Professional Documents
Culture Documents
ABroadenedConceptionofInternalMarketing VareyLewis EJM1999
ABroadenedConceptionofInternalMarketing VareyLewis EJM1999
net/publication/230555229
CITATIONS READS
225 5,131
2 authors, including:
Richard J. Varey
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
All content following this page was uploaded by Richard J. Varey on 04 November 2015.
European
Journal of A broadened conception of
Marketing
33,9/10
internal marketing
Richard J. Varey
926 BNFL Corporate Communications Unit, University of Salford,
Manchester, UK, and
Received August 1997 Barbara R. Lewis
Revised January 1998
Manchester School of Management, UMIST, Manchester, UK
Keywords Internal marketing, Employee communications, Marketing theory, Case studies,
Literature review
Abstract Internal marketing has been of interest to practitioners and academics, in marketing
and other disciplines of management, for some years, and published papers focus on definitions,
the role of internal marketing in organisations, and various empirical investigations. Discusses
the elements of a broadened concept on internal marketing, which emerges from: a systematic
review and examination of the existing literature; case study material; ``expert'' opinion from
leading academics; and interviews with managers.
Introduction
Explicit discussion of the marketing concept in use in the internal operations of
the organisation entered the marketing and service management literature in
the late 1970s. However, this concept has origins in published discussions of
the organisation of marketing systems from the early years of the twentieth
century. It would seem that the essence of internal marketing is not a
phenomenon of the post-industrial era, since there is some evidence of
associated attitudes and methods in the early marketing management
literature, indicating that programmes to generate commitment amongst
employees to company goals are not new. For example, Frederick Taylor
stressed an internal focus, which bears an obvious resemblance to the attitude
management aspect of internal marketing (GroÈnroos, 1994). It is the active,
market-oriented, approach that is new.
Recent studies of managers' concerns show employee communications,
involvement and development (a new employer-employee ``contract''), the
redesign of business processes, and the perceived relationship between
employee and customer satisfaction, as predominant (for example, in the People
Factor Study, (Watson Wyatt, 1995)). Further, service-orientation and the need
for greater organisational effectiveness have become major features of debate
about sources of competitive advantage and the future form and purpose of
business enterprise organisations. Internal marketing has been offered as a
management technology (see Fisk (1986) and Sweeney (1972), for debate about
whether marketing is a management technology or a social process) for solving
problems of internal service productivity, marketing orientation, successful
European Journal of Marketing,
Vol. 33 No. 9/10, 1999, pp. 926-944.
implementation of appropriate plans and customer orientation. It has been
# MCB University Press, 0309-0566 promoted to a position of some importance and recognition in much of the
management literature of the 1980s and beyond, appearing now in most Broadened
marketing and service management textbooks. Yet, it is clearly still an conception of
evolving subject, with no firm theory or strong base of empirical evidence to marketing
show how and why it is of value to managers. Why has the notion of internal
marketing come to such prominence in the 1990s? Perhaps its apparent
simplicity has immediate appeal for managers. Perhaps another development
of marketing principles into a new application is evident, rather than any 927
fundamental development in marketing theory (Arndt, 1979). However, the
popular internal marketing theory may be too simplistic to be of real value.
In 1992, the opportunity arose to embark on an in-depth research
investigation of internal marketing. The objectives of the research were: to
study the origins, nature, scope and application of the internal marketing
concept; and to consider how the internal marketing concept might be
developed to take a greater account of the social and other non-economic needs
and interests of people working in an organised enterprise. The intention was
to develop and offer a broadened concept and associated system model for
internal marketing, as a social (communicating) system capable of providing a
means for organisational capability enhancement (e.g. economic performance)
and improved quality of working life for organisational members.
Data were collected from several sources. A systematic search for and
review of the literature in various disciplines pertaining to internal marketing
was undertaken, resulting in a bibliography of over 450 publications. Some 38
case studies were examined for content, and 25 leading academics were
surveyed for their expert opinion on the essential elements of the concept of
internal marketing. Finally, a practitioner view was explored through data
generated from 37 in-depth interviews in which managers were asked to
compare and contrast internal marketing with employee/internal comm-
unications, and to consider its practical impact on business performance.
Some of the major findings from the research are presented in this article
(see Varey, 1996, for further detail and discussion). Initially, the context of the
study is highlighted, and then limitations of the popular concept of internal
marketing are addressed. Consideration is then given to the structural impact
of internal marketing which leads into the presentation of a broader conception
of internal marketing, together with some implications for management.
Conflict resolution Emphasises why and how conflicts emerge and are resolved
Social exchange Deals with the transactions and interactions among institutions,
groups and individuals
Table III.
Paradigms of
marketing Source: Carman, 1980
Arndt (1983) claims that there has been too much reliance on the micro- Broadened
economic/marketing management paradigm as a foundation for marketing conception of
theory, and this has been largely unchallenged. An alternative paradigm which marketing
allows development of the exchange notion is political economy.
Arndt's (1983) use of the term ``political economy'' views social systems as
``comprising interacting sets of major economic and socio-political forces which
effect collective behaviour and performance''. The emphasis in this view is on 935
the ``interplay of power, the goals of the power wielders, and the productive
economic exchange systems''.
The political economy paradigm supplements the basis of the micro-
economics paradigm of marketing in economics, learning theory, and cognitive
and social psychology, with organisation theory, political science and
sociology. In the political economy ``world view'', marketing is exchange and
the ``social unit'' is a marketplace for the exchange of scarce resources (Arndt
sees ``organisation'' as a narrower concept included within ``social unit'', along
with groups, families, etc.). The organisation is seen as a coalition of internal
and external stakeholder groups with partly common and partly conflicting
goals. Marketing must achieve acceptable ``exchange ratios'' for the various
interest groups (Arndt, 1979). Political interactions involve attempts to
influence the decision premisses of the parties to the relationship. An ``internal
economy'' is structured through the distribution, mobilisation, utilisation and
limitation of authority in the organisation, to ensure the efficient functioning of
the internal productive processes and internal transfers of resources. The
internal economy co-ordinates behaviour and allocates resources to produce an
output of sufficient interest to external exchange partners. Thus, internal
marketing is identified when marketing organisations are conceived as
dynamic, adapting, internally differentiated social systems. Arndt identifies
three major tasks for internal marketing:
(1) the dissemination of information to and from all internal groups
involved in or affected by the marketing activities, for the efficient
implementation of marketing decisions;
(2) the development of competence, especially important where ``the
organisation is the product'' (i.e. in service businesses);
(3) the development and maintenance of incentive and motivation systems
which reward marketing performance.
Piercy and Morgan (1991) have also highlighted the limitations of the use of the
``marketing technology'' which assumes rationality, a profit-maximisation
motive, the means-end instrumentality of control and a harmonious, no-conflict,
world. Thus, they argue, it is necessary to go beyond the superficial aspects of
how organisations work, to recognise and treat the underlying power and
politics in the pursuit of marketing goals. The internal marketing ``paradigm'' is
proposed by Piercy and Morgan (1991) as ``an easily accessible and ``user-
European friendly'' mechanism for executives to analyse the organisational issues which
Journal of need to be addressed in implementing marketing strategies.
Marketing
The structural impact of internal marketing
33,9/10 Internal marketing has been proposed variously as a structured approach to
strategy implementation, to the diffusion of innovations, to recruiting and
936 retaining service-minded staff, to creating a service culture, or to increasing
internal service productivity. However, few writers have explained or even
recognised the implications for organisational arrangements.
Should internal marketing be superimposed or supplanted on the
``traditional'' organisation form, that of the formal authority-hierarchy?
Maitland (1990) discusses the relationship between internal marketing and
organisation theory, and suggests that the human relations approach of
McGregor (1960) is most appropriate because it emphasises prerequisites of an
internal marketing culture: mutual trust, holistic supportive relationships,
internal networks and self-direction (egalitarian management style which
implies discretion and autonomy), which enhance commitment, loyalty and
motivation (Ouchi, 1981).
Further issues are:
. the dominant management style must support internal marketing;
. the whole organisation must practise internal marketing;
. internal marketing must be driven top-down, to match external
marketing strategy; and
. internal marketing must fit the organisation's ``life stage'' (discussed by
Greiner, 1972).
A ``new employee relations'' or marketing orientation may well require
managers to rethink their role, and to recognise the processes by which value is
profitably created for internal and external customers, but this has rarely been
addressed in terms of organisation design or development. At best, team-
working has been offered as a means to total quality management and as part
of business process re-engineering, but little has been said about this in the
internal marketing literature. One exception is the teamworking approach
described by Bak et al. (1994), and another articulated in a personal
communication with Professor Laura Cousins in which the implications of
internal marketing for organisational arrangements were discussed.
Halal et al. (1993) have taken a more radical approach in urging managers to
redesign their organisations around the notion of a free enterprise market in
which operating units freely compete with external suppliers for business
within and without the organisation. This approach makes sense in that
internal marketing requires the conception of a market in which the required
competitive customer-supplier relationships can operate.
Halal (1996) suggests that organisational learning may merely be the rebirth
of organisation development, in using team learning to encourage change from
the bottom of the hierarchy of authority. This is needed to build effective teams, Broadened
but does not recognise the growing need to transform organisations into conception of
entrepreneurial, democratic systems (Halal et al., 1993; Halal, 1996) which are marketing
able to learn about the current world by unlearning outmoded assumptions
based on past experience. The parallel (or collateral) learning structure allows
people to work in a completely different way from that of the formal
organisation (the system of rules and objectives which officially prescribe and 937
allocate tasks, privileges and responsibilities, thereby specifying how the
activity of a group is to be carried on). It is specifically designed to solve
problems, and allows change and innovation to be managed without disrupting
the formal structures and mechanisms required for routine and repetitive tasks.
Managers and workers are assigned to tasks within a different context. This
provides workers with a chance to affect the formal organisation, and evidence
shows that this leads to increased work satisfaction and task effectiveness
(Zand, 1981). Cahill (1995) treats metamorphosis into a learning organisation as
a prerequisite for internal marketing; alternatively, it may be seen as an
outcome by treating internal marketing as a process for organisation
development.
Thomson (1990) has identified people and organisation issues within the
context of the culture of the organisation. The former are concerned with
maximising relationships within the organisation where individuals, teams,
managers and leaders are seen as internal ``target'' customers with needs which
can be satisfied through the generation of internal ``products and services''. The
latter includes practices, plans, structure, vision, mission and values, and is
concerned with maximising (the effective utilisation of) resources.
The terminology is yet to develop fully to the point where a single, clear
understanding of the underlying principles of internal marketing is widespread
among managers. Some strong resistance to the use of the term ``internal
marketing'' has been experienced amongst academics and practitioners, as it
suggests that the mechanism of change management being described is the
exclusive property of marketers, or there is a narrow perspective on the
purpose and form of ``marketing''. The terms ``internal relationship marketing'',
``internal relationship management'', or ``internal social process management''
are proposed as a development of other terms used by the writers discussed.
These new terms recognise the applicability of the marketing concept through
the identification of (intra-organisational) exchanges in working relationships
and between the organisation and its customers, since ``all employees are
customers of managers who wish to carry out the firm's objectives'' (Harrell
and Fors, 1992). They also recognise differing goals of the parties to these
exchanges, within the overall organisational goal of achieving profitable long-
run customer satisfaction and loyalty through demonstrated customer
orientation. This is pursued in a planned manner by all organisation members,
as a means to achieving differentiation of the organisation for the purposes of
attaining sustainable competitive advantage. Ulrich (1989) has argued that
customer satisfaction is not sufficient and that competitive advantage must be
sought in the conscious development of customer commitment, i.e. loyalty and
devotion which transcends short-term ``feel good'' relationships by building
interdependencies, shared values and mutually beneficial strategies.
As yet, there is little empirical basis for the required theory of internal
marketing as a change management concept, whilst at the same time there are
empirical data to show that internal marketing, in various forms, is being
practised as a viable response by managers to the real problems of achieving
the objectives required by strategic decision making. Internal marketing cannot
be viewed as simply the application of marketing concepts within the
European organisation, nor is it the use of modified human resource management
Journal of principles. It is a conceptually separate phenomenon which warrants further
Marketing investigation and development. Further, much of the literature disregards the
33,9/10 difficulty of the political processes, i.e. differing ideas, beliefs and values held
by managers, supervisors and front-line service providers (Dawson, 1994). The
literature is too prescriptive and too narrow in trying to apply the marketing
940 concept as it has developed as a response to (external) market relationships
(Mudie, 1987). It was, thus, a ``reform ambition'' (Strauss and Corbin, 1990)
which motivated this research project to develop a more appropriate theory of
internal marketing, which takes a wider view than that of the traditional
economics-based marketing concept (see for example, a recent popular
textbook (Dibb et al., 1994)).
Conclusion
A broader concept of internal marketing requires that a process, or meta-
structure, perspective is taken for organisational development through
learning in a consciously created interactive communication system, i.e. a social
system which is not solely concerned with economic transactions. Whilst
communication can occur without an economic transaction, any economic
transaction cannot occur without communication. If the democratising
potential of a goal-oriented inner market, which fosters value-creating
enterprise, is to be realised for continuous improvements in business
performance and quality of working life for all, then the concept of internal
marketing must be capable of engendering the application of marketing
principles within the total corporation as a social system which operates like a
``free market''. External marketing focuses primarily on economic transaction
due to its managerial bias. The broader internal marketing focus on social
values provides for a richer range of exchanges premissed on both economic
and non-economic values.
Further research and development of application techniques should focus on
alerting educators and practitioners alike to the richness of a broader
perspective on the marketing process which recognises that when
communication is in a dialogue there need be no zero-sum outcome.
Considerable added-value can be sought in multi-disciplinary work which
raises social, political and technological concerns as well as those of the
economic sphere of life.
The authors have continued with the work of isolating the elements
identified. Their conceptual relationships are explored in a follow-on paper in
order to build a model of internal marketing as an intracompany social
marketing system. A detailed discussion of the themes identified here is
developed into an integrated conception of internal marketing.
References
Arndt, J. (1979), ``Toward a concept of domesticated markets'', Journal of Marketing, Vol. 43, Fall,
pp. 69-75.
Arndt, J. (1983), ``The political economy paradigm: foundation for theory building in marketing'',
Journal of Marketing, Vol. 47, pp. 44-54.
Baggozi, R.P. (1976), ``Science, politics, and the social construction of marketing'', in Bernhardt,
K.L. (Ed.), Marketing: 1776-1976 and Beyond, Proceedings of the 1976 Educators'
Conference, American Marketing Association, pp. 586-92.
Bak, C.A., Vogt, L.H., George, W.R. and Greentree, I.R. (1994), ``Management by team: an Broadened
innovative tool for running a service organisation through internal marketing'', Journal of
Services Marketing, Vol. 8 No. 1, pp. 37-47. conception of
Bandura, A. (1978), ``The self-system in reciprocal determinism'', American Psychologist, Vol. 33 marketing
No. 2.
Berry, L.L. (1981), ``The employee as customer'', Journal of Retail Banking, Vol. 3 No. 1, pp. 33-40.
Bower, M. (1966), The Will to Manage, McGraw-Hill, New York, NY. 943
Boyer, D.L. (1990), ``Proactive internal marketing of ennobling: a new paradigm for corporate
education'', unpublished PhD thesis, University of Kansas.
Cahill, D.J. (1995), ``The managerial implications of the learning organization: a new tool for
internal marketing'', The Journal of Services Marketing, Vol. 9 No. 4, pp. 43-51
Carman, J. (1980), ``Paradigms of marketing theory'', in Sheth, J.N. (Ed.), Research in Marketing,
Vol. 3, JAI Press, Greenwich, CT, pp. 1-36.
Case, J. (1995), ``The open-book revolution'', Inc., June, p. 27.
Christopher, M., Payne, A. and Ballantyne, D. (1991), Relationship Marketing: Bringing Quality,
Customer Service and Marketing Together, Butterworth Heinemann/CIM, Oxford.
Dawson, P. (1994), Organisational Change: A Processual Approach, Paul Chapman Publishing,
London.
Dibb, S., Simkin, L., Pride, W.M. and Ferrell, O.C. (1994), Marketing: Concepts and Strategies, 2nd
European edition, Houghton Mifflin, Boston, MA.
Drucker, P.F. (1973), Managerial Communications, in Management: Tasks, Responsibilities,
Practices, Heinemann, Oxford, pp. 481-93.
Fisk, G. (Ed.) (1986), Marketing Management Technology as a Social Process, Praeger, New York,
NY.
Geneen, H.S. and Moscow, A. (1986), Managing, Grafton Books/Collins, Worcester.
Greiner, L.E. (1972), ``Patterns of organisation change'', Harvard Business Review, Vol. 45 No. 4,
pp. 119-30.
GroÈnroos, C. (1994), ``From scientific management to service management: a management
perspective for the age of service competition'', International Journal of Service Industry
Management, Vol. 5 No. 1, pp. 5-20.
Halal, W.E. (1996), The New Management: Democracy and Enterprise Are Transforming
Organisations, Berrett-Koehler Publishers, Inc., San Francisco, CA.
Halal, W.E., Geranmayeh, A. and Pourdehnad, J. (1993), Internal Markets: Bringing the Power of
Free Enterprise inside Your Organisation, John Wiley & Sons, New York, NY.
Hales, C. (1994), ```Internal marketing' as an approach to human resource management: a new
perspective or a metaphor too far?'', Human Resource Management Journal, Vol. 5 No. 1,
pp. 50-71.
Harrell, G.D. and Fors, M.F. (1992), ``Internal marketing of a service'', Industrial Marketing
Management, Vol. 21 No. 4, pp. 299-306.
Heilbroner, R.L. (1988), Behind the Veil of Economics: Essays in the Worldly Philosophy, W.W.
Norton & Co., New York, NY.
Howe, R.J., Gaeddert, D. and Howe, M.A. (1992), Quality on Trial, McGraw-Hill, London.
Johnson, G. and Scholes, K. (1989), Exploring Corporate Strategy ± Text and Cases, 2nd ed.,
Prentice-Hall, London.
Kotler, P. and Levy, S.J. (1969), ``Broadening the concept of marketing'', Journal of Marketing,
Vol. 33, pp. 10-15.
Lambert, A. (1995), Company Brochure: People in Business, London.
European Langer, E.J. (1989), Mindfulness: Choice and Control in Everyday Life, Harvill/HarperCollins,
London.
Journal of McGregor, D. (1960), The Human Side of Enterprise, McGraw-Hill/Penguin, New York, NY.
Marketing Maitland, D. (1990), ``Introduction to the theories behind corporate internal marketing'', in
33,9/10 Thomson, K., The Employee Revolution: Corporate Internal Marketing, Pitman Publishing,
London, pp. 240-59.
944 Mastenbroek, W.F.G. (Ed.) (1991), Managing for Quality in the Service Sector, Basil Blackwell,
Oxford.
Mazur, L. (1991), ``Silent satisfaction'', Marketing Business, December-January, pp. 24-7.
Mintzberg, H. (1973), The Nature of Managerial Work, Harper & Row, New York, NY.
Mudie, P.M. (1987), ``Internal marketing: cause for concern'', Quarterly Review of Marketing,
Spring/Summer, pp. 21-4.
Ouchi, W.G. (1981), Theory Z: How American Business Can Meet the Japanese Challenge,
Addison-Wesley, Reading, MA.
Peters, T. (1992), Liberation Management: Necessary Disorganisation for the Nanosecond
Nineties, Macmillan, London.
Piercy, N.F. and Morgan, N.A. (1991), ``Internal marketing ± the missing half of the marketing
programme'', Long Range Planning, Vol. 24 No. 2, pp. 82-93.
Rafiq, M. and Ahmed, P.K. (1993), ``The scope of internal marketing: defining the boundary
between marketing and human resource management'', Journal of Marketing
Management, Vol. 9 No. 3, July, pp. 219-32.
Sasser, W.E. and Arbeit, S.P. (1976), ``Selling jobs in the service sector'', Business Horizons,
Vol. 19 No. 3, pp. 61-5.
Sheth, J.N., Gardner, D.M. and Garrett, D.E. (1988), Marketing Theory: Evolution and Evaluation,
John Wiley & Sons, Chichester.
Strauss, A. and Corbin, J. (1990), Basics of Qualitative Research, Sage, London.
Sweeney, D.J. (1972), ``Marketing: management technology or social process?'', Journal of
Marketing, Vol. 36, pp. 3-10.
Thomson, K. (1990), The Employee Revolution ± the Rise of Corporate Internal Marketing, Pitman
Publishing, London.
Thomson, K. (1991), ``Internally yours...'', Marketing Business, No. 3, September, pp. 24-7.
Ulrich, D. (1989), ``Tie the corporate knot: gaining complete customer commitment'', Sloan
Management Review, Summer, pp. 19-27.
Varey, R.J. (1996), ``A broadened concept of internal marketing'', unpublished PhD thesis,
Manchester School of Management, UMIST, Manchester.
Watson Wyatt (1995), People Factor Study, London.
Webster, F.E. (1992), ``The changing role of marketing in the corporation'', Journal of Marketing,
Vol. 5 No. 6, pp. 1-17.
Weylock, B. (1992), private e-mail response to a request for comments on internal marketing.
Zand, D. (1981), Information, Organization, and Power: Effective Management in the Knowledge
Society, McGraw-Hill, London.