Know your customers: The Italian divide

Italy is the world’s seventh largest economy and has strong connections to Toronto. The Italian diaspora in Toronto is one of the largest in the world. When the Italian national team won the World Cup in 1982, the party on St. Clair was the largest gathering of Italians outside of Italy.

While Italy is currently teetering on the edge of a financial disaster born of an enormous national debt and high unemployment, Italy still ranked eighth in the Economist’s Quality-of-Life Index and is an excellent place to do business.

For Canadian organizations doing business with Italy, it’s crucial to keep in mind the imaginary dividing line that runs through the country. From Rome on the west across to the Adriatic coast, it bisects the country into two psychological and economic regions: north and south.

This split has important economic and cultural consequences for entrepreneurs wanting to do business in Italy. The north is home to fashion capital Milan and tourist juggernaut Venice. The south is home of the corruption of Naples and the agrarian economy in Sicily.  So how do these two regions get along and how is business conducted?

The north is an industrialized economy swept up in the growth of the European Union. It conducts business much like Switzerland to the north and France to the west. Credit cards, complete with PIN codes, are accepted everywhere and products are priced and taxed in accordance with national policy. The GDP here approaches 30,000 Euros.

In the South, the GDP is a little more than half that of the North, at 17,000 Euros. In Naples, credit cards are a source of bafflement. When I visited earlier this summer, the one ATM in Pompei was out of order and no one had any other ideas about where to get money.  It is a source of pride in the south to conduct business through bartering and a handshake rather than through formal economic transactions.

That there should be such economic disparities between the north and south shouldn’t be surprising. Italy, after all, only became a country in 1861.  Rome and Venice joined in 1870, which makes the modern country of Italy younger than Canada.

Marketers find a vast difference between customers in the north and the south. Marketing products in English have little effect in the south, as citizens still largely speak regional dialects and aren’t subject to English in school. The SmartCar, a roaring success in the congested streets of Rome, proved less popular in Milan where drivers are used to wider roads and better surfaces.

Marketing products online has been proven to be successful in the north where broadband connectivity is the norm.  In the south, however, the infrastructure is much less reliable and many towns are only now getting connected to the Internet and setting up websites.

In 2009, Italian Prime Minister Silvio Berlusconi eliminated property tax in Southern Italy to try and close the economic gap that was widening between the north and south.  And recently, several rural communities in the state of Calabria have created co-ops and marketing organizations to by-pass the traditional distribution mechanisms of organized crime.

The lessons from Italy can be applied to any country being considered for export: there is no such thing as a universal customer, so products need to be tweaked for markets based on cultural norms, economic conditions and the needs of a community.