Pizza Express in Central Europe

Pizza Express was founded in London in the 1960s and runs 280 restaurants in the UK and Ireland, providing upmarket Italian-style pizzas. The company offers what it calls casual dining- halfway between fast-food chains and gourmet restaurants. Cenu Pizza has taken the franchise for Pizza Express in Poland, Hungary and the Czech Republic where it will operate under the trade name San Marzano. Significant opportunities are believed to exist in these countries, not only because of their rapid development but because there are plenty of fast-food restaurants, and plenty of hotels and five-star establishments, but not much in between- ideal for Pizza Express's positioning.

Aside from the new brand name (San Marzano) a number of other changes will be necessary for the Central European markets. With incomes much lower than in Western Europe, prices will be around half those normally charged in the UK. In Poland it quickly became apparent that the company needed to offer pasta dishes as well as pizza, which is traditionally all that has been on offer in the UK branches. The drinks list has also had to be adapted. Czech Budvar beer will be available in all restaurants and Hungarian wine will be available in the Hungarian restaurants.

The company's goal is to expand gradually, offering a core experience with some local adaptation. Restaurants will initially only open in the capitals, Warsaw, Prague and Budapest, before spreading out into the provincial towns. Menu adaptations will be selective in order to avoid compromising what has been a very successful formula to date.

Demographic forces

This area is to do with changes in population. Three major forces are world population growth, changing age distribution and the rise in the number of two-income households. Most of the forecasted world population growth is expected to occur in Africa, Asia and Latin America. Many marketers tend to ignore these countries because they are home to the bulk of an estimated four billion people worldwide who live in poverty (that is, surviving on less than US$1500 a year). However, companies such as Hewlett Packard, and Citibank are increasingly focusing their attention on these so-called 'pre-markets' (i.e. not yet sufficiently developed to be considered consumer markets) and are recognizing that they can turn a profit while having a positive effect on the livelihoods of people. For example, Hewlett Packard aims to sell, lease or donate a billion dollars' worth of satellite-powered computer products and services to these under-served markets.

A major demographic change that will continue to affect demand for products and services is the rising proportion of people over the age of 45 in the EU and the decline in the younger age group. Figure 2.2 gives age distribution trends in the EU between 1995 and 2010. The fall in the 15-44-year-old group suggests a slowdown in sales of products such as CDs, denim jeans and housing. However, the rise in the over-45-year-old group creates substantial marketing opportunities because of the high level of per capita income enjoyed by this group. They have much lower commitments in terms of mortgage repayments than younger people, tend to benefit from inheritance wealth and are healthier than ever before. In France, for example, the average per capita disposable income for households headed by a retired person is now higher than the average for all households, and people over 60 (who constitute 18 per cent of the population) consume more than 22 per cent of the French gross domestic product (GDP). It is conceivable that the current trend for high-street clothing stores to target young and young-adult consumers will be replaced by shops catering for the tastes of the over-50s. The overall implication of these trends is that many consumer companies may need to reposition their product and service offerings to take account of the rise in so-called 'grey' purchasing power.

Finally, over half the couples with dependent children in the UK are dual-earner families. This is very different from the time when women were supported to work in the home, and only men engaged in paid employment. The rise of the two-income household among professional and middle-class households means that this market segment has high disposable income leading to reduced price sensitivity and the capacity to buy luxury furniture and clothing products, and expensive services (e.g. foreign holidays, restaurant meals). Also the combination of high incomes and busy lives has seen a boom in connoisseur convenience foods. Marks 8c Spencer, in particular, has catered for this market very successfully. Demand for child and homecare facilities has also risen. Some of the more unusual services that are being offered to time-poor consumers in Ireland are documented in Marketing in Action 2.2.

2.2 Marketing in Action