Internal Marketing: Review for Next Generation Businesses

Service organizations face various issues and challenges. Berry (1981) has proposed the term Internal Marketing as a solution to multidisciplinary problems i.e. marketing, human resources and operations. This paper evaluates how different environmental settings have different interpretations of internal marketing. 70 research papers and reports, both quantitative and qualitative, have been analysed to fulfill the objectives of this research. This paper reviews the literature asserting concepts and constructs of internal marketing. It presents a discussion on the defining Internal Marketing (IM) objectives,theories and constructs that are relevant to the context of internal marketing. Finally a definition of internal marketing is proposed that can be useful for any service enterprise and moreover it can be utilised by any enterprise using and delivering service.

Introduction

More than 35 years ago, internal marketing was first proposed as a solution to the problem of delivering high service quality consistently by Berry, Hensel, & Burke, (1976). The internal marketing (IM) concept emerged from services marketing and its main concern was to get everyone who was involved in service encounters –the front line squad of contact workforce- to engage insuperior service delivery during interaction with customers(Kaurav & Prakash, 2011).

Since 1970s, IM has appeared to be a solution tothe problem related withconsistantly delivering high service quality (Berry, Hensel, & Burke, 1976). The literature dedicated to IM is rapidly evolving and increasing (Sasser & Arbeit, 1976; Berry, 1981; Gronroos, 1981; Richardson & Robinson, 1986; Barnes, 1989; George, 1990; Piercy & Morgan, 1990, 1991; Collins & Payne, 1991; Piercy, 1995; Foreman & Money, 1995; Varey, 1995; Cahill, 1995, 1996; Sergeant & Asif, 1998; Pitt & Foreman, 1999; Varey & Lewis, 1999; Ballantyne, 2000; Rafiq & Ahmed, 2000; Bansal, Mendelson, & Sharma, 2001; Ahmed & Rafiq, 2003; Ballantyne, 2003; Lings, 2004; Lings & Greenley, 2005; Panigyrakis & Theodoridis, 2009).The above authors have produced prominent research in the area of IM. In the following few paragraphs the concept of IM is explored.

Rationale for Study

Various researchers have identified that service enterprises are not achieving higher performances significantly as they should. Recent doctoral research has identified the concept of internal marketing as a solution to various issues and challenges such as interfunctional coordination and integration, quality of service delivery, satisfaction and employees empowerment.

The first important aspect related to this concept was it is equally accepted and practiced by various types of industries, i.e. banking, retail, finance, telecommunication, technology firms, hotel sector. The roles of services are been increasing in manufacturing industries also. Therefore the researchers decided to undertake further study to produce some insights about IM. This will increase the understanding of IM which can then be used by managers and planners, industry wide.

The second important dimension behind this initiative was when the researchersconducted research into Indian and Asian perspectives andfound that number of researches are very less in numbersin comparison of US and UK countries (as they are already developed countries). This was also an important reason why the researchers under took the decision to investigate further about internal marketing.

Methodology Utilised for Study

Researchers of this paper downloaded 1360 total research papers, with keywords such as internal marketing from different research databases, i.e. ebscohost, emerald insights, proquest, google scholar, and new economic papers. Subsequent filtering by the researchers resulted in 305 papers to analyse with the definitions and other analytical aspects of them. As a result of further analysis finally 70 papers, published during 1970 to 2013 were found suitable foranalysis on the basis of application orientation of the papers. These papers have been analysed for different dimensions, i.e., qualititative and quantitative perspectives.

The process commenced in September 2011 and was completed in January 2014.The researchers identified several definitions or models for applying the concept of IM in real world practices.

Defining Internal Marketing

Several researchers have attemptedto define internal marketing but their definitions have appeared to be extremely narrow and unclear in explaining concepts of IM.

Berry (1981) defined internal marketing as “Viewing employees as internal customers, viewing jobs as internal products and then endeavouring to offer products that satisfy the needs and wants of these internal customers while addressing the objectives of the organisation.”

In the same study he stated that the same marketing tools use to attract customers can also serve to attract and retain the best employees, who can be considered of as ‘internal customers’. For Berry it was only a tool to market to the internal customers for delivering satisfaction to external customers. He also used the tools of marketing for applying his idea.

Internal marketing acts as part of the marketing strategy with the employee’s themselves who are termed internal customers. It is used as a philosophy for managing the firm’s human resources based on marketing perspectives and practices to build internal competencies for external success or effective external marketing (George, 1990). It is a strategy that aims for the creation of high-performance work systems by managing the interdependent elements of the internal marketing concepts to achieve greater competencies for the firm. Consequently, these variables will influence a firm’s competitive advantage. George has recommended IM to increase internal competencies for decreasing threat of competition.

Thomson (1991) has elaborated IM while including “Looking at the employee as a valued customer is the focus of new descipline of internal marketing.”According to Thomson internal marketing is a means of creating values from inside (employees) and deliver it to outside (customers).

In the argumentive words of Mazure (1991), internal marketing is “Where you are thinking of your own employees as customers with needs to be satisfied so that they are enthusiastic – is that marketing’s job … or is it human resources?” Mazure advocates that IM is a concept which should belong to the human resource department and not with marketing people.

Berry & Parshuraman (1991)suggests interacting with frustrated and dissatisfied customers can deflate employees’ enthusiasm for the job, decrease their commitment, and result in increased employee turnover. Reichhled cited in Chowdhary & Prakash, (2005)Sr. Consultant, PiRockes Services Consultancy and author of The Loyalty Effect expresses his view for internal marketing in some other words – “Employee retention has a direct link to customer retention and acquisition.”The above authors have supported that the concept of IM should be practiced by HR people not by marketingas it is also is a way to solve the issues of HR.

• Lambert (1995) was of an opinion that a number of current management issues merit attention and can be treated with a broadened concept of internal marketing:
• retention of skilled people in an organisation by providing corporate and personal direction;
• relationship with the management team who share the objectives, experience and skills to build, release and mobilise individual motivation for economic recovery;
• building a corporate brand which appeals to both customers and organisation members; and
• productivity through participation requiring leadership, processes and commitment from all.

In a study of two hotels Owen & Teare (1996) concluded “If staff is happy about their organisation and the need to do in order to satisfy customers and are well trained and supported, they will, on average remain with their employer 3-4 times longer than employees who feel less secure.”

Rafiq & Ahmed (1998) expanded the idea of internal marketing and definedit as, “…a planned effort using a marketing-like approach to overcome organisational resistance to change and to align, motivate and inter-functionally coordinate and integrate employees towards the effective implementation of corporate and functional strategies in order to deliver customer satisfaction through a process of creating motivated and customer oriented employees”.

According to Woodruffe (1999) internal marketing can be defined as “Treating with equal importance the need of the internal market – the employees – and the external market through proactive programmes and planning to bring about desired organizational objectives by delivering both employees and customer satisfactions.”

Barnes & Morris, (2000); Bansal, Mendelson, & Sharma, (2001) also supported in similar words “Internal marketing can improve the organizational commitment and job satisfaction and when employee job satisfaction is enhanced, employees adopt a positive attitude when serving external customers, a state that can help to enhance customer loyalty.”

The concept of IM is that employees of the organisation are its first market. Some researchers have also stated that concept of internal marketing is based on the idea of employees as customers. Among the first who advocated the idea of IM were Sasser, (1976) and De Bussy, Ewing, & Pitt, (2003) who argued for the concepts given earlier and stated that the concepts of internal marketing are not limited to the ‘front-line’ customer service staff alone. Even the employees who do not interact directly with customers may impact upon percieved service quality because they directly influence the service providers. If all employees perform their jobs well they are counted as value-added components of the service and product offering.

Chowdhary & Prakash(2005) explained internal marketing as“Internal marketing refers to selling the service concept to the internal audience before it can be sold externally. The organization must ensure all support and enable the employees to deliver what is promised.”

Clow & Kurtz (2008) also defined internal marketing as “the process of using marketing concepts to enhance the satisfaction of company’s employees is called internal marketing.”

Evidences of Empirical Researches Related to Internal Marketing

Table 1 shows how different researchers have quantified or developed quantitative works for converting internal marketing concepts to operational words. This table also produces a related literature review of internal marketing in different services’ settings with a chronological development of the IM concept.

Geographical presence of researches of IM

Figure 1 presents the actual locations of various research studies done in context of internal marketing. This information is based on the availability of papers on online databases. The marked studies are full available papers and published in double blind refereed journals.

Major Disciplines of Internal Marketing

The definitions of internal marketing diverge to the great extent. The literature analysis reveals that it is possible to organize them according to their dominant perspective in the following major groups- i) IM as asynonym of HRM; ii) IM as a usage of marketing techniques in the internal market place; iii) IM as a precondition of satisfied internal customers; and iv) IM as a source of competitive advantage (Sincic & Vokic, 2007). The representatives of each group and their definitions are given in Table 2.

Outlining Objectives and Activities of Internal Marketing

Many researchers have discussed aspects about objectives and activities of internal marketing. This research has attempted to identify some of these different objectives and activities reflecting the various researcher opinions identified and presented in table 3.

Constructs and Variables of Internal Marketing

From the many and varied literature reviews identified,13 constructs have been derived to make up the core structure of internal marketing for research. The constructs are i)inter-functional coordination and integration, ii) customer orientation, iii) marketing-like approach, iv) job satisfaction, v) empowerment, vi) stake-holder’s motivation, vii) quality of service, viii) stake-holder’s development, ix) vision of the firm, x) strategic rewards, xi) internal communication, xii) senior leadership, and xiii) training and development. For understanding and differentiating the above mentioned constructs, further discussions are followed here:

Conclusion

The concept of internal marketing is proposed to be a solution to many challenges of the next generation of businesses. The leaders have to convert the theories of IM into the practices of HRM department to assist in solving issues in marketing, human resources, operations and competitive advantages. The essence of this research is to define IM: Internal marketing is a practice for making internal customers (employees) happy to delight external customers (actual customers). To create a WOW effect in the minds of customers, employees should be in WOW motion at the time of delivering service. Managers need to adopt IM as strategic tool for satisfying three major dimensions of organisation as it can be a positive solution of problems related to – marketing, human resources and operations.

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Dr. Rahul Pratap Singh Kaurav, Assistant Professor, Prestige Institute of Management, Gwalior, India.                      Email: rsinghkaurav@yahoo.co.in.

Dr. Monika Prakash, Associate Professor, Indian Institute of Tourism and Travel Management, Noida, India.

Dr. Nimit Chowdhary, Professor, Indian Institute of Tourism and Travel Management, Noida, India.

Alan David Briggs, Lecturer, Murdoch University, Murdoch, Western Australia.