such as this to be extremely successful. Hungarians seem to

be price sensitive across a range of products and services (Hubpages).

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Included in our campaign will be information leading to general brand awareness, as

very little is known about the brand throughout Hungary. Through this we will be

promoting the wide variety of products that the store offers.   

The positioning we want to occupy in the consumers’ minds is that it is a store that

provides the average family with a range of products to suit their everyday needs.

These will all be provided at an affordable price without compromising quality or

service. Family is important to K-Mart because the stores offer goods that are

suitable for many age groups. This aspect will be even more important in Hungary as

the population places such a large importance on community. Hungarians are more

family orientated than westerners, so it is more appropriate to target families rather

than individuals (Filolog).

This campaign will introduce brand recall into the minds of Hungarians, as it will

ultimately lead to consumers thinking of the brand when they desire one of these

family products.

Our communication objectives will be achieved through incorporating these elements

into all aspects of the campaign. Not only will our advertising and promotion educate

consumers on what stocks the brand carries, but it will create brand awareness and

a more long-term positive attitude in the minds of our target audience.

We will be utilising several forms of media to achieve our objectives. For more

information, please see below.

Our communication strategy hinges on our belief that a positive attitude towards a

brand will bring back customers and promote loyalty in our consumers. We will

achieve this loyalty through effective pricing and promotions designed to appeal to

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Hungarians natural family values and their instinct for good value. This will result in a

positive brand image and satisfied customers.

Target Audience

K-mart’s target audience in Hungary will be fundamentally defined by the following:

The Hungarian population is extremely price sensitive so there will be a focus

on the fact that K-mart is affordable for this audience.

The target audience will be apart of the middle-lower income bracket as they

are the part of the population that would be most attracted to affordable

goods.

Hungarians are very family orientated more so than western countries, so

there will be a focus on the fact that K-Mart can offer a happy shopping

environment for the entire family

The main age demographics that will be targeted is 25-55 year old mothers,

since females in Hungary engage in household shopping more than the

males

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The location of K-Mart will be a highlighted feature for the target audience as

all K-Mart stores will be situated in close proximity to smaller cities and towns

throughout Hungary not solely in the bigger cities

Hungary is an ageing population since there are more deaths each year than births.

The average size of a family is 2.6 people. The Hungarian demographic profile

consists of the following recorded statistical fact, recorded in July 2009:

The population rate sits at 9.905.596 million

The age structure shows that 15% of the population is 0-14 years of age

and that 69.3% of the population is between the ages of 15-64 years and

15.8% of the population is over 65 years old

The median age works out to be 39.4 years (Indexmundi)

Teenagers and children are not included as the primary target audience not only

because they are a small percentage of the population but mainly because they do

not have a steady income. The primary target audience is between ages 25-55 year

old mothers, who need to shop for the entire family. The secondary target audience

is the entire family under one collective group. Hungary has many small cities, town

and villages so the location of K-Mart will be spread throughout the country so

consumers can get there easily without having to drive to the closest biggest city.

Some traits in consumer behaviour in Hungary that need to be kept in mind are due

to the fact that the Hungarian market is extremely price sensitive meaning that other

consumer satisfaction measures assume less importance, this means that there is a

huge opportunity for hard discounters to be successful. Consumer brand loyalty and

awareness is not as prominent in Hungary as in other Western countries and lower

than other Central and Eastern European averages. Some ways to improve brand

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loyalty in Hungary is by the introduction of brand loyalty cards, which can be used in

cinemas, hypermarkets, bookstores and so on. This would work well in Hungary

since price is the most important factor in the consumers mind. Electronics has

become a huge demand in Hungary therefore many chains of electronic goods

stores have opened, employing up to 70 000 people, which is a positive fact in the

Hungarian consumers mind since it has opened opportunity for the unemployed. The

winning formats in Hungary are known to be hypermarkets, discount and DIY stores

(Euromonitor).

It is statistically observed that currently there are 8 million people in the Hungarian

population that are subscribed to a mobile phone, the Hungarian population sits at

10 million. The Internet subscribers sit only at 3 million from the entire population,

therefore there is a significant difference in numbers of mobile and Internet users in

Hungary. There has been an increase in internet usage, meaning that our target

audience’s attention can be obtained over the internet yet majority still use telephone

to communicate more and TV to gather daily information, so TV and other mediums

should be more of a priority over internet for this target audience.

In order to establish a set of psychographics in Hungary, the mentality of the people

in this nation need to be looked upon the values, behaviour and thinking are the core

motives behind this task. Unlike many ‘Communist Eastern European’ Hungarians

are not a collectivist culture instead it is better defined as a ‘moderately

individualistic’ culture, although it is viewed as significantly less so than most Anglo-

Western cultures. Below is a list of key differences between Hungarian mentality and

Anglo-Western mentality, this is important to be able to see what really motivates or

does not motivate the target audience:

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Anglo-culture is built on key ideas of competence, product, project, task =

“what I accomplish” whereas Hungarian culture has key ideas built upon

relationships “who I am, who I belong to”

People in Hungary are traditionally expected to put the interest of their family

or group where they belong, before their own interest rather than looking after

individual needs and interests

Hungarians are big on forming their own, unique, different opinions (2

Hungarians means 3 opinions) whereas Anglo-westerners are expected to

have a private opinion

Personal happiness comes from relationships: maintaining a happy family,

creating a progressing society, having fulfilling personal relationships, and

being able to “look in the mirror” with self respect (have not over-compromised

personal values) whereas Anglo-Westerners are driven by self-actualization

by each individual is an ultimate goal

The uncertainty inherent in life is felt as a threat which must be fought

whereas in the Anglo-Western world uncertainty is a normal feature of life and

each day is accepted as it comes

Acceptance of familiar risks; fear of unknown situations and of unfamiliar

risks. What is different is dangerous whereas in the Anglo-Western world what

is different, is curious

Pessimism is a state of mind with Hungarians, realism is a value which in

Anglo-Westerners is the opposite, optimism to always assume the good.

(Filolog- Hungarian Mentality)

So it can be seen quite clearly that the psychographics for Hungarians differ to the

Anglo-Western world. This means the way in which we communicate to our 27

audiences will be different. It appears through this list even more that the

psychographics in Hungary match very much our target audience in the way that

they are very family orientated and that these aspects of lifestyle are highly

prioritized.

“Compared to Americans, Hungarians have a significantly stronger tendency to

avoid life’s uncertainties. This means that new situations, unknown people or

circumstances cause greater stress to the individual, and is usually looked at as a

potential problem or danger, rather than a challenge (Filolog- Hungarian Mentality)”

Hungarians can be afraid of trying new things and don’t appreciate constant change

in their lifestyle. It would therefore be wise to slowly introduce K-Mart to the target

audience rather than advertising it too heavily and not to take an ‘in-your-face’

approach to marketing.

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Message & Positioning

Main Message

The main message we are trying to communicate in this communication plan is that

K-mart is affordable and part of the Hungarian community. Both of these aspects of

the creative are directly linked to ingrained Hungarian beliefs and attitudes. As

mentioned previously, family is incredibly important to the almost the entire

Hungarian population, as is value for money and cost-saving. The primary message

of the campaign will therefore focus on these key elements.

In line with the primary message the brand will be launched just prior to Christmas,

with all marketing promotions relating directly to this event. Christmas is integral to

the Hungarian community and complements our key strategic goals perfectly.

Justification

As mentioned above in the Target Audience profile, Hungarians value respect and

inclusion within their family life. The culture echoes that of their previous political

affiliation, with a high degree of socialist values still present within most communities.

Hungary’s culture is not defined as collectivist, but their society still contains more

elements of this than other Western cultures. Because Hungarians value this aspect

of their lives so highly, we will be promoting K-Mart initially as a store that is part of

the community. We intend for this to establish K-Mart as a trusted and highly

regarded brand that is part of the Hungarian way of life.

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The second key element of our positioning will be the affordability of K-Mart’s

products. Affordability is likely be a determining factor as to whether consumers

decide to shop in our store, as the Hungarian market is extremely price-sensitive.

With brand loyalty exceedingly low, consumers in Hungary, and indeed in most of

Eastern Europe, tend to base their purchase decisions almost purely on price.(REF)

We will therefore be careful to promote K-Mart as a discount brand, one that

represents good value for money. This approach was adopted in a nearby store in

Prague, with great success (REF).

Competitor Comparison

Tesco is Hungary’s main retail hypermarket chain, and will therefore be K-Mart’s

biggest competitor. Tesco’s strategy in Hungary and throughout most countries it has

launched in has been to emphasize its large size and buying power. This approach

has been successful at promoting the company’s superior buying power and the

range of goods available within their stores. However, Tesco has received some

negative publicity centring on their decision to install stores in such large spaces.

Tesco planned to build one of their hypermarkets in Dunaújváros, a small town

located 70km south of Budapest. While residents of the town supported the idea of

having a large retailer nearby, the planned project required that 9 hectares of noise-

reducing forest be cut down. Almost the entire population of the town signed a

petition requesting that Tesco not build there, and legal action was brought against

the company (REF). While these were ultimately unsuccessful, it shows that it is

important for companies entering a new environment to be mindful of local attitudes

and beliefs. Tesco received a large amount of bad press related to the above

incident, with community groups promising to boycott the store once it was

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completed. When considering the above for K-Mart, it is important to take community

attitudes into account before launching.

Global Image

By focussing on families we are supporting the global brand image of K-mart being a

family friendly, community orientated shopping experience. The campaign will also

echo the brand’s discount image, as there will be a large emphasis on the low prices

and savings that can be taken advantage of throughout K-Mart. Our philanthropic

efforts will be consistent with the company’s continuing work with global charities,

while genuinely benefitting local communities. In Hungary K-Mart we will therefore

build on the brand’s American values and image as a trusted store with quality,

reasonably priced products, whilst establishing new elements of the brand, primarily

in the areas of community and convenience.

New Positioning

As mentioned above, K-Mart will be taking on a slightly different positioning than has

been adopted in other areas. Whilst still focussing on family values and affordability,

we will also introduce convenience to the consumer in a completely new way. This

strategy will be drawing on Tesco’s experiences with promotion of a large store, and

the difficulties of such an operation. We also wanted to differentiate K-Mart from

Tesco through this positioning. This plan is outlined below.

This unique positioning will focus on smaller stores with higher output and quicker

sales. Referring to (REF), this method will promote the store as a “fast retailer,”

which is smarter and more convenient for both the customer and the store owner.

The benefit to the consumer with this approach will be twofold. Firstly, the stores will

be more convenient and centrally located, because they will be smaller and easier to 32

fit into existing shopping centres. This will mean less travel time and expenses for

the consumer, and increased numbers of walk-by shoppers for the retailer.

Secondly, the smaller stores will be more personal and relatable than a store with a

large and unfriendly warehouse design. Consumers will feel more comfortable and

will be able to navigate their way through the stores faster and easily with this layout.

K-Mart will be the fast retailer in both location and size with a limited store layout

ensuring customers don’t spend hours searching for the perfect gifts for their families

during Christmas. The store will however be big enough to offer a range of clothes,

toys, food, electrical appliances and other home goods at reasonable prices.

K-mart will be positioned as a store that is larger than traditional local shops, whilst

maintaining the prices of its ‘superstore’ competitors, such as Tesco. This is because

Tesco promotes their stores size, which has resulted in negative community attitudes

towards the brand. We will instead focus on highlighting why K-mart is smaller and

its benefits to the consumer. The store will be positioned as more conveniently

located and easier to navigate than its major competitors, while still providing similar

low cost, quality products.

Single Selling Idea

K-Mart’s core selling proposition will relate to the values associated with the

Hungarian family. All secondary selling ideas stem directly from families and

Hungarian community values. From this core selling proposition the links to

Christmas and convenience are clearly drawn, and from this the price and the

affordability of goods becomes important. Christmas is a time for families, sharing,

gift-giving and ultimately shopping. Convenience in their shopping experience is

highly important for families as this is crucial period when an individual’s time is so

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important. And lastly, affordability of family items is crucial for every household,

especially in Hungarian culture, as they are extremely price sensitive. It is clear then

that by focussing on K-Mart’s relationship with the average family in our creatives,

we will encompass all of the relevant selling propositions. This also reinforces part of

K-Mart’s mission statement to create long lasting relationships with its customers.

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Media

For this campaign we are focusing heavily on media that directly targets women with

families aged 25-45 years in middle to low-income house holds. To do so we are

using media that reaches the audience in their homes and reminds them of their

families. We are using direct mail and radio as our main media lines as well as

newspapers; magazines and event sponsorship to further convey our message.

Hungary has tight regulations regarding what children can be shown doing in

advertisements including touching dogs, eating ice putting things in their mouths,

and walking around without shoes. We have taken these into consideration when

designing our campaign and have ensured that they are adhered to.

We are launching the campaign in time for Christmas in Hungary and are using key

dates such as the 6th of December (St Nicholas day) to launch each phase. Direct

mail will arrive at targeted households on the day (see creative for details), and

advent calendars and radio promotions will keep K-mart in top of mind positioning

throughout.

After the festive season, sporting events such as water polo and football (soccer)

and charity (heart disease & cancer) fundraising days will continue to promote K-

mart to the Hungarian target market.

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Competitive Environment

In 2009, the Hungarian Competition Office (GVH) fined Tesco HUF8m ($42,000 US)

for its use of "unfair business practices.” Tesco was investigated for infringing

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Hungary's Act on Unfair Commercial Practices, after it infringed ‘point five’ of the

blacklist, which bans bait advertising. Tesco advertised goods without sufficient

stocks, resulting in consumers not being able to buy the goods they desired to.

Tesco was also found to be advertising electronic devices to have attributes they did

not have in reality. This is an important issue Kmart will have to take into

consideration as Kmart in the past has had serious issues with being out of stock on

fast moving items.

Louis Delhaize has a strong brand affiliation with eco-homecare products. The

Belgium company has committed itself to enlarging and promoting the set of eco-

friendly product ranges within their points of sale from 2009 to 2012.

Tone

The tone of the creative campaign to launch K-Mart in Hungary will be friendly and

personable. It is important that family values and the affordability of K-Mart’s

products are accentuated, whilst differentiating the company from its main

competitors. Because of our unique approach to shop location and size, our

customers will be able to do their Christmas shopping in an area nearby; the K-Mart

will almost act as a local store. The tone of our advertising will highlight this

community orientated personality and image of the store.

We will be communicating to our target audience that won’t have to drive out to the

outlying areas of town for a good deal, but will instead be offered the convenience of

a large retailer in a central location. Our tone will reflect this through advertisements

that are friendly, relatable, and emphasize K-Marts commitment to the Hungarian

community.

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Non-traditional Media

Both traditional and non-traditional forms of media will be used in this campaign. As

the primary consumption of media in Hungary is through newspapers, magazines

and radio, a series of advertisements will be developed for each of these. As well as

these, several non-traditional forms of advertising will be developed. These include:

Advent Calendar

This promotional effort will reflect the Christmas season and will promote brand

awareness and draw people for the first time into the store. The advent calendar will

be a fun and interactive activity for families. It will essentially be an innovative

catalogue, with a calendar counting down the days until Christmas. It will feature 25

windows (one for each day up until Christmas) that the user may open, inside which

will be information for a discount on a particular item in store, or a simple holiday

greeting. One of the windows will have a direction to draw awareness to the “K-Mart

wishing tree,” which will be operating on that day in stores across Hungary. The

window for the 6th of December will reference St. Nicholas day, and will remind

people to put their stockings out for the event. The calendar will feature Christmas

images, and of course will be K-Mart branded. This form of promotion is integral to

our branding strategy of family, as Christmas is something that the whole family

looks forward to celebrating together; this calendar will help them count down the

days until this is possible.

The advent calendar will be available in-store, but will also be distributed through

direct mail initiatives and will be included as a lift-out in major newspapers and

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magazines. The calendar encourages interaction and offers genuine discounts to

customers who have one. (See Appendix 2 for sample)

St. Nicholas Day Mail Out

The 6th of December is St. Nicholas day in Hungary, a traditional holiday where

children put their best boots out in order to be filled with presents and Hungarian

string chocolates. We plan to tie K-Mart to this event through a direct mail out

promotion that will be received by customers just before St. Nicholas day. These

mail-outs will be distributed among areas of the population where our target

audience are located, as this is traditionally who celebrates this holiday.

The mail-out will be in the shape of a boot, to make an obvious connection with the

holiday. The user must rip open the envelope through a perforated edge at the top of

the boot, and will find inside a K-Mart branded, flat, string chocolate. These flat

chocolates are traditional in Hungary and are an integral part of the holiday(REF).

Included in each boot will be a special offer for customers, likely a “Buy one get one

free for a friend” type of promotion, used to encourage more first-time customers into

the store. This will draw comparisons between the brand and the event, and will

bring K-Mart to the forefront of the consumers mind when considering St. Nicholas

day. The promotion will also promote goodwill and K-Mart’s commitment to

remaining a family brand. (See Appendix 3 for sample)

Loyalty Cards

Loyalty cards will be available for customers to sign-up to. Users will submit their

details, and in return they will receive a card that entitles them to 5% off in-store. In

addition, loyalty card holders will be invited to special events, be given information

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about sales and offers in-store via targeted direct mail-outs, and will be privy to

“Loyalty card only” deals on selected items. This tactic is particularly important in

Hungary because consumers rarely practice brand loyalty and are swayed mostly by

price. By introducing a system that effectively tempts consumers to be loyal through

repeated discounts, we will ensure continued sales. The card will also link to our key

selling proposition of family by referring to the loyalty members as part of the “K-Mart

Community Club,” driving sales through consumers need to belong. (See Appendix

4 for sample)

Kmart Wishing Tree

The K-Mart wishing tree is an existing element of the global brand that we feel can

be replicated successfully in Hungary. The idea revolves around helping a charity of

choice (in this case, for disadvantaged children) that has relevance for the local

community. Patrons enter the store and shop as usual, and are able to donate gifts

or money to the cause. This tree helps create the warm and selfless atmosphere that

is present at Christmas and also provides legitimate help to those that need it. The

Wishing tree is consistent with our key selling propositions of Christmas, community

and family, and is also an integral part of the global image of the brand.

Audience Appeal

This campaign will engage our target audience through a variety of appeals. The

principal appeal will be emotional and will be directed at our Target Audience’s family

values and beliefs. Family and community will be emphasised in the campaign

through depiction of the Hungarian way of life, and how K-Mart can influence this

with its affordable products.

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Action Prompts

Consumers will be driven to action through K-Mart’s association with the festive

season, and through our direct marketing attempts. The original positioning of the

company will involve a strong link with Christmas and everything it stands for. The

values of family, togetherness and community associated with Christmas are

conveniently inherent and are treasured in Hungarian culture. The holiday therefore

synergises well with the launch of K-Mart, as the company will be positioned as a

welcoming, family brand. Christmas is also important in the launch of K-Mart as it

gives consumers a legitimate avenue to purchase gifts, food and other items that are

associated with the event. As K-Mart’s prices are “affordable,” the link with Christmas

will imply that customers will be able to shop for their entire family, whilst keeping

their expenditure low. This is important as shopping demand in Hungary is so price

sensitive.

Several action prompts will also be included in our direct marketing. The advent

calendar that will be distributed will contain special discounts on certain items on

certain days. This will influence consumers by giving them a specific action to

perform, and will also appeal to their sense of value. The discounts will be genuinely

good deals, and will all be on items that might be required for Christmas. Hungarians

will most likely need to buy these products anyway, so we will be promoting K-Mart

as the place to go to get these essentials at an affordable price.

Differentiation Points

The primary method of differentiation from K-Mart’s main competitors will be to

position the company as a smaller and more convenient hypermarket, as previously

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explained. The focus will be on family, smaller outlets (while still maintaining the

competitive pricing of the larger stores) and central, more convenient locations.

Whilst we would like to differentiate K-Mart from Tesco and other competitors, it is

important to look at their successes. A prime example of integration into the local

culture occurred when Tesco moved into a small town in the UK. When confronted

with a major retailer on her doorstep, a local bookshop owner complained to the

company that it was stealing her customers. She was unable to compete with Tesco

on price, but did offer a much larger range of books than the hypermarket. Rather

than simply continuing to compete and ultimately drive the smaller bookshop out of

business, Tesco arrived at a mutually beneficial agreement. They resolved to

continue selling books at their regular low price, but allowed the smaller bookshop to

advertise their larger range within the Tesco store. From this, both the small

business and the large retail market prospered, and were able to exist in harmony. It

is important to take this success and put the key factors into practice within Hungary.

K-Mart in Hungary would be wise to work with, rather than against, existing small

businesses in order to keep negative attitudes to a minimum.

Cultural Considerations

One important thing to consider when entering the retail market in Hungary, and

Eastern Europe in general, is that most markets and hypermarkets include food in

their product selection (REF). Therefore we will be recommending K-Mart includes

food in their product range. The main types of food included will be semi-perishable,

such as dried meats, pastas and cheeses. Canned goods and other non-perishables

will also be stocked. This is important because Hungarians expect to be able to buy

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food from major retailers. To deny them of this would be contradictory to their cultural

expectations. This plan will also be relevant when assessing our strategic plan, as

most families need to buy certain foods at Christmas time.

Rules and Regulations

As mentioned above, we have taken all Hungarian advertising regulations into

account when developing our creatives. There are only a few that are relevant to the

retail-marketing sector, and we have adhered to all of them. The rules relating to

children are the most restrictive, so we have been careful not to infringe any of them.

No child will be depicted patting a dog, licking an ice cream, or walking without shoes

on in any of our advertisements.

Tag Line

The Christmas tagline for K-Mart will be: “Your Christmas memories... Brought to you

by K-Mart” in Hungarian it will be “Kelemes Karacsonyi emlekeid… a K-Martol” and

will be integrated into all print and direct mail promotion. After Christmas, K-Mart

Hungary will be united under the one line: “Providing for your family” in Hungarian “A

csaladnak”. Both of these tag-lines will of course be translated into Hungarian to be

accessible to the average family in the country.

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Evaluation

The success of this campaign will be evaluated and assessed through several

processes:

Brand recognition survey

We will have post-campaign surveys done amongst Hungarians to determine

whether they have more awareness of the brand Kmart. It is a measure of the

extent to which the target audience was exposed to the campaign

respondents able to recall any of the campaign or brand elements.

Sales and number of customers will be monitored

Based on this we will monitor the sales and the number of customer coming to

the store to measure how many people actually comes and spend on our

stores.

Feedback from consumers and clients

We will have questionnaires and focus groups to find out what our consumers

and clients think of the stores. This is to help improve the quality of our

services in the future.

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