A k a d e m i k A r a ş t ı r m a l a r D e r g i s i 2005, S a y ı 25, S a y f a l a r 73-90 73 Akademik Araştırmalar Dergisi The Emerging Marketing Environment in Georgia as a Transition Economy İsmail ÖZSOY* Ali Rıza APİL** 1. Introduction The emerging economies where there has been a shift from a command economy to a market economy receive considerable attention from scholars be- cause of the complexity of problems that these economies face. Under the so- cialist economy, all the decisions concerning investment, prices, and distribu- tion of goods and services during the Soviet period were made by central plan- ners. The banking system was severely underdeveloped and its activities were limited mainly to savings deposits and transfer activities. Heavy industries such as machine building and metallurgy were at the forefront, while the service in- dustries and light industries producing consumer goods were neglected, being considered non-productive. The Soviet economy had such peculiarities that one could hardly perceive them today. It was an economy that could produce mo- tors but could not produce enough butter and soap to meet the demand of the people. At the same time, the prices of consumer goods and certain essential services were highly subsidized and controlled by the government and did not reflect market prices. Consequently, a ‘shortage’ economy was created where there always existed excess demand at controlled prices. The failure of the economy to satisfy the demand of the consumers generated long queues and black markets, characteristic of socialist countries. Goods and services pro- duced according to the plans were distributed to shops, where they were pur- chased. The system felt no need for advertising. Therefore, when a new product was introduced, people were informed about it by word of mouth. Since there was always a shortage of products, there was not a marketing environment in today’s sense in these countries. In this paper, we will take the Georgian mar- keting environment and deal with the developments therein during the current transition period, drawing a framework of the marketing infrastructure of the country with particular references to the recent economic reform process, legal and fiscal reforms, and material culture of the Georgian people; and give some findings for workable marketing strategies at the end. 2. Economic Environment For transitional economies to succeed they need to adopt comprehensive, well-designed, and executed reform policies that will enable them to achieve higher economic growth with equity. The reforms introduced in transitional economies include, among others: price and trade liberalization and the ac- ceptance of the private sector as the main engine of economic growth; privati-