Journal of Strategic Marketing

ISSN: 0965-254X (Print) 1466-4488 (Online) Journal homepage: www.tandfonline.com/journals/rjsm20

Developing an integrative model of internal and

external marketing

Ahmed Shahriar Ferdous, Carmel Herington & Bill Merrilees

To cite this article: Ahmed Shahriar Ferdous, Carmel Herington & Bill Merrilees (2013)
Developing an integrative model of internal and external marketing, Journal of Strategic
Marketing, 21:7, 637-649, DOI: 10.1080/0965254X.2013.817474

To link to this article: https://doi.org/10.1080/0965254X.2013.817474

Published online: 28 Aug 2013.

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Journal of Strategic Marketing, 2013
Vol. 21, No. 7, 637–649, http://dx.doi.org/10.1080/0965254X.2013.817474

Developing an integrative model of internal and external marketing

Ahmed Shahriar Ferdousa*, Carmel Heringtonb and Bill Merrileesc
a
School of Management and Marketing, Deakin University, Melbourne, Australia; bMacquarie
Graduate School of Management, Macquarie University, Sydney, Australia; cDepartment of
Marketing, Griffith University, Gold Coast, Australia
(Received 10 September 2012; accepted 12 June 2013)

The purpose of this paper is to propose a model which presents an expanded view of the
beneficial impact of internal marketing (IM) in organizations. The model innovatively
proposes links between the development of internal market orientation, internal
marketing programs and external market orientation and external marketing programs.
As a significant novel contribution to knowledge, this model advocates a continual
process of improvement as marketing knowledge develops. Such an approach to the
development of the marketing programs within an organization potentially increases
business success and competitive advantage. The model has implications for
organizational management, where internal marketing programs are desirous. Future
research opportunities are suggested, including assessment of the model.
Keywords: internal marketing; internal market orientation; market orientation;
marketing programs; business success

Introduction
An important issue in the area of marketing management is demonstrating the link
between internal marketing (IM) and business success. Despite the existence of
considerable literature devoted to internal marketing (Berry, 1981; George, 1990;
Gronroos, 1985; Lings, 2004; Lings & Greenley, 2010; Rafiq & Ahmed, 2000; Tansuhaj,
Randall, & McCullough, 1988; Varey, 1995; Varey & Lewis, 1999; Wieseke, Ahearne,
Lam, & Dick, 2009), the concept remains neither universally understood nor universally
accepted as a construct.
Lings (2004) argues that much of the literature on internal marketing contains a variety
of interpretations of the domain of internal marketing, its aims and its focus. For example,
Berry’s (1981) interpretation of internal marketing is based on the perspective of treating
employees as customers, which can lead to desired changes in employee attitudes and, in
turn, positively affect customer satisfaction. Gronroos (1985) describes internal marketing
as an instrumental behavioral strategy for developing the ‘state of mind’ that enables
customer service effectiveness and relationship marketing. Rafiq and Ahmed (2000)
explained internal marketing from a change management perspective. According to the
authors, internal marketing is targeted at all employees in a holistic approach through
inter-functional coordination, organizational change and competence.
A number of authors have provided a broader conceptualization of IM. Varey and
Lewis (1999) argue that a broader concept of internal marketing requires a social process
or a meta-structure perspective for organizational development. Ballantyne (2003) focuses
on the importance of networks and knowledge renewal to explain the purpose of IM. Other

*Corresponding author. Email: ahmedf@deakin.edu.au

q 2013 Taylor & Francis

638 A.S. Ferdous et al.

authors (e.g. Lings, 2004; Tansuhaj et al., 1988) have worked on linking the internal and
external marketing functions of the firm in the context of services marketing.
However, it has been argued that even though considerable literature on internal
marketing exists, little systematic research on how IM actually works in practice has been
conducted (Ahmed & Rafiq, 2003; Ahmed, Rafiq, & Saad, 2003; Wieseke et al., 2009).
Further, scholars advocating the value of the concept of internal marketing have argued
that the application of IM is important for only a small number of companies and has
tended to be regarded as being a difficult and challenging task to implement (Gounaris,
2006; Rafiq & Ahmed, 2000; Schultz, 2004).
One of the key features of internal marketing is its link to the external marketing
activities of the firm. Authors (e.g. Bruhn, 2003; Lings, 2004; Tansuhaj et al., 1988) have
worked on linking the internal and external marketing functions of the firm, generally in
the context of services marketing. However, the processes advocated to date are limited in
their value to firms in terms of indicating exactly how the internal and external marketing
functions of firms might be linked.
Proponents of existing models of IM (e.g. Berry, 1981; Gronroos, 1985; Rafiq &
Ahmed, 2000) have tried to fill this gap by emphasizing how IM works. However, these
models all have individual limitations as a holistic approach to modelling the external
organizational benefits of IM. Although attempts have been made to explain the finer
details concerning the linking of internal and external marketing activities, the existing
models have not provided the ‘big picture’ that results from coherently arranging the
pieces of the puzzle. We argue, therefore, that at a meta-level organizations are yet to be
provided with the key activities/imperatives of internal and external marketing for
management actions, and how they are linked. Hence, in an endeavour to mitigate the
confusion surrounding the understanding and operationalization of internal marketing as a
construct, and how it is logically linked with external marketing, this paper proposes
a conceptual integrative model addressing ‘what’ are the key internal and external
marketing imperatives/activities required by organizations, and ‘how’ these activities are
linked with each other to achieve business success. Such a model offers a process for firms
desirous of developing a competitive advantage through the level of success of their
business.
Hence, we commence with an examination of the literature related to existing IM
models and highlight the gaps in current knowledge, before proposing a more
encompassing model demonstrating the integration between internal and external
marketing. A number of propositions are outlined and the paper concludes with
recommendations for managers as well as future research directions.

An examination of existing models of internal marketing

Examination of the internal marketing literature (e.g. Ahmed & Rafiq, 2002; Ahmed et al.,
2003; Rafiq & Ahmed, 2000; Schultz, 2004) reveals that at present there are three
dominant models that explain how IM operates within the organizational environment
(Rafiq & Ahmed, 2000). The models are based on the work of Berry (1981), Gronroos
(1985) and Rafiq and Ahmed (2000). The core basis of Berry’s (1981) model of internal
marketing posits that if employees are treated as customers, jobs as products and the
traditional marketing techniques (basically the 4P’s) are applied internally within an
organization, employees will be influenced to become more customer-focused, leading to
improved service quality and competitive advantage in the marketplace. Gronroos’ (1985)
model of internal marketing is based on the premise that supportive management will act
 Journal of Strategic Marketing 639

as an antecedent for employees to become customer-focused so that, in the long run,

increased interactions between contact employees and customers will result in greater
success for firms. Gronroos’ model of internal marketing goes beyond Berry’s model of
IM by incorporating aspects of relationship marketing in the context of internal and
external marketing, and linking successful ongoing and repeated ‘transactions’ to ultimate
success for an organization.
Rafiq and Ahmed (2000) developed an internal marketing model of services based on
existing IM literature. Adopting a change management framework, Rafiq and Ahmed’s
model of internal marketing is based on the premise that it is essential for management to
exhibit a marketing-like approach when motivating employees and achieving inter-
functional coordination.
Schultz (2004) suggests that even though the current streams of thought have driven
IM for more than 30 years, practitioners and managers still find IM to be a most difficult
task to implement. A reasonable explanation is that all three existing models lack some
directions for the implementation phase. According to Ahmed and Rafiq (2002), both
Berry’s and Gronroos’ models do not spell out the constitution of specific components of
their models and how they are connected. However, even though Rafiq and Ahmed’s
(2000) proposed model of internal marketing of services reflects the components of IM
and attempts to show the links between the various components, it does not incorporate the
notion of how the internal and external market orientation as a strategic initiative by firms
might: (1) vary in intensity (Ellinger, Ketchen, Hult, Elmadağ, & Richey, 2008; Ruekert,
1992); (2) be linked with each other (Lings & Greenley, 2010; Lings & Greenley, 2009);
(3) impact on the internal and external market implementation process (Ahmed et al.,
2003; Gounaris, 2008); and (4) impact on internal and external aspects of organizational
performance (Dabholkar & Abston, 2008; Lings, 2004; Tansuhaj et al., 1988).
Additionally, the three models attempt to explain how IM works utilizing differing
approaches to IM development phases, namely, through employee satisfaction, customer
orientation and change management (Rafiq & Ahmed, 2000). All three models are built on
a common premise that applying motivational tools, having a customer-centric focus, and
taking a marketing-like approach to the internal market results in improved internal
service quality, which in turn results in better external customer orientation and,
ultimately, business success for service organizations. The common premise on which all
three models have been built is similar to that of the logic presented by Heskett, Jones,
Loveman, Sasser, and Leonard (1994) in their ‘service – profit chain’ concept. The major
internal and external marketing imperatives for management action, however, are not
detailed in these models, along with what factors are to be considered when designing
marketing programs both internally and externally, and how these activities are coherently
linked with each other. Therefore, the opportunity is provided to further develop our
understanding of the beneficial impact of internal marketing, and the identified gap in the
literature is stated as: How can management integrate internal marketing within an
organization so that it aids in the success and profitability of the organization?
In order to answer this question a proposed conceptual integrative model of internal
and external marketing is presented, derived from existing academic and practitioner
literature, in an attempt to extend the current models of internal marketing.

An integrative model of internal and external marketing

The proposed model, illustrated in Figure 1, indicates that the major marketing activities
of organizations focused inside the firm fall within the internal marketing perspective, and
640 A.S. Ferdous et al.

Business Success
• Growth
• Competitive advantage
External Outcomes • Shareholder value
• Affective outcomes • Sustainability Internal Market Orientation
• Performance outcomes (IMO)
• Firm-Customer relationship • Information generation
(for the External Market) Internal • Information dissemination
Marketing • Responsiveness
Perspective (for the Internal marketplace)

External
Development and
Marketing
Implementation of EM Development and
Perspective
Programs Implementation of IM
Programs

External Market Orientation

(EMO) Internal Outcomes
• Information Generation • Affective outcomes
• Information Dissemination • Performance outcomes
• Responsiveness • Firm-Employee relationship
(for the External marketplace) (for the Internal Market)

Works as a corridor Low to high internal and external orientation continuum

Figure 1. An integrative model of internal and external marketing.

those activities focused on the external market are within the external marketing
perspective. The internal marketing perspective consists of three major components:
internal market orientation; development and implementation of appropriate internal
marketing programs; and internal outcomes. The external marketing perspective also has
three major components: external market orientation; development and implementation of
appropriate external marketing programs; and external outcomes.
The model presented is closed-looped, reflecting that in practice the whole process of
internal and external marketing is cyclical and driven by an end customer focus. Further, a
series of propositions is developed to direct future research purposes. In the review of the
model, which follows, each of the major components under the internal and external
marketing perspectives will be explored, and the way the components are linked to each
other will be further examined.

Internal marketing perspective

Internal Marketing Orientation (IMO)
A body of literature argues IM is a strategic process that operates across the functional
departments and between staff and management (Ahmed & Rafiq, 2003; Ballantyne, 2000;
Varey, 1995). According to Lings and Greenley (2005), IM is interchangeable with
internal market orientation (IMO). Past studies have also argued IMO is a company
philosophy that guides firms to develop and implement internal marketing practices
(Gounaris, 2008; Lings, 2004). A deeper look into internal marketing literature shows four
key factors explaining IMO as a higher order construct, namely: exchanging values;
segmenting the internal market; the strength of the relationship between managers and
 Journal of Strategic Marketing 641

employees; and the response to internal intelligence (Lings, 2004). These factors parallel
the external market orientation (EMO) (Kohli, Jaworski, & Kumar, 1993). From the above
discussion, it can be suggested that firms which have higher levels of IMO are likely to be
more responsive in generating internal information and disseminating the information
generated to its internal market (i.e. employees) (Lings & Gordon, 2010). Tactical
programs/practices are, thereby, implemented more effectively to achieve positive
employee as well as organizational outcomes (Gounaris, 2008; Lings, 2004).
Studies focusing on the external market orientation (EMO) have found that the
intensity of market orientation might vary across industries, firms and even within
departments (Kirca, Jayachandran, & Bearden, 2005; Ruekert, 1992). Taking a similar
view, it can be argued within the conceptual model of this paper that the levels of IMO
might differ between a low and high continuum. We posit in our model that some level of
IMO is evident in all types of organization as any firm would have some measure/initiative
to look after its employee needs and respond to those needs (Lings, 1999, 2004). What
varies is the degree or levels of IMO among different organizations, that is, some
organizations may have higher levels of IMO whereas others may have lower levels of
IMO. For example, factories making mass-produced garments, or agriculture-based firms
dependent on seasonal part-time fruit pickers might exhibit lower levels of IMO as the
employers and employees are well informed about the labour market, recognize that
employee commitment is purely a function of the wages paid and, therefore, the
transaction cost of responding to the employee needs might outweigh the benefits for the
firm (Pitt & Foreman, 1999). On the other hand, service-focused firms such as hospitality
or financial services might require higher levels of IMO as the employees’ interactions
with customers present the face and voice of the organization (Babakus, Yavas, Karatepe,
& Avci, 2003). Such firms need to be proactive in generating and disseminating
information regarding employee needs and responding accordingly so that employees are
looked after better and, in turn, the employees are better prepared to interact with
customers (Herington, Johnson, & Scott, 2006). Based on the preceding discussions, the
following proposition is offered:
P1: Organizations with higher levels of IMO will be more effective in implementing
practices to achieve positive organizational outcomes than those with lower levels
of IMO.

Developing appropriate internal marketing programs

Gounaris (2008) argues that ‘practice’ is the implementation of specific actions and is
guided by a broader framework. In this sense, the author argues IMO is the broader
framework that guides the practices of IM (which we refer to in our model as IM
programs). Piercy and Morgan (1991) provide a basis for using key marketing mix
elements in creating successful internal marketing programs, by illustrating the use of
internal product, price, communications, and distribution to facilitate organizational
change within the firm. Ahmed and Rafiq (1995) further illustrate a multi-level model of
internal marketing showing how the transaction-focused marketing mix tools (the 4P’s)
can be used internally to produce the required response from the internal market. Other
studies such as Ahmed et al. (2003) identified a range of tactical human resource-focused
IM mix tools that could be used to achieve IM strategic goals, such as empowerment,
reward, staffing, internal communication and training and development. Gounaris (2008)
suggested grouping of the IM programs into three specific facets – employee
642 A.S. Ferdous et al.

empowerment, participation in decision making, and communication formalization

between management and employees.
Varey and Lewis (1999) argue that despite the advances in internal marketing
concepts, internal marketing needs to change from a mechanistic managerial functional
approach to a broader, more goal-oriented social process, and a conceptual system for
continually creating rapid strategic organizational change in response to the macro- and
micro-environments. Thus, internal marketing (IM) is understood more as an inclusive and
comprehensive social process of exchange/interaction, rather than a managerial
technology of competitive profiting only.
Interestingly, the proponents of contemporary marketing practices (CMP) provide
empirical evidence that marketing practices tend to be pluralistic, that is, transactional,
relational, and process-oriented marketing are all evident, but managerial practice has not
shifted from transactional to relational approaches per se. Further, Brodie, Little, and
Motion (2008) argue that rather than one strategy, practice or perspective dominating, a
wide range of possibilities can co-exist with a diversity of opportunities. Thus, successful
firms are those that allow for flexibility and can adapt to different opportunities.
Consequently, we argue that internal marketing programs have to be appropriately
matched to management needs and organizational strategic goals (Schultz, 2004).
Additionally, while designing the internal marketing activities, the intensity and nature
of the internal market orientation that exists with an organization may have considerable
impact (Gounaris, 2008). We suggest in our model that organizations with lower levels of
IMO may design and implement internal marketing programs differently from those with
higher levels of IMO (see Figure 1). For example, firms with lower levels of IMO might
focus mainly on transactional programs, such as rewards focusing on pay and commission,
that yield the quick desired response from their internal market (i.e. employees) (Pitt &
Foreman, 1999). Alternatively, firms with higher levels of IMO might invest in programs
focusing on training and development, increased empowerment and participation in
decision making to achieve increased organizational identification, commitment, job
satisfaction, and firm/employee relationships (Herington et al., 2006; Herington, Johnson,
& Scott, 2009). Therefore, the following proposition is put forward:
P2: Firms having higher levels of IMO are likely to develop IM programs that are
relationship-oriented, whereas firms with lower levels of IMO will develop IM
programs that are transaction-focused.

Internal outcomes
Schultz (2004) has argued for outcomes of internal marketing programs to be measured in
the context of an attitudinal measurement model, although this lacks the opportunity for
financial measures of the IM program. In order to assess the impact on the bottom line, it
would be essential for management to develop methods of measuring the outcome of
internal marketing programs in terms of the behavioral and attitude changes of employees,
as well as building tracking systems to measure the financial returns of implementing IM
programs.
Taking a similar viewpoint, several studies have provided empirical support between
IM programs and internal outcomes which focuses on employee affective outcomes,
performance, and firm – employee relationship strength (Ahmed et al., 2003; Gounaris,
2008; Herington et al., 2009; Keller, Lynch, Ellinger, Ozment, & Calantone, 2006; Tan,
2009). For example, several studies have found IM programs positively predict employee
 Journal of Strategic Marketing 643

affective outcomes, such as job satisfaction (Ahmed et al., 2003; Gounaris, 2008; Keller
et al., 2006), and organizational commitment (Ashill, Rod, & Carruthers, 2008; Caruana &
Calleya, 1998). Other studies have found IM programs have an effect on employee
performance (Babakus et al., 2003; Keller et al., 2006).
A stream of research studies focusing on commercial firm – employee– customer
relationships has argued that IM programs might also impact on the firm-employee
relationship strength (Herington et al., 2006, 2009; Tan, 2009), which is depicted as the
depth of the enduring relationship between the firm and its employees (Herington et al.,
2009). Thereby, it can be argued that firms developing and implementing IM programs
that are relationship-oriented will lead to increased levels of employee affective outcomes,
which in turn will result in a stronger firm – employee relationship strength. We propose in
our model that the intensity of IMO will affect the development and implementation of IM
programs (i.e. either relational or transaction-oriented), which in turn will predict internal
outcomes (i.e. employee affective outcomes, performance outcomes, and firm –employee
relationship strength). Based on the discussion so far, we put forward the following
proposition:
P3: IM programs are likely to predict internal outcomes (i.e. affective, performance,
and firm – employee relationship strength).

External marketing perspective

External Market Orientation (EMO)
McGee and Spiro (1988) explained marketing concept as a combination of some specific
techniques by which a company seeks to identify and satisfy customer needs. The variant
of these ideas and definitions, nevertheless, was reflected by four core themes or ‘pillars’:
(1) customer focus; (2) coordinated marketing; (3) market focus; and (4) profitability
(Kohli & Jaworski, 1990; Kotler, 1994; Lings, 2004). In order to operationalize these four
pillars a number of authors proposed a concept known as ‘market orientation’, which we
refer to in our model as external market orientation (EMO) to distinguish it from a firm’s
IMO (Dobni & Luffman, 2000; Kohli & Jaworski, 1990; Kohli et al., 1993; Narver &
Slater, 1990; Ruekert, 1992; Voss & Voss, 2000). In order to develop and validate a
measure for capturing EMO as a higher order construct, Narver and Slater (1990)
developed a scale comprised of three dimensions, namely, customer orientation,
competitor orientation and inter-functional coordination. However, it has been argued that
these constructs failed to take into account the speed with which market intelligence was
generated and disseminated within an organization (Kohli et al., 1993). As a result, Kohli
et al. (1993) soon provided a broader measure for operationalizing MO which has been
broadly accepted in the marketing literature (Dobni & Luffman, 2000; Homburg,
Krohmer, & Workman, 2004; Subramanian & Gopalakrishna, 2001). The new constructs
included market intelligence generation, dissemination of the information generation, and
responsiveness (Kohli et al., 1993). Research has also pointed out that EMO varies across
sectors, firms, and industries, that is, some firms might have higher levels of EMO than
others (Ruekert, 1992).
In their meta-analysis, Kirca et al. (2005) identified top management support, market-
based reward systems, and inter-departmental connectedness as important predictors of
EMO. It can be argued that the antecedents of EMO as identified by Kirca et al. (2005) are
similar to what has been identified in the internal marketing literature as IM programs
(Ahmed et al., 2003; Foreman & Money, 1995; Gounaris, 2008). Several studies have also
644 A.S. Ferdous et al.

provided empirical support for the notion that firms’ EMO is dependent on IM initiatives
(Awwad & Agti, 2011; Lings & Gordon, 2010; Lings & Greenley, 2009; Rodrigues &
Pinho, 2010).
Taking a similar view, we argue within our model that firms’ IM activities (i.e. both
strategic as well as tactical) will predict internal aspects of performance which, in turn,
will have a considerable effect on a firm’s EMO. Herington et al. (2006) argue that firms
that look after their employees better prepare their employees to look after their customers,
which, in turn, affects business profitability. We build the connection between the internal
and external marketing perspectives of our model (see Figure 1) based on a similar
perspective given by Herington et al. That is, firms engaging better with their internal
market (i.e. employees) through IMO and IM programs are likely to achieve positive
internal employee outcomes which, in turn, will guide firms to better respond to the
external marketplace (i.e. respond to external customer needs and create perceived value)
through their employees. Therefore, we put forward the following proposition:
P4: The intensity (i.e. lower or higher levels) of firms’ EMO will be influenced by the
intensity (i.e. lower or higher levels) of IMO and IM programs.

Development and implementation of appropriate external marketing (EM) programs

Firms’ EMO provides impetus for organizations when developing external marketing
programs (Gounaris, 2008; Gounaris, Avlonitis, & Papastathopoulou, 2004). Andrews and
Smith (1996) depict external marketing (EM) programs as tactical initiatives related to
promotions, packaging, labeling, positioning, or the product itself. Other studies have
identified EM programs that are relationship-focused ranging from customer loyalty
schemes, electronic order-processing interfaces, customized packaging/products, to social
engagement initiatives entailing such things as meals and sporting events (Palmatier,
Scheer, Houston, Evans, & Gopalakrishna, 2007). Im, Hussain, and Sengupta (2008)
provided empirical support for the notion that external marketing programs are influenced
by firms’ EMO. The authors further reported EMO positively impacts on the novelty and
meaningfulness of external marketing programs.
It is widely accepted in the literature that EMO guides firms to undertake specific
actions or practices such as market segmentation, target marketing, and new product
development based on specific customer needs (Gounaris, 2008; Gounaris et al., 2004;
McGee & Spiro, 1988). The conceptual model (Figure 1) indicates that the way an
organization designs and implements its IMO and IM programs will impact on EMO
which, in turn, will have an influence on the development and implementation of external
marketing programs. For example, firms which exhibit higher levels of IMO and EMO
will design programs that deliver on the strategic goals and objectives, thereby
satisfying, retaining, and creating value for both internal (i.e. employees) and external
(i.e. customers) markets (Gounaris, 2008; Lings & Gordon, 2010; Lings & Greenley,
2009). Thus, it can be reflected that the design of either transaction or relationship-focused
EM programs is likely to be conditioned by a firm’s EMO, which should be supported by
the appropriate IM initiatives. Furthermore, it can be pointed out that organizations that
are more transaction-oriented should realize that there will be a transitionary process from
a transaction to a relationship orientation approach (Gronroos, 1990) when designing
marketing programs which are more relationship-focused. Notwithstanding the above, the
application and importance of a transaction approach should not be ignored as, indeed, a
relationship orientation approach should actually operate as a ‘transaction plus’ approach
 Journal of Strategic Marketing 645

for organizations (Coviello, Brodie, Danaher, & Johnston, 2002). Based on the discussion
provided, we put forward the following proposition:
P5: The development of transactional or relationship-focused EM programs will be
contingent on the level of EMO (i.e. lower or higher) supported by appropriate IM
activities.

External outcomes
Once developed, the external marketing initiatives need to be implemented effectively so
organizations can achieve their objectives and goals successfully (Heskett et al., 1994;
Tansuhaj et al., 1988). A large body of literature exists that supports the finding that the
implementation of external marketing activities affects organizational outcomes (Ferdous
& Towfique, 2008; Heskett et al., 1994; Kohli & Jaworski, 1990; Lings, 2004; Piercy,
1995; Piercy & Morgan, 1991; Tansuhaj, Wong, & McCullough, 1987; Tansuhaj et al.,
1988). For example, several studies have provided empirical support for the relationship
between transaction-focused external marketing programs and organizational outcomes
such as customer satisfaction (Ferdous & Towfique, 2008; Tansuhaj et al., 1987). Others
have posited that a firm’s implementation of external marketing programs leads to
outcomes such as positive customer-perceived quality and value, customer loyalty, and
customer retention (Heskett et al., 1994; Lings, 2004; Piercy, 1995; Tansuhaj et al., 1988).
Some other studies have argued that relationship-focused EM programs might result in
stronger relationship quality between firms and their customers which, ultimately, affects
business performance (Herington et al., 2006; Palmatier et al., 2007).
In addition, this paper argues that management needs to build a tracking system that
measures the success and effectiveness of both the internal and external marketing
programs (Schultz, 2004). The tracking system should not be narrowed down to foresee
short-term success but should also take account of the long-term success of the
organization. Both internal and external marketing evaluations need to have a feedback
process so that responses from both the internal and external markets can be gathered to
inform management when corrective action is required. Further, it is important that
organizations measure the success of external marketing programs in both the attitudinal
and financial contexts. As such, the external outcomes are grouped as three broad
categories in our model – affective outcomes (e.g. customer attitudes, satisfaction,
perceived value), performance outcomes (e.g. number of customers retained, leads
conversion, revenue), and the strength of firm –customer relationships (i.e. the depth of the
enduring relationship between the firm and its customers). It should further be noted that
within this model external outcomes will be contingent on the firm’s IM and EM
initiatives. Therefore, the following proposition is put forward:
P6: External marketing (EM) programs are likely to positively predict outcomes such
as customer affective responses, firm performance, and firm – customer relationship
strength.

Business success
Organizations seek success in business activities in terms of both profit and sustainable
competitive advantage. Using the service– profit chain, Heskett et al. (1994) show a clear
link between internal and external service quality and how it leads to, and relates to,
646 A.S. Ferdous et al.

customer satisfaction, loyalty and ultimately business success for service organizations.
Previous studies (e.g. Ahmed & Rafiq, 2003; Yoon, Choi, & Park, 2007) have shown
empirical relationships between IM and business performance. The model presented in
this paper reflects a broad perspective where the intensity of firms’ IMO and EMO impacts
on ‘how’ management designs its internal and external marketing programs, and the ‘way’
organizations implement and align internal and external marketing programs. The model
also demonstrates the ultimate impact on the profitability and competitive advantage of the
organization. Further, the model is directing managers to the key components of internal
and external marketing programs.
It is, however, important for organizations that internal marketing activities should not
be restricted to the concept of serving the internal market only, but should also take a
broader approach to make an ultimate connection with the end customer. In doing so,
management will design internal marketing initiatives that prepare its employees to better
execute the external marketing programs, ultimately rendering the process more end-
customer focused, and resulting in the achievement of a superior marketing performance.
In addition, the proposed model is closed-looped, suggesting that, in practice, internal
and external marketing management is a continuous improvement process. The loop
indicates organizations over time improve their marketing knowledge in order to develop,
implement, and measure increasingly more appropriate internal and external marketing
programs, thus resulting in the creation of value, sustainable growth, profit, and business
performance. Therefore, the final proposition is:
P7: Over time, organizations improve their marketing knowledge enabling them
to develop, coherently link, implement, and measure more appropriate internal
and external marketing initiatives, resulting in sustainable business success
(i.e. sustained growth, profitability, and performance).

Implications
The model linking internal and external marketing presented in this paper provides a
contribution to both theory and practice. In terms of the theoretical contribution, the extant
literature is yet to provide an integrative model that details and links the imperatives of IM
and EM (Schultz, 2004). The model presented in this paper fills these research gaps by
presenting an integrative model of IM and EM. The overall contribution of the model is
that the intensity of a firm’s IMO guides the development and implementation of EM
programs which, in turn, impacts on internal outcomes. This is then argued to support and
influence the nature and intensity of a firm’s EMO which conditions external marketing
programs and, consequently, impacts on external outcomes. The other key contribution of
the model is that the implementation of IM and EM is a closed-loop process, and
organizations gradually develop the ‘competence’ or ‘know-how’ to link and implement
IM and EM strategies and programs resulting in sustained business success.
From a managerial perspective, the model presented in this paper not only suggests
various propositions for future research paths, but also has several direct practical
implications. First, the model clearly illustrates for managers that embracing the concept
of Internal Marketing (IM) within a firm is likely to have a considerable positive impact on
an organization’s External Marketing (EM), and also how the key IM and EM activities
should be coherently linked in practice to achieve business success. Second, the model
presented clearly sends a message to managers as well as the academic community that
internal marketing is no longer limited to a variety of interpretations of internal marketing
 Journal of Strategic Marketing 647

concepts, but also has significant practicality in terms of aligning and managing the key
components of internal and external marketing to achieve business success. The model
also provides a directive for management, with the notion that a firm’s development and
adoption of EMO (i.e. either lower or higher levels of market orientation) has to be
supported by the development of appropriate IM initiatives. For example, if an
organization wants to move to the higher end of the EMO continuum, it has to first focus
on developing the appropriate IMO and relevant IM programs which, in turn, affects
employee outcomes and making them better prepared to respond and deliver on the EM
programs.

Conclusions and future research directions

To sum up, the model presented in this paper provides three main insights for practitioners
and researchers. First, a clear boundary between an IM and EM perspective is provided.
Second, the key components and imperatives of IM and EM are discussed. Finally, the
model also explains how IM and EM perspectives are logically linked. Additionally, the
model also contributes to the existing literature by arguing that the ‘way’ organizations
design and implement internal marketing initiatives influences the design of external
marketing strategies and programs. Further, it is argued within the model that internal and
external marketing management in practice is a continuous improvement process, and
when aligned coherently, results in sustainable competitive advantage and business
success for organizations.
The model presented in this paper is derived from anecdotal evidence and the existing
marketing literature, therefore, further empirical research needs to be conducted to assess
the model in its entirety as well as the individual links. Empirical research needs to be
conducted to determine how existing internal relationship strength and current internal
marketing programs within organizations influence business success. Further study is also
needed to test ‘whether’ and ‘how’ an internal marketing program and its implementation
influence the relationship strength and development of the external marketing program.
Finally, both action and interactive research could be conducted to assess each of the
propositions developed in this paper.

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