Managing Internal Marketing

What Is Internal Marketing?

The term was coined as an umbrella concept for a variety of internal activities, which as such are not new, but which offer a new approach to developing a service orientation and an interest in customers and marketing among the personnel.  Internal marketing starts from a notion that the employees are a first, internal market for the organisation.  If goods, services, and external communication campaigns, cannot be marketed to this internal target group, marketing to ultimate, external customers cannot be expected to be successful either.

An increasing number of firms have recognised the need for internal marketing processes, again first in the traditional service sector, whereas manufacturers of industrial goods have followed somewhat later.  The perhaps most spectacular internal marketing process is the one successfully implemented by SAS (Carlzon 1987), Today, internal marketing is considered a prerequisite for successful external marketing performance

Internal marketing is a management strategy. 

The focus is on how to develop customer-conscious employees.  Goods and services as well as specific external marketing campaigns have to be marketed to employees before they are marketed externallyEvery firm, or any organisation, has an internal market of employees, which must first be taken care of.  Unless this is done properly the success of the firm’s operation on its ultimate, external markets will be jeopardised.  To put it in the words of Heskett (1987):  “Effective service requires people who understand the idea” (p.124).   And an understanding of the business and what is expected of people in the organisation and why this is expected of them is not achieved without effort.

An example of the need for internal marketing relates to the idea of service guaranteesAssuring potential customers that a service will work or otherwise corrective actions will be taken is becoming a means of attracting customers.  In theory this concept is good.  However, in practice it ‘ will backfire unless internal marketing is properly taken care of.  If there is no understanding and mental readiness among employees for fulfilling in a proper manner what a service guarantee promises to customers, this per se excellent means of competition will become a means of disaster instead.

Internal marketing operates as a holistic management process to integrate multiple functions of the firm in two ways.  First, it ensures that the employees at all levels in the firm, including management, understand and experience the business and its various activities and campaigns in the context of an environment that supports customer consciousness.

Second, it ensures that all employees be prepared and motivated to act in a service oriented manner.

The premise of internal marketing is that the internal exchange between the organisation and its employee groups must be operating effectively before the firm can be successful in achieving its goals regarding its external markets.

The Internal Marketing Concept

The increasing need for internal marketing is due to the renaissance of man in business in today’s competitive climate.  There is an ongoing movement from the industrial era to the new competition of the service economy, where the logic of the manufacturer has to be replaced by a new logic which we have called “a service know-how.” The emerging importance of services to almost every business has enhanced the notion that a well trained and service-oriented employee, rather than raw materials, production technology, or the products themselves, is the most critical scarce resource today.  These employees will be even more critical in the relevant future in an increasing number of industries.

With the development of services marketing theories marketing is changing (compare also the more general views of the changing role and focus on marketing).  More emphasis is now being placed on keeping customers and cross-selling to existing customers.  The concepts of relationship marketing and interactive marketing, which have already been discussed, were developed to describe marketing programs directed toward the existing customers of an organisation.

Here the role of the employees is vital.  Moreover, the marketing specialists of the marketing department are not the only human resource in marketing; often they are not even the most important resource.  During customer contacts these marketing specialists are often outnumbered by a variety of employees whose main duties are production, deliveries, technical service, claims handling, and other tasks traditionally considered non-marketing.  However, the skills, customer orientation, and service mindedness of these persons are critical to the customers’ perception of the firm and to future patronage behaviour.

The internal marketing concept states that the internal market of employees is best motivated for service-mindedness and customer-oriented performance by an active, marketing like approach, where a variety of activities are used internally in an active, marketing like and coordinated way.

The need for internal marketing is certainly not entirely new.  Certain aspects of internal marketing programs and activities have been used in many firms for a long time.  What is new with the internal marketing concept as described in this topic is the introduction of a unifying concept for more effectively managing a variety of interfunctional and frequently well established activities as part of an overall program aiming at a common objective.  The importance of internal marketing is the fact that it allows management to approach all of these activities in a much more systematic and strategic manner.

Attitude Management and Communications Management

Internal marketing means two types of management processes, attitude management and communications management.  First of all, the attitudes of employees and the motivation for customer consciousness and service mindedness have to be managed.  This can be called the attitude management aspect of internal marketing.  This is often the predominant part of internal marketing for an organisation that strives to develop a competitive edge by pursuing a service strategy.  As Edvardsson, Edvinsson, and Nystrom (1988) observed: “. . . there is a need for a more pro-active mental management view where service companies create the future rather than adapt to existing conditions”(p. 12).

Second, managers, contact persons, and support persons need information to be able to perform their tasks as leaders and managers and as service providers to internal and external customers.

They need information about job routines, goods and service features, promises given to customers by, for example, advertising campaigns and salespersons, and so forth.  They also need to communicate about their needs and requirements, their views on how to improve performance, and their findings of what customers want.  This is a communication management aspect of internal marketing.

Both attitude management and communication management are needed if good results are to be expected.  Too often only the communication management aspect is recognised, and maybe only as a one-way information task.  In such cases, internal marketing typically takes the form of campaigns and activities.  Internal brochures and booklets are distributed to the personnel, and personnel meetings are held where written and oral information is given to the participants and very little communication occurs.  Also, managers and supervisors typically take limited interest in their subordinates and do not recognise their need for feedback information, two-way communication, and encouragement.  The employees receive an abundance of information but very little mental encouragement.

This, of course, means that much of the information has no major impact on the receivers.  The necessary change of attitudes and enhancement of a motivation for good service and customer consciousness is lacking, and the employees are, therefore, not receptive to the information.

If the need for and the nature of the attitude management aspect of internal marketing is recognised and taken into account, internal marketing typically takes the form of an ongoing process instead of a campaign or series of campaigns, and the role of managers and supervisors, on every level, is much more active.  Also, much better results are achieved.  Internal marketing is like a marriage.  Once you start it, you live with it every day, it never ends. The internal marketing process is where attitude management and communications management go hand in hand and support each other.

A successful internal marketing process requires an attitude management impact as well as a communication management supportAttitude management is a continuous process, whereas communication management may be more of a discrete process including information activities at appropriate points in time.  However, these two aspects of internal marketing are also intertwined.

Naturally, much or most of the information shared with employees has an effect on attitudes; for example, contact persons who are informed in advance about an external advertising campaign develop favourable attitudes toward fulfilling the promises of that campaign.  Moreover, the tasks of managers and supervisors include, as integral and often inseparable parts, both communication management aspects and attitude management aspects.

Overall Objectives of Internal Marketing

The overall objective of internal marketing is twofold:

1.         To ensure that the employees are motivated for customer-oriented and service-minded performance and thus successfully fulfil their duties as part-time marketers” in their interactive marketing tasks; and

2.         To attract and retain good employees.

The main objective is, of course, to manage the personnel and implement internal action programs so that the employees feel motivated for  “part time marketing” behaviour.  However, the second objective follows from the first one.  The better its internal marketing works, the more attractive the firm is considered as an employer.  These overall objectives can be developed into more specific goals depending on the situation at hand.   Of course, in any specific situation such generally formulated goals have to be specified to meet the requirements of that situation.

Three Levels of Internal Marketing

In principle, three different types of situations can be identified where internal marketing is called for:

1.         When creating a service culture in the firm and a service orientation among the personnel;

2.         When maintaining a service orientation among the personnel; and

3.         When introducing new goods and services as well as marketing campaigns and activities to the employees.

 

Dr Brian Monger is Executive Director of MAANZ International and an internationally known consultant with over 45 years of experience assisting both large and small companies with their projects.  He is a specialist in negotiation and behaviour He is also a highly effective and experienced trainer and educator

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These articles are usually taken from notes from a MAANZ course.  If you are interested in obtaining the full set of notes (and a PowerPoint presentation) please contact us – info@marketing.org.au

Also check out other articles on http://smartamarketing2.wordpress.com

MAANZ International website http://www.marketing.org.au

Smartamarketing Slideshare (http://www.slideshare.net/bmonger)

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