Actual and perceived gaps in the supply and demand for marketing and communication services: an empirical analysis of the province of Bergamo

Abstract

Purpose

The purpose of the paper is to analyze the supply and demand of marketing and communication consulting services and evaluate actual and perceived gaps.

Design/methodology/approach

The paper uses two different datasets to assess the gap. The supply database comes from desk research carried out in the province of Bergamo (n. 159 consulting agencies). The demand dates are the results of 100 structured interviews with local companies that requested marketing and communication consulting services both inside and outside the province.

Findings

Findings show that there is no significant shortage in local service supply. Nonetheless, a limited gap exists between the provision of specific services and their overall quality. Conversely, the perceived gap is wider, leading to an impression of scarce availability – a notion disproven by the analysis of the actual supply.

Practical implications

The study suggests that local agencies may overcome their “myopic” attitude and need to increase their visibility, competencies and expertise by investing in these areas and improving networking.

Originality/value

There are no previous studies that compare the supply and demand for marketing and communication consulting services. The paper also provides insights into actual and perceived gaps in a hypercompetitive environment.

Citation

Cavallone, M., Pozzi, A., Wassler, P. and Palumbo, R. (2024), "Actual and perceived gaps in the supply and demand for marketing and communication services: an empirical analysis of the province of Bergamo", The TQM Journal, Vol. 36 No. 9, pp. 40-52. https://doi.org/10.1108/TQM-08-2023-0259

1. Introduction

Hypercompetition, technological innovations, environmental pressures and constantly evolving customer demands are forcing firms to continuously adapt and redefine strategies to maintain and/or acquire a competitive edge (D’Aveni, 1994; Ploetner, 2008; Osterwalder and Pigneur, 2010; Kotler and Armstrong, 2012). Due to this trend, many firms have started to commercialize business-to-business (B2B) marketing and communication consulting services (e.g. branding, web and social media marketing, market research) to help businesses frame and implement a unique and distinctive value proposition (Chowdhury et al., 2023; Nussipova, 2022). This is one of the fastest growing industries in the world, with an overall growth rate of 55.5% in 2021 and an economic value of about US$87bn (Statista, 2021).

Firms are interested in marketing and communication consulting agencies that can deliver high-quality services. A talented and knowledgeable staff is one of the most relevant factors driving firms to opt for particular agencies (Gronroos, 2011; Bitner et al., 2008), along with the opportunity to build a long-term relationship ensuring personalized interactions and responsiveness (Gummesson, 2008; Kitchen and Schultz, 2009). Among the factors influencing decision-making, we must add value for money and geographical proximity, especially for micro, small and medium-sized enterprises (Kubr, 2002; Cavallone, 2016, 2017). This is evident from recent works related to value creation in professional service firms (e.g. Bordian et al., 2023; Cardinali et al., 2023; Khaksar et al., 2023; Kondapaka et al., 2023).

Firms requiring marketing and communication services may be unaware of the supply of marketing and communication consulting services in their location. More specifically, firms may deem the offer lower and poorer than it actually is because they have little time and/or willingness to find and compare different agencies (Zhang and Majid, 2009). Additionally, consulting agencies may fall short in terms of visibility, making it harder for businesses to become aware of their services (Treichler, 2019). The perceived gap may also concern the quality, which can be measured in terms of fulfilling the customers’ expectations and coping with complex demands that require a wide range of specialized competencies (Haverila et al., 2011).

This paper focuses on the supply and demand for specialized services in marketing and communication. We chose the province of Bergamo (Northern Italy) as the area of our investigation for two main reasons. First, it has a long and well-established industry representing a catchment area for specialized marketing and communication services. Second, the area has a considerable tertiary sector that can satisfy the requests, but may suffer from the competition of agencies located in the Lombardy region, which is among the most competitive areas in Europe. We intend to evaluate the extent to which consulting agencies established in Bergamo can meet local businesses’ demands and address their needs. We also examine gaps between the demand and the supply, arguing practical implications.

2. Literature review

Marketing and communication consulting is an independent professional advisory service assisting firms to enhance their relationship with (current and prospective) customers and advance their competitiveness (Kubr, 2002; Soedarsono et al., 2020). It deals with both the technical (i.e. the technical know-how needed to solve the specific business problem) and the human dimensions (i.e. the consultant’s ability to face human problems) (Gabbianelli and Pencarelli, 2019, 2021). In the past, industries have considered marketing a peripheral rather than a core component of their business mix (Nagdeman, 2009). Nowadays, the intense competition in the market, the emergence of disruptive technological innovations and the constantly changing customer demands are forcing businesses to acquire marketing expertise also from external agencies (D'Aveni, 1994; Ploetner, 2008; Osterwalder and Pigneur, 2010; Kotler and Armstrong, 2012).

Consulting agencies are selling a service that addresses the firms’ needs and expectations. Even if they rely on formalized organizational activities, e.g. structured systems and methodologies, marketing and communication services are naturally intangible (Amonini et al., 2010; von Nordenflycht, 2010). Furthermore, the tangible part of the organizational process cannot be compared to what happens in other settings, such as manufacturing. From this standpoint, it can be argued that marketing and communication agencies offer a “promise” of a service, which cannot be fully substantiated in a codified service offering (Momparler et al., 2015). Why should a company buy a mere promise? Which aspect should be evaluated to minimize the risk?

The quality of the service provided is among the primary factors driving firms to choose certain agencies (Gronroos, 2011; Bitner et al., 2008). Quality relies on the consultant’s knowledge, competencies, experience in the specific field and his/her capability to focus on the problem and deliver a professional service to meet the business’s expectations (Gardner, 1986; Oyewo et al., 2023; Yorke, 1990). Another critical aspect is long-term relationship management (Gummesson, 2008; Kitchen and Schultz, 2009). The capability to establish long-term links with the firms would ensure personalized interactions and responsiveness to requests. Moreover, it would lead firms to conceive the consulting agency as a relevant partner in value co-generation (Vargo and Lusch, 2004). Value for money (Kubr, 2002) and geographical proximity (Cavallone, 2016, 2017) are also crucial in the decision-making process, especially for micro, small and medium-sized companies that often do not have marketing departments and look for specialized services delivered by external agencies.

In a recent study, Kalaignanam et al. (2021) highlight some changes and future challenges that marketing and communication agencies are facing. The reconfiguration of marketing analytics is a significant trigger of change, which requires consulting firms to reframe their value proposition. Alongside technological changes, trust is also achieving a pivotal role in predicting the utilization of marketing and communication services (Moorman et al., 1992). This will spur firms to establish long-term relationships with stakeholders, relying on mutual trust to enhance value generation.

Kalaignanam et al. (2021) add that, although tools utilizing machine learning and deep learning are beneficial for generating targeted marketing campaigns, their practical adoption by marketing firms creates challenges. Marketing professionals often exhibit reluctance towards adopting algorithms that they do not comprehend (Dietvorst et al., 2015). Within this context, consulting agencies can play a crucial role to increase the transparency and perceived usefulness of MarTech tools, accompanying firms in their digital transformation.

Amidst these challenges, the supply of marketing and communication services is wide and heterogenous, making it difficult for customers to determine which agency is more compatible with their (?) demand for services. About 25,600 agencies offer management consulting services in Italy and 87.2% are micro-enterprises. A growing number of consultants specialize in marketing and customer management (+44% in 2020–2022). Most customers of marketing and communication agencies operate in the financial, capital and consumer goods sectors (Cerruti, 2023). In such a crowded market, firms looking for marketing and communication services may consider the service supply lower than it really is. In fact, firms often have little time and/or willingness to find and compare different agencies (Kubr, 2002). Furthermore, consulting agencies may lack visibility due to their small size, making it harder for businesses to become aware of their services (Gabbianelli and Pencarelli, 2019, 2021). These arguments have led us to consider the actual and perceived gaps in the current supply and demand for marketing and communication services. Do they relate mainly to criteria used to guide decision-making (i.e. quality, retention, value for money and geographical proximity) or are they affected by the content of the service supply?

Extant literature on this topic is limited. Some authors have investigated what consulting agencies could/should do in terms of strategies and communication activities in different countries – e.g. Barr and McNeilly (2003) in the United Reid (2008) in Australia, Sieg et al. (2012) in Europe and Gabbianelli and Pencarelli (2019, 2021) in Italy. Our study attempts to contribute to the academic discourse by assessing the extent to which consulting agencies are able to meet firms’ demand by conceiving a service supply consisting of specialized marketing services.

The province of Bergamo represents an interesting research setting to accomplish this analysis. The province is part of the Lombardy Region, which is acknowledged to be one of the most competitive areas in Europe (Dijkstra et al., 2023) and one of the most vital industrial environments together with Baden–Württemberg, Rhône-Alpes and Catalonia – the so-called Four Motors for Europe (4motors.eu, 2023). The province of Bergamo has a well-established industrial fabric which is highly competitive in the machinery and chemical sectors (Becattini and Coltorti, 2006; Bifulco et al., 2009; Cantù, 2010). Over the decades, an advanced tertiary economy focusing on banking, retail and services has developed to support the industrial sector. Currently, this sector accounts for 32,729 active companies, representing about 40% of the total number of businesses in the province (CCIAA Bergamo, 2023).

3. Methodology

This paper empirically compares the supply and demand of marketing and communication services in the province of Bergamo, assessing the extent to which consulting agencies can meet the needs expressed by local firms. We used two different datasets to assess actual and perceived gaps.

We carried out desk research using the dataset provided by the local Chamber of Commerce to analyze the supply of marketing and communication services. According to the board of trade, in the first quarter of 2021, the province of Bergamo accounted for 2,713 companies offering a wide range of marketing and communication services (see Table 1 for details). Statistics provide information about the market size, but have some limitations. First, businesses are associated with a NACE (Statistical Classification of Economic Activities in the European Community) code corresponding to their main economic activity, but they may also offer services that fall under a different code. Second, NACE codes include companies providing B2B and business-to-consumer (B2C) services that are not related to marketing and communication (e.g. financial and administrative consulting). We focused exclusively on marketing and communication consulting services, in accordance with our study aims. We selected only those businesses with an official website reporting the offer of at least one marketing and communication consulting service. Our dataset consisted of 159 agencies.

We evaluated the local demand for marketing and communication services through a direct survey. In line with the exploratory nature of our research, we adopted a convenience sampling technique (Dornyei, 2007; Etikan et al., 2015), approaching firms in the primary, secondary and tertiary sectors that had ongoing collaboration with local marketing and communication consulting agencies at the time of this study. This allowed us to meet the aim of the study easily, also considering the lack of information about the number of firms requesting these services externally. We carried out 100 structured interviews between January and April 2023. A key informant was elected for each company, focusing on people who were directly involved in marketing and communication activities. During the interviews, we asked participants about:

1. the knowledge of agencies in the province offering marketing and communication services in terms of number;

2. the type of service they requested from agencies inside and outside the province;

3. the perceived critical issues and suggested areas of improvement only for local agencies (i.e. inside the province of Bergamo);

4. the quality of service (or services) expected;

5. the organizational attributes of the firm;

The order and specific wording of the questions did not vary, enabling us to collect comparable data.

4. Results

4.1 Analysis of the offer of the marketing and communication consulting services

As previously anticipated, our dataset consisted of 159 companies in the province of Bergamo that offer B2B marketing and communication services. Web (47.8%) and social media marketing (40.9%), communication (38.4%) and e-commerce (35.8%) are among the most widely offered services in the province of Bergamo. These figures highlight the increasing importance of an online presence in the contemporary business landscape and emphasize the existence of a relevant local and non-local demand for these specialized services. Graphic and web design, video-making and photography are complementary services that are common, too. The core marketing services – e.g. branding (35.2%), strategic marketing (22.6%) and design management (22%), in other words those falling under the category “Business and other management consultancy activities”,– are high in terms of demand due to their importance for maintaining and/or increasing a firm’s competitiveness in crowded markets. Few agencies offered market testing, coaching, or support to analyze and develop foreign markets.

The results show that the current offer of marketing and communication services is diversified. However, our aim is to examine the quality of such an offer and its ability to meet local demand. Therefore, we analyzed a sample of businesses in the province of Bergamo that are interested in such services.

4.2 The analysis of the demand in the province of Bergamo

Most of firms interviewed (74%) belong to two main categories (Table 2): businesses providing electric power, natural gas, steam and similar products through a dense network of lines, mains and pipes (44%); and service activities related to motor vehicles (including lorries and trucks) and motorcycles, such as the wholesale and retail sale of new and second-hand vehicles, repair and maintenance and the wholesale and retail sale of parts and accessories (30%). The remaining businesses (26%) cover different sectors, from construction to human health and transportation. The companies are well-balanced in terms of size: 56% are micro and small enterprises, while 44% are medium and large-sized.

If we consider the services that the surveyed companies requested (Table 3), most of them concern communication and public activity services (34%), especially web marketing (13%), e-commerce (8%) and social media (7%). There was also a high demand for core marketing services (14%) – such as branding and strategic marketing (14%) – and services related to the organization of events and conferences (13%). The surveyed firms were interested in various local marketing and communication services. These are also the most widely offered in the province, as shown in Table 1. Some interesting insights can be collected from comparing the services bought inside and outside the province of Bergamo. The difference is relatively high, suggesting that marketing and communication agencies in the province of Bergamo are not effective in coping with the local demand.

From the collected data, some critical issues were identified and areas of improvement were discovered, as reported in Tables 4 and 5. Most companies (84%) stated that they know of few (i.e. less than 5) marketing and communication agencies in the province of Bergamo. Furthermore, about half of them (46%) considered the supply of services limited or insufficient to meet local demand. This evidence is related to the lack of visibility, which represents the most relevant issue for the firms involved in this analysis. Although the actual offer is vast and diversified, the supply is perceived as poor and scattered, because it is not easily accessible and not effectively communicated to organizations needing specialized services in marketing and communication. As a consequence, firms try to satisfy their need by moving outside the province of Bergamo, even though the same services are available locally.

Findings highlight poor/low-quality services resulting from a lack of satisfaction compared (?) with what businesses had asked for. About 15% of companies stated that local agencies need to update their knowledge in the field, 14% increase the quality standards and 9% improve human resource performances. If we look at the type of services, UX design, web and social media marketing are those whose perceived quality tends to be the lowest. Lack of specialization in these innovative fields can represent a further driver making consulting firms in the province of Bergamo less attractive and prompting firms to address their demand to agencies operating in other cities of Lombardy.

5. Discussion and conclusions

This paper investigated the actual and perceived gap between the supply and demand of specialized marketing and communication consulting services in the province of Bergamo. The region has a strong industrial vocation and tradition, making it an attractive area for potential businesses. However, over the past few decades, the tertiary sector, including various complementary services (such as marketing and communication), has experienced significant growth, contributing to a highly competitive landscape both geographically, due to its proximity to Milan and in terms of service offerings essential for the competitiveness of local enterprises.

The results indicate that the province does not suffer from a actual shortage in service supply. Firms in the province of Bergamo provide an adequate amount of specialized consultancy services offering both core activities, such as market analysis and positioning and innovative solutions related to digital marketing. However, a perceived twofold gap between supply and demand exists. First, certain types of services (such as UX design) have not been fully mastered by local marketing and communication agencies, prompting firms to seek consultation outside the province of Bergamo Second, the quality of the services offered is considered to be below expectations. Firms continue to use the services provided, but overall satisfaction tends to be low, especially with regard to skills updating.

All things considered, the gap between the demand and supply of marketing and communication services is about perception. Firms show limited awareness of the province’s marketing and communication consulting agencies. This generates a sensation of scarce service availability – a notion disproven by the analysis of the actual supply. Such a gap represents a severe threat to local agencies. Competitors based in neighboring provinces and indeed businesses worldwide, have the potential to quickly reach out, propose and deliver services to companies in the province of Bergamo. To fill this gap, marketing and communication agencies in the province of Bergamo should position themselves as superior service providers in a specific niche of the market and gain share.

It is interesting to note that, regardless of the perceived gaps, several firms still address their demand for marketing and communication services to agencies located in the province of Bergamo. A possible reason lies in the gratitude towards service providers for successful communication campaigns delivered in the past, valuable consultative insights, or the creation of an effective website – factors that create value and may discourage companies from seeking alternative suppliers (Hitt et al., 1998; Lusch et al., 2007). Another possible explanation could be a reluctance to engage in a new competitive analysis of potential providers to find better options (Gummesson, 2008; Kitchen and Schultz, 2009). Furthermore, the fear of making a wrong decision when selecting a new supplier, mainly when dealing with intangible services, adds to the hesitancy. Firms can value the acquired services only when utilized; therefore, the risk of a negative return on investment is higher than for products (Cavallone, 2016, 2017).

We can draw some implications that may be useful for local marketing and communication consulting agencies. In our analysis, we noticed a “myopic” attitude that prevents local agencies from investing money and time to build up their professional reputation and increase their visibility. Limited customer orientation is widespread in Italy and other countries, where small consulting firms are the majority (Sweeney et al., 2011; Gabbianelli and Pencarelli, 2019). Local consultants should start by increasing their web presence and being more active on social media to convey clear and timely information about their offering and make firms aware of their marketing and communication services (Jaafar et al., 2008; Buratti et al., 2018). They should also adopt a collaborative approach with local firms. An example involves the co-creation of a common digital platform where communicating and delivering integrated consultation services about marketing and communication. Collaborative solutions may also reduce costs, enabling micro and small companies to communicate effectively in a context of scarcity.

Our findings also indicate the need for local agencies to improve and/or update their knowledge in the field. To a general extent, the creation of trust between the provider and the customer is crucial (Bergen et al., 1992). Three different roles can be attached to the provider: (1) “standard setter”, legitimizing the final choice of the company; (2) “knowledge broker”, transferring knowledge and proposing solutions to the customer; and (3) “knowledge integrator”, making him/her the one who can implement the solution (Canato and Giangreco, 2011). In our study, we noticed a low level satisfaction in general among the companies that requested marketing and communication services. Local agencies should work on their employer branding and acquire more specialized knowledge, extensive industry know-how and project experience (Cavallone, 2016, 2017; Bronnenmayer et al., 2016). To overcome the restrictions (?) of the small dimension, they could develop partnerships and/or create business networks, also thanks to new legal instruments such as the network contract.

Finally, we must acknowledge the limitations of this study, which is focused on a very local geographical setting. The supply analysis was limited to companies with a website presence, which significantly reduced the number of agencies considered and may have led to an underestimation of the population of marketing and communication consulting agencies. Moreover, the companies interviewed for the demand analysis was determined following a convenience approach, which influenced the results obtained. Future studies are needed to overcome these limitations and broaden the scope of this analysis. Research is needed to explore whether there is a widespread difference between actual and perceived gaps between demand and supply in other hypercompetitive environments (geographically and/or in terms of service offerings). It may also be of benefit to investigate some uncovered issues, such as how businesses get in touch with consulting firms to evaluate the role of online visibility in selling consulting services.

Table 1

Types of marketing and communication services offered by companies in the province of Bergamo

NACE code	NACE category	Services considered in the analysis	Companies offering the service* (% of the sample – n. 159)
58.19	Other publishing activities	Publishing project	18.2
59.11	Motion picture, video and television programme production activities	Video-making service	35.2
63.12	Web portals	Web design	44
70.21	Public relations and communication activities	Web marketing	47.8
		Social media marketing	40.9
		Communication plan	38.4
		E-commerce/Web app	35.8
70.22	Business and other management consultancy activities	Branding	35.2
		Strategic marketing	22.6
		Design Management	22
		Competitor analysis	15.7
		Marketing coaching	13.8
		International market analysis and development	7.5
73.11	Advertising agencies	Advertising	62.9
		Market testing	4.4
73.12	Media representation	Broadcasting	4.4
73.20	Market research and public opinion polling	Market analysis	21.4
74.10	Specialized design activities	Graphic design	64.2
		UX Design	19.5
74.20	Photographic activities	Photographic services	37.7
82.30	Organization of conventions and trade shows	Event planning	27
		Exhibition planning	22
		Exhibition center	13.8
		Congress center	13.2
82.99	Other business support service activities n.e.c. (nonemployee compensation)	Flyering and bill posting	9.4

Note(s): *a company can offer one or more of the services in the list

Source(s): Own elaboration from data provided by the chamber of commerce

Table 2

Characteristics of the companies involved in the survey

		Companies (% of the sample – n. 100)
Category (according to the NACE code)	Electricity, gas, steam and air conditioning supply	44
	Wholesale and retail trade; repair of motor vehicles and motorcycles	30
	Human health and social work activities	7
	Construction	5
	Human health and social work activities	4
	Water supply; sewerage, waste management and remediation activities	3
	Transportation and storage	2
	Financial and insurance activities	2
	Activities of extraterritorial organizations and bodies	2
	Agriculture, forestry and fishing	1
Size	From 1 to 9 employees (micro enterprise)	23
	From 10 to 49 employees (small enterprise)	33
	More than 50 employees (medium and large-sized enterprise)	44

Source(s): Own elaboration

Table 3

Type of service requested by surveyed companies from agencies inside and outside the province and related difference

NACE category	Service requested	Inside the province (% of the sample – n. 100)	Outside the province (% of the sample – n. 100)	Difference between inside and outside the province
Other publishing activities	Publishing project	2	4	−2*
Motion picture, video and television programme production activities	Video-making service	5	4	1
Web portals	Web design	6	6	0
Public relations and communication activities	Web marketing	13	7	6
	Social media marketing	7	7	0
	Communication plan	6	7	−1*
	E-commerce/Web app	8	4	4
Business and other management consultancy activities	Branding	3	3	0
	Strategic marketing	2	3	−1*
	Design Management	2	3	−1*
	Competitor analysis	2	3	−1*
	Marketing coaching	3	2	1
	International market analysis and development	2	4	−2*
Advertising agencies	Advertising	4	6	−2*
	Market testing	2	3	−1*
Media representation	Broadcasting	2	3	−1*
Market research and public opinion polling	Market analysis	3	4	−1*
Specialized design activities	Graphic design	9	6	3
	UX Design	2	4	−2*
Photographic activities	Photographic services	2	4	−2*
Organization of conventions and trade shows	Event planning	6	5	1
	Exhibition planning	3	4	−1*
	Exhibition center	2	3	−1*
	Congress center	2	3	−1*
Other business support service activities n.e.c. (nonemployee compensation)	Flyering and bill posting	2	2	0

Note(s): *Negative difference

Source(s): Own elaboration

Table 4

Perceived critical issues and suggested areas of improvement for local agencies

		Companies (% of the sample – n. 100)
Perceived critical issues	A limited/insufficient offer of services	46
	An adequate offer of services, but not of the expected quality	8
	None	46
Suggested areas of improvement	Visibility/Accessibility	34
	Offer of service	23
	Updated knowledge in the specific field	15
	Quality of the service	14
	Competences of the employees	9
	Other	5

Source(s): Own elaboration

Table 5

Services provided that are perceived to be of limited or below expected quality

NACE category	Service requested	Company (% of the sample – n. 100)
Other publishing activities	Publishing project	3
Motion picture, video and television programme production activities	Video-making service	3
Web portals	Web design	4
Public relations and communication activities	Web marketing	17
	Social media marketing	8
	Communication plan	0
	E-commerce/Web app	7
Business and other management consultancy activities	Branding	2
	Strategic marketing	6
	Design Management	0
	Competitor analysis	3
	Marketing coaching	2
	International market analysis and development	6
Advertising agencies	Advertising	1
	Market testing (?)	3
Media representation	Broadcasting	2
Market research and public opinion polling	Market analysis	0
Specialized design activities	Graphic design	6
	UX Design	18
Photographic activities	Photographic services	4
Organization of conventions and trade shows	Event planning	2
	Exhibition planning	3
	Exhibition center	1
	Congress center	1
Other business support service activities n.e.c. (nonemployee compensation)	Flyering and bill posting	2

Source(s): Own elaboration