Editor's note: For his annual contribution to our international research issue, our West Coast ad rep/roving reporter Lane Weiss traveled to San Jose, Costa Rica to speak with Carlos Denton, CEO of CID Gallup, a San Jose-based research firm.
Lane Weiss: Tell us a bit about your company’s background.
Carlos Denton: We have operations in 14 countries based from [San Jose] and have wholly-owned operations in 10 of them. For example, we have offices in countries such as Panama, Nicaragua, El Salvador and also in Haiti, the Dominican Republic, Ecuador, Peru and Bolivia. We also do research in Cuba.
We have a licensing agreement with Gallup to do, with their supervision, Gallup public opinion polls in these countries and call them Gallup Polls. We do something like 35 of those kinds of surveys a year. We do something like 300-350 individual pieces of research now throughout these different countries. We do no subcontracting if we can help it.
When we began this business in 1977, market research did not exist in this region of the world. We’re proud to say that we opened up the field. And as each of the countries began to get rid of their military dictatorships and their problems with currencies and other things, we opened up in the others.
Some of the adventures we had in those days were pretty wild, everything from an interviewer shot in the buttocks on the outskirts of San Salvador to having to throw myself under a car to avoid a fusillade of gunfire between the guerrillas and another group in Guatemala City. We have quite a lot of those kind of stories!
One problem in the days of the dictatorships and the wars was that the military people thought that maps should be state secrets. So when you needed to develop samples to do your research, the census maps weren’t something that you could get ahold of very easily unless some general took pity on you and decided to let you have them. And so we used to have to draw our own maps.
Very often in those days if we sent someone out to certain neighborhoods we had to send a list to the military command of the names of people who would be out knocking on doors. Otherwise they would think they were guerillas and take them in and interrogate them for a couple of days.
For example we would put a group out in El Salvador during the war years of the 1980s and we knew that some of them would be picked up by the military and be taken into headquarters. They all had copies of the form that we had submitted to the general and so they could go into the headquarters and the lieutenant would say, “OK, it’s all right. You can go back to what you were doing.” But the military didn’t transport them back to where they picked them up so we had to give the interviewers money to so that they could make their way back to the neighborhood where they were working.
And the problem was, our clients often wouldn’t understand why it was more expensive to do research in those countries and we would say, “Well, with our people getting arrested constantly it takes us a long time to gather the data!”
What research methods are most commonly used in Latin America? For example, face-to-face research? Focus groups? Telephone interviewing?
Because regional household telephone penetration is relatively low, survey research may routinely require face-to-face interviewing. This is a problem for a variety of reasons. First and foremost, crime in lower socioeconomic neighborhoods is endemic and interviewers entering them are at risk. In some areas of cities like Rio de Janeiro, Caracas, San Salvador and others it is necessary to pay what is referred to as a “war tax.” This is a payment to the crime gangs to insure safe passage. Secondly, there is the cost factor, although in some countries - one example is Panama - it is cheaper to send an interviewer to a home to conduct an interview than to interview the same person on the phone because of very high local phone tariffs. In Panama, a local phone call costs 25 cents a minute. There is now a great deal of qualitative research being conducted in the region - in-depth interviews, focus groups, etc.
Are there wide differences from country to country in terms of the research methods used?
There are not wide differences between countries - with a couple of exceptions. It is virtually impossible to do a national survey in Colombia because of the war. Most research uses urban samples. In Cuba, the government needs to approve any questionnaires fielded, regardless of the topic.
Is Internet research becoming more popular and more feasible in Latin America?
I think it is necessary to view Internet research within a worldwide context, rather than one focused on Latin America . I think that response rates are lower than with mail surveys and it is very difficult to qualify the respondent. We run regular proprietary surveys on our Web page and we now have a very solid base of Central Americans living in the region and in North America. However, the ones who might respond to a specific Internet survey - what are they representative of?
One side of Internet research which we are interested in is using voice over IP. If we can improve our capacities in that area we might convert part of our phone banks to this methodology.
What are some of the problems facing marketing research in Latin America and around the globe?
I think that the Latin America researcher faces the same problems that others do around the world. Much of what traditionally was market research has become generic and the downward pressure on prices has been a constant. There are now so many research products, and so many companies doing research, that it is difficult for any one of them to create an independent identity. As a result, the process of consolidation, which is seen in other areas of the world, is now also taking place in this region.
Are there privacy laws in Latin America that make it difficult to conduct legitimate marketing research? Does telemarketing have a damaging effect on legitimate research, as it does in the U.S.?
There are no privacy laws in this region that I know of and I have no idea how they could be enforced in any case.
As for telemarketing, you may or may not know that some less reputable telemarketers have been relocating to countries in this region - Belize, Jamaica, Costa Rica, Uruguay, wherever there are plenty of English speakers - because an international operator does not have to worry about the exclusion lists prepared in the United States. There are also phone banks in all of these countries, conducting research into the United States. I cannot speak to the experience of these phone banks, because we are talking about research in Latin America, not from it.
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?
I think that the Latin American research companies that have an international relationship, which could range from having been acquired to a licensing agreement, will do better over the years because the relationship provides the buyer of the research with some kind of guarantee or support in terms of the quality of the work he or she is buying. It is important to underline here that many of the big multinational firms do not have representation in many of the Latin American markets. They have North America, they have Europe, they probably have the Far East, but Latin America is a kind of black hole for many of them.
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?
One of the frustrations that any seasoned researcher faces is dealing with clients that do not know what they are asking for or do not know how to use the information they are provided when they finally obtain it. The young brand manager going through the motions of buying research without knowing what it really is for is not something exclusive to the Latin American region. Any consultant knows that her or his advice will only be followed partially and that is one aspect of being part of the profession.
What things can marketing research companies do to help their clients use marketing research data more effectively?
Educate, educate, educate. Many research companies offer seminars and other training sessions to their clients to help them know what to ask for and how to use what they get afterwards.
What trends do you see in the use of marketing research in Latin America? Are certain kinds of companies or industries doing more research or less research, or doing research for the first time?
One trend is toward a two-tiered structure, where on the bottom are a series of low-cost, generic research-providing companies doing mass research on broad-based commodities and services. On the top are the firms doing value-added research - these are being requested to get directly involved with the clients in developing strategies for the market, for developing innovative approaches, for educating, etc.
Does marketing research seem to be respected by Latin American businesses? Is conducting research seen as a worthwhile expenditure?
The “creole” companies - the wholly-owned Latin American firms - which are generally family-operated, tend to misjudge the importance of market research and to want to spend little on it. As one producer in Ecuador said, “I sell everything I produce and I cannot produce more - why do I need research?” The multinational companies follow international practice and, in fact, are the ones that set the trends, value the research and pay more for it.
Are the research departments in the client companies in Latin America growing or shrinking?
Research departments have been reduced in size, mostly because more and more of them are now regionalized. Where once there was a research department in each country, it is now possible that there will be one department for the Andean countries, another for Brazil, a third for Southern Cone countries, etc.
Who are the largest users or purchasers of marketing research services in the various Latin American countries? Is it private firms? Government agencies?
If the question is posed as “market research” then the largest purchasers by far are private sector companies. However, if the question is posed as “research” then it is necessary to include the large international banks like IDB and the World Bank, United States government agencies, and many others. In this case the response would be 65 percent bought by the private sector and 35 percent by the other.
Manufacturing companies generally buy generic research, the lower tier that I referred to above. They buy more in volume but not in terms of market size. The service sector - banks, fast-food companies, telephone companies, supermarkets, credit card operators and others - are the ones who buy the most in dollar terms. Utilities, presumably electricity and water providers, buy some.
Are most of your clients based in Latin America or do you have some U.S.-based clients as well?
We have many U.S.-based clients. In fact, that really is our strong suit. About 45 percent of what we are doing comes from clients outside Latin America, in places such as the U.S., Canada, England, Finland.
Marketers that may have overlooked the area are now coming down and testing the waters. We are working with American brewers, a fast-food company, a bank...they are all taking a look at the market. We think that if you are in the research business in this region, you need to sell the region, and marketers need to think about the region. This region has signed a free trade agreement with the U.S., and we are presuming it will be passed.
Do you think more client companies will rely on a global marketing approach or will they tailor their marketing efforts - and by extension their marketing research efforts - to each country?
One problem that researchers who work in Latin America have is that North American clients either overcomplicate or oversimplify the diversity of the markets. The fact is that for certain types of products and services acquired by elites in the region - high-end automobiles and SUVs, jeans, perfume, whisky and vodka, gold and platinum credit cards, airline travel, cruises, and many more - the marketing strategy used in one market is applicable to any other. Research to develop an advertising strategy is cross-national in many cases.
But at the middle- and lower-class levels, there are significant differences from country to country. The middle-class housewife in Guatemala City does not have the same income or interests of one from Santiago, for example.
Also, the Hispanics in the U.S. aren’t really a bellwether for the Hispanics who actually live here as consumers. The U.S. is a great melting pot and over time [immigrants] adopt morés and buying patterns, in many cases without realizing it. So that if you meet a Costa Rican who has been in the States for 10 years, he may have a Costa Rican flag in his house but if you look at his consuming patterns, he has shifted, he has become an American, culture-wise, which is one of the great successes of America. So you can’t look at the consumption habits of Hispanic consumers in the U.S. and think they will be duplicated in Latin America.
That’s why, for companies that don’t have a lot of experience in foreign markets, it’s better to get the inputs from the people who are in the market, because they are familiar with it.
In Latin American countries, there is often an educational component required of a marketing program which is different from what is required North America, where most consumers know all of these things. You can’t take for granted that consumers will know what your product is used for. For example, we were hired 20 years ago by a U.S. maker of toothpaste to do research with the Indians of Guatemala - most of whom don’t speak Spanish, by the way. We discovered in doing research there that they did not know the relationship between brushing your teeth and preventing cavities. So rather than simply marketing the toothpaste, the campaign that this company put into place in the highlands on billboards was to explain to people that brushing your teeth can help avoid problems with your teeth, and here is the toothpaste to use. It was highly successful. So now the Indians brush their teeth and buy the toothpaste.