Teliani Valley PLC Essay Example

and opportunities, Teliani Valley aspires to become a renowned brand on a global scale.

It has high-quality wine, demonstrated by its numerous awards. On July 20, 2006, the wines "Teli" and "Mukuzani" were honored with bronze medals at The International Wine and Spirit Competition in the UK. This renowned competition, founded in 1969, remains the leading event of its kind globally.

In 2006, The Competition received around 5,000 entries from over 50 countries and awarded medals to only the finest wines, including those of Teliani. Following the closure of the Russian market, wine companies shifted their attention and developed new strategies. Teliani chose to distribute its products not only in the American market but also in European markets. The company is currently present in all countries around the Baltic Sea except for Lithuania. Consequently, we are planning a project on how Teliani should enter the Lithuanian market.

Teliani Valley is looking to create a marketing strategy specific to the Lithuanian market. By entering this market, we expect our exports to reach every country along the Baltic Sea. These countries are all part of the European Union and have well-organized, regulated, and established wine markets. Additionally, we have discovered that the volume sales of alcoholic beverages in Lithuania are projected to steadily rise throughout the forecast period.

In the project, our main focus is on exploring the consumer market in Lithuania and assessing the feasibility of entering this market. Teliani Valley is currently shifting its strategy from relying on sales from importing countries to establishing a presence in the foreign wine market and building brand recognition.

Methodology

Our group has chosen to concentrate on Teliani Valley, a well-known wine brand in Georgia

that has the resources and potential to expand into different countries and become a global company.

This question pertains to time, but the work towards it has already commenced. Therefore, we have deliberated and concluded that our focus should be on investigating the market in Lithuania, as this is a crucial step towards achieving success. We initiated our process by discussing among ourselves. The more we discussed, the more information we obtained from the interview, making the task more challenging due to some contradictory information. Additionally, there were internal issues that arose.

We implemented group strategies by dividing tasks. To gain knowledge on developing a marketing strategy, our group conducted various interviews. Our aim was to gather as much information as we could from diverse sources. Initially, we interviewed export processes manager Goga Kipiani, who provided an overview of the export strategies and information about their markets. Afterwards, we met with marketing processes manager George Khutsishvili, who gave us an overview of the marketing strategies.

We conducted a simple questionnaire with 100 randomly chosen Lithuania citizens, contacting them through "Skype". The questionnaire asked respondents about their alcohol consumption habits, specifically regarding spirits and wine. To further explore the market, we analyzed existing statistical data, conducted a marketing survey, and studied the political and economic environment as well as the competition. We gathered data through internet research using search engines and email polls, as well as interviews with representatives from Teliani Valley's Marketing and Public Relation department. To find the necessary theoretical framework, we consulted our coursebook; however, we also referenced the previous year's coursebook (Wild, Wild, Han 2006) and electronic library resources for additional relevant information.

We later utilized

these theories to customize Teliani Valley's strategy and goals to match the market structure and environment. For the project, we decided to develop an analysis and recommendation section. Based on empirical findings and theoretical framework, we formulated our recommendation on what needs to be done to increase sales.

Theoretical Framework

Promotional Strategy

Companies employ various communication methods, including personal selling, advertising, PR, and direct marketing, to reach distribution channels and customers. These efforts collectively make up the marketing mix. There are two primary promotional strategies.

We will begin by discussing and examining push and pull strategies. These two strategies can be used separately or together. Pull strategy is a promotional strategy that aims to create buyer demand, which will motivate channel members to stock a company's product. This means that the company uses various marketing tools to generate demand and "pull" products to end-users through the distribution channel.

The promotional strategy known as push strategy involves pressuring channel members to carry and promote a product to end users. Essentially, this strategy "pushes" products and relies on subsequent channel members to promote the product themselves. The choice between push and pull strategies in a particular marketing environment depends on several factors, including the distribution system, access to mass media, and the type of product.

Regarding the distribution system, implementing a push strategy is challenging when channel members (such as distributors) hold significant power relative to the products. Additionally, push strategies are less effective in long distribution channels, as multiple members must be convinced to carry the product. In such cases, pull strategies are often more effective by generating buyer demand.

Access to mass media plays a role in determining which strategy to employ.

Developing markets may have limited options for mass media, making it difficult to increase consumer awareness and create demand with a pull strategy. In these situations, advertisers may rely on billboards and radios but still find pull strategies ineffective.

Lastly, the type of product is also a factor in choosing between push and pull strategies.

A pull strategy is suitable when buyers demonstrate strong brand loyalty towards a specific brand. Essentially, these loyal customers already know which brand they want to purchase before they go to buy it. On the other hand, a push strategy is more appropriate for inexpensive consumer goods that are commonly purchased by buyers who are not loyal to any particular brand. These buyers do not have a predetermined plan for which product to buy, and will simply purchase whichever product is presented by the retailer.

Distribution Strategies

Distribution involves the planning, implementation, and control of product flow from the beginning to the end. The distribution channel represents the "path" that a product takes during its journey. Distribution plays a significant role when expanding into foreign markets.

Companies usually develop their distribution strategies based on two main choices: how to import goods into a country and how to distribute goods within a country. In this instance, we will concentrate on distribution strategies within the country.

When creating distribution channels, there are two primary factors to take into account: the required level of product exposure and the cost of distribution. The marketer must evaluate the potential customer base of the target market when determining the level of exposure. An exclusive channel is a method of distribution in which a manufacturer grants the

rights to sell its product to one or a few chosen sellers.

In terms of distribution channels, strict control is made possible, which helps producers limit the sale of competing brands and restricts market entry for outsiders. Conversely, the intensive channel allows a producer to grant multiple sellers the right to distribute and sell its product.

A location-flexible intensive channel is advantageous for buyers due to the wide availability of outlets where a product is sold. However, this type of channel does not facilitate entry for new buyers and is also more challenging to control. Channel length is determined by the number of intermediaries between the producer and the buyer. In a zero-level channel, producers sell directly to the end-user.

A channel with one intermediary is referred to as a one-level channel, and similarly for higher levels. Typically, the more intermediaries involved in a channel, the more expensive it becomes due to additional charges for services provided by each "player". This cost factor is particularly important for companies targeting price-sensitive consumers. Business-level strategies assist in determining the most suitable approach for a specific product.

There are three main business-level strategies: low-cost leadership, differentiation, and focus. A low-cost leadership strategy involves using economies of scale to have the lowest cost structure compared to competitors. It also includes keeping costs low for primary activities like marketing, advertising, and distribution. This strategy is effective for mass-market products targeting price-sensitive buyers. On the other hand, a differentiation strategy focuses on designing products that are seen as unique compared to competitors. By offering unique products, a company can charge higher prices and enjoy greater customer loyalty than a low-cost leader.

One way products can be

differentiated is by improving their quality. Additionally, products can be differentiated by their distinctive brand images. Another factor of differentiation is product design, which encompasses the features that determine how a product looks and functions based on customer requirements. The Focus Strategy involves a company focusing on serving the needs of a specific market segment. This can be done by being the low-cost leader, differentiating its products, or both. A focus strategy often entails designing products and promotions for consumers who are dissatisfied with existing choices or seeking something unique.

Empirical Findings

Interviews

The interview with export processes manager Goga Kipiani provided us with an overview of the export strategies and information about the markets they operate in.

Teliany Valley has plans to expand its business into both European and American markets. They have already exported their products to 22 countries, including markets in America and Europe. However, their goal is to increase the number of countries they export to. The company's strategy focuses on entering new markets and developing them into potentially profitable opportunities. This ambitious plan is expected to take around 10-15 years, but it plays a critical role in Teliany Valley's future plans.

The closure of the Russian market resulted in a 30% decrease in sales for Teliani Valley. This market was particularly important for Georgian wines due to the Russian customers' preference for alcoholic beverages and the historical connection between Georgia and Russia as former members of the Soviet Union. As a result of the closure, many major Georgian wine companies faced bankruptcy. However, Teliani Valley had already established its product distribution in other countries and had a strong position in the Georgian market at that

time.

Nowadays, Teliani Valley's sales are increasing in Russia but not as much as they would like due to several restrictions. The export process involves Teliani Valley searching for potential distribution companies, attempting to capture their interest, and then holding meetings. Once contracts are secured, Teliani Valley grants these companies a trading license, allowing them to export the wine and distribute it in a suitable location. The communication between businesses is conducted in a business-to-business manner. Unfortunately, Teliani Valley cannot distribute its products directly in foreign countries as it would require establishing local offices which would demand financial resources. Additionally, the foreign market is not sufficiently profitable to warrant establishing branches there.

The main objective of Teliany Valley is to generate interest among local distributors, rather than prioritizing finances. By establishing these connections, the brand can enhance recognition, boost sales, and secure a strong market position for future growth. Although Tianyi Valley has set fixed prices for all distributors in each market, the actual selling price may vary depending on factors like tax rates, alcoholic beverage taxes, and distributor demands.

Teliani Valley is seeking a partner in Lithuania to expand its export operations. Multiple distributors in Lithuania have shown interest in collaborating with Teliani Valley, including one that already distributes wines in Latvia and Estonia. While this distributor is interested in obtaining a license from Teliani Valley, the company still requires an additional partner.

Teliani Valley has a strategy of partnering with different companies in order to increase reliability and expand their presence in various markets. During our second interview with George Khutsishvili, the marketing processes manager, he provided an overview of the company's marketing strategies and shared information

about the markets they currently serve. Teliani Valley currently exports its products to several countries including Russia, Ukraine, Kazakhstan, USA, Azerbaijan, Belgium, Poland, Israel, Finland, Turkey, Belarus, Bulgaria, Chech Republic, Ireland, The Netherlands, Moldova, Latvia, Japan, and Estonia. The company's goal is to establish itself as a well-known brand both in European and American markets. To achieve this, Teliani Valley focuses on producing high-quality products and creating a reliable brand image. They have implemented a strict quality control system that is applied throughout the entire production process, starting from grape selection and ending with the bottling of the final product.

In May 2004, Teliani Valley established a strategic relationship with the European Bank for Reconstruction and Development (EBRD), acquiring a block of shares in Teliani Valley PLC. This investment allowed the company to construct a new winery, plant vineyards in prime micro-zones of Georgia, enhance marketing efforts, and boost sales of its high-quality wines. It also involved making partial updates to existing production equipment and expanding production capacity. Additionally, modern pneumatic presses and stemmers were installed to improve the wine's quality. The silver medal received in the current year's international wine competitions, "The challenge international du vin" in France and "The International wine and spirit competition" in Britain, further validate the excellence of Teliani wines.

Teliani is known for producing a diverse selection of high-quality wines each year, including brands such as Teliani, Mukuzani, Napareuali, Kvareli, and Saperavi. As they enter the Lithuania market, Teliani Valley is maintaining its marketing strategy of offering exceptional quality. However, there are challenges to overcome due to the higher price associated with their commitment to quality. The wine market

is highly competitive, with foreign wine brands and counterfeit Georgian wines posing as competitors. These counterfeit wines are cheaper, attracting customers who prioritize affordability over Teliani Valley's more expensive offerings.

These customers are wine enthusiasts who belong to a lower social class, but they have the potential to become users of Teliani Valley. On the other hand, the real customers are individuals from a higher social class who are knowledgeable about quality wine and even have wine collections. The distributor engages in marketing activities to promote the sale of wine.

It has a marketing strategy or distribution channel where it effectively sells and distributes wine. The wine will be sold in supermarkets or hypermarkets, which are the largest marketing places in the country. The wines will be prominently displayed on shelves.