Editor’s note: For his annual contribution to our international research issue, our West Coast ad rep/roving reporter Lane Weiss traveled to Italy to speak with Danilo De Candido, chairman of Pragma, a Rome-based research firm.


Quirk’s: What research methods are most commonly used in Italy? Face-to-face research? Focus groups? Telephone interviewing?

Danilo De Candido: In the year 2002, the revenue of the institutes belonging to ASSIRM was about 350 million euros [ASSIRM is a trade association of Italian research agencies]. It is believed that this amount represents 70-75 percent of the total market research revenue.

Quantitative research - panels and ad-hoc research - represent three-fourths of the total revenues, out of which telephone interviews account for more than 30 percent. About 20 percent is made up by qualitative research, mainly focus groups. The remaining 5 to 6 percent represents other methods, such as desk research, etc.

Only considering those companies that have joined ASSIRM since 1996, 26 companies in total, their revenue increased from 216 to 325 million euros, with an yearly increase constantly higher than 5 percent, with the only exception of the past year. In fact, in 2002 the increase over the previous year was just 3.6 percent.

The revenue from research mainly comes from domestic projects, more than three-fourths. The remainder is made up by projects coming from abroad, and to a lower extent by Italian projects conducted abroad - 13 percent the former, 8 percent the latter, as data for 2002 shows.

Is Internet research becoming more popular and more feasible in Italy?

Internet keeps being a niche market in Italy. According to what ASSIRM data for 2002 shows, research through the Web covers about 1 percent of the total Italian market. The reasons for such a poor relevance of this tool are, on one hand, a lack of representativeness of Internet users. The youngsters and the people with a mid-higher education are those who make most use of it. On the other hand, companies feel mistrust and fear about a tool they know so little of. The spread of the Internet in our sector is easily foreseeable if we consider, among other things, the progressively increasing costs for face-to-face interviewing and the universe representation problems of telephone directories, problems which are due to increase in the future because people who don’t want to appear in the directories, and widespread of mobile phones, etc.

What are some of the ways you see the Internet affecting market research?

The most relevant and significant innovation brought about by the Internet is definitely the possibility of gathering data without relying on interviewers’ support. The research process will benefit a lot from the spread of CAWI methodology. First of all, because accounting procedures are made a lot easier. Nowadays middle-sized companies - like Pragma, for example - have to handle around 1,000 interviewers, etc., and consequently fixed costs may decrease, for accounting department staff and fieldwork department staff.

The speed of data gathering is another important advantage offered by the Internet, not only compared to the more traditional methodology, for example, face-to-face interviewing, but also in comparison with telephone interviewing. Moreover, through the Internet it will be possible to guarantee a better data quality, since it allows you to avoid possible biases due to the interviewer’s presence during the data gathering.

However, the use of the Internet implies relevant investments to purchase, manage and update the mailing list, such as costs for software and hardware, new professional figures to be included in the research process, such as mathematicians, engineers, IT professionals, etc.

What are some of the problems facing marketing research in Italy, in Europe and around the globe?

Information tends to get standardized; ongoing surveys use the same questionnaire. This is definitely a positive aspect, as it allows comparisons throughout the time that would not be possible otherwise. However, it implies the danger of relying too much on what is already tested, already known. Maybe, the search for the new, for new hypotheses has been put aside a little bit. Beside being useful for monitoring the current situation, research should also encourage innovative thought and creativity. Research plays the role of finding out the emerging trends and creating/showing the new opportunities of development, the new markets.

Are there privacy laws in Italy and/or Europe that make it difficult to conduct legitimate marketing research? Does telemarketing have a damaging effect in legitimate research, as it does in the U.S.?

Since 1996, a privacy law has been approved in Italy, too. However, the research sector hasn’t been affected by it. On the other hand, telemarketing has generated and still generates negative effects on our activity, as it contributes to increasing the refusal rate and the mistrust of people towards the interview.

How has the consolidation in the market research industry - in Europe, the U.S. and around the world - affected the industry? Is consolidation helpful or harmful?

The consolidation in the sector, meant as a concentration of companies, is an inevitable process, connected to the need of rationalizing the resources, obtaining economies of scale, improving competitive market positioning, enlarging the customer base, etc. Overall, it is a positive process when the companies that join together have complementary activities or operate in different countries so that the consolidation becomes an enrichment for all. It is also a positive process in the case of a small-sized agency, maybe a specialized one, that joins a large network. However, I believe that, besides the indicated general trend, there is always room for specialized companies and/or companies that operate on niche markets, which generally present more interesting business opportunities.

Do your company’s clients have reasonable expectations about what they learn by conducting marketing research? Do they make effective use of the information they obtain from research?

The company that is used to conducting research and that has a marketing and research department of its own has in general reasonable expectations and makes effective use of the market information. In the case of small-sized companies, that have just started considering market research or that don’t have a long tradition, expectations may be different and partly controversial: there are those that exclusively rely on the market research company and on its capability to do a good job. Instead, in other cases and particularly when the owner or the top management intervene, expectations can exceed what the research is realistically able to provide.

What things can marketing research companies do to help their clients use marketing research data more effectively?

I started being involved in market research over 30 years ago. We didn’t have PCs then and many market research companies relied on external structures for data processing. Nowadays, for example, even a junior researcher is able to process research data. In short, there has been an exponential spread of the knowledge. During these years, marketing research has made very relevant progress from a theoretical point of view as well as in terms of methodologies. This is a process that has affected and keeps affecting not only market research agencies but also our clients, the universities, training centers, etc. Each one of these subjects may contribute, in their own sector, to improving the quality of marketing research.

But let’s get back to your question. Market research companies can and should work following three guidelines:

The first aspect is represented by research with an ever-improving cost-benefits ratio for the client. That means we need to determine the most effective methodology, making constant quality controls on the data and, more generally, make the entire research process more and more reliable.

A second aspect refers to the relationship between agency and clients, a relation destined to grow and based on the actual solution of the client’s problems.

Finally, a third aspect is the training, meaning that the market research company must contribute to improving the qualitative standard of the young researchers who will look after marketing research within the companies. Throughout the years, for example, Pragma has organized several courses in market research for both private and public company clients. Moreover, it usually organizes training periods of three to six months for students coming from different branches - psychology, economics, statistics, etc. All this is to say that a more effective use of market research comes from a thorough knowledge of the tools that can be easily achieved within the market research company.

What trends do you see in the use of marketing research in Italy? Are certain kinds of companies or industries doing more research or less research, or doing research for the first time?

Development prospects for marketing research are definitely positive for the following reasons. There is an ever-growing market complexity and a consequent growing need of data and analysis tools to help our clients to understand, keep under control and also anticipate any possible evolutions.

The importance given to research in Italy is still considerably low compared to other European “big spenders.” In 2000, Italy contributed 7 percent of the total expense for European research, against 27 percent from England, 21 percent from Germany and 16 percent from France. The low Italian figure hides a surely interesting potential for at least three reasons. The inevitable process of company concentration - in Italy, we have the largest number of small-sized companies compared to other big European countries - with a consequent greater use of the research. The presence of a public sector which has been nearly absent in the past few years and which is now starting to consider the research world. And the liberalization of the market and the fall of monopoly in some sectors such as utilities and the parallel development of a research market.

Does marketing research seem to be more respected by Italian businesses? Is conducting research seen as a worthwhile expenditure?

Once again, I think I can state that there has been an overall improvement of the situation. Reluctance, if any, mainly comes from small family businesses, which are still run in a completely traditional manner. Yet, spending money for research and spending it well is more and more a top priority, given the increasing market complexity. On the other hand, the investments assigned to research every year - to the revenues indicated by the institutes belonging to ASSIRM, we must add, as I mentioned before, an additional 20-30 percent coming from other research suppliers - show real respect for and consideration of the accountability of marketing research.

What things can research companies do to help improve the reputation of marketing research among Italian businesspeople or businesspeople in general?

Basically, I believe there are two tools that could help improve the image of marketing research. On one hand, it is necessary to invest in resources in order to improve the quality of the data and the methodologies of analysis. From this point of view, the quality certification has been an important step toward a general improvement of performance. On the other hand, it is important to continue and spread more and more widely the marketing culture by organizing seminars, conferences, training courses within the corporations, etc., for the people of the sector. However, universities have significantly improved their supply in marketing and research courses, and this has contributed to further improving the image of such a subject.

Are the research departments in the client companies in Italy growing or shrinking?

Research departments have greatly increased within the companies throughout the years. There are many companies that, up to some years ago, used to take marketing research into consideration only in case of problems and that now every year plan to invest a certain amount of money in market research. Moreover, in recent years, a market parallel to that of research has been activated, whose users are represented by municipal companies that supply services to the community - transport, electricity, gas, etc. By law, they must conduct customer satisfaction surveys. An additional, although indirect, confirmation of the greater importance given to market research is showed by the number of marketing research agencies operating in Italy. When Pragma was founded in 1971, there were only some 10 institutes. Nowadays, we have more than 150.

Are Italian companies looking at research providers as consultants in information management, or still just as data-gatherers?

Customers still make both requests; in fact, there are companies that look for solutions, while others prefer to consider the two functions separately. In parallel, there are some agencies that are more oriented towards consultancy - that is, supplying high added value data - and others that are merely data gatherers. A concentration process is also taking place, which means the creation of multi-sector companies that are able to provide all the different services a client may need - marketing research, advertising, promotion, public relations, organizational consultancy, etc.

How has the globalization of the world economy affected marketing research?

The globalization has dramatically affected marketing research. The “global village” is no longer just a theoretical expression, it is reality. A considerable number of companies have taken root around the world. The Internet, the other side of the globalization, gains new followers every day. Although, globalization also means other things to marketing. Diesel Jeans owner, Renzo Rosso, stated: “We do not sell a product, we sell a lifestyle and a way of dressing.” Phil Knight from Nike took an opportunity to say that the company’s mission is not selling shoes, but validating people’s life through sport and fitness. These are only two of the innumerable witnesses confirming that the core business of a successful company is no longer only the product itself but what the product represents and what can be exported. Therefore, branding policies will move more and more towards the values, which become an integral part of the marketing research objectives. The reference model of the marketing manager will include the physical, functional characteristics of the product and the advantages coming from the use of the product itself. But to these aspects, it will be necessary to increasingly add the values associated with the product.

Do you think more client companies will rely on a global marketing research approach or will they tailor their marketing efforts, and by extension their marketing research efforts, to each country?

It is necessary to make a distinction according to the type of company and the relative market of reference. Multinational companies are obviously more interested in developing a global insight into the marketing. Therefore for these companies, research will particularly focus on the international market. Given a certain degree of cultural standardization that implies some loss of information, the global marketing approach shows noticeable advantages, such as for data processing, the cost-effectiveness of the approach and better management of the different marketing mix activities. However, the bigger portion of the market is made up by firms that operate within the national territory. For example in Italy, as I’ve already mentioned, more than three-fourths of the research is domestic in nature. Consequently the marketing activities will necessarily be country-focused. Furthermore, in Italy there is a third typology of companies: small-sized companies focused on exporting. These companies need basic marketing information on the markets they operate in, although they don’t have the resources for conducting ad-hoc surveys. They are instead interested in conducting multi-client and multi-country surveys.