INTRODUCTION

Nowadays organizations operate in a dynamic, ambiguous and

challengeable environment. One of the most important characteristics of
this context is continuous changes and transformations that happen in the
social and cultural (such as modifications in the way of thought, ideology
and social value), political, economical, technological and international
situations. Environmental dynamics and increasing competition lead
organizations to become more competitive and to be sensitive about
customers satisfaction (!ghazadeh et al ., "##$). One of the most factors to
realize this ob%ective, especially in service organizations, is service &uality.
'he &uality of service is dependent upon a variety of factors. ! factor
which may contribute to the sustainable upgrading of the service &uality
and faithfulness of customers is internal mar(eting. )nternal mar(eting is
a ma%or activity in the development of a customer*oriented organization.
'he main ob%ective of internal mar(eting is to promote the (nowledge
about internal and external customers and lift the operational obstacles
which may be in the way of ma(ing the services based on values and
organizational effectiveness (+hristopher et al ., ,--,). )nternal mar(eting views
the employees and %obs as internal customers and internal products,
respectively (.ee and +hen, "##/). )n the mar(et*oriented literature and
strategic management, more attention was paid to the external factors of
an organization, although you can see today that a balance should be
created between the external and internal factors, as both are critical for
a strategy to be successful (.ings, ,---). 0oreman and 1oney (,--/) held that
when an organization has an internal chain of supply comprising internal
customers and suppliers, the organization2s management ought to view
the organization as a mar(et. 'his means that meeting the internal
customer needs will put the organization in better conditions to provide
high*&uality services to the external customers (0oreman and 1oney, ,--/).
'herefore, internal mar(eting is an important activity in the development
of a customer*oriented organization.
SERVICE MARKETING
'he number of service organizations in today2s economy, which is of a
service nature, has grown dramatically3 as a result, competitions among
such organizations increase and become more complicated. One of the
most important means to satisfy the customers2 needs and ensure their
loyalty is service &uality (4eyed 5avadein et al ., "##63 7aye% et al ., "#,#3 4oltani et al .,
"##6). 7eichheld and 4asser (,---) held that offering proper services &uality is a
substantial strategy for the organization to survive (7eichheld and 4asser, ,---).
8uality has two dimensions9 technical and functional (:otler and :eller, "##;).
'he technical &uality points to the tangible aspects of services and that
how the services are provided. 'he functional &uality deals with the
behavior of the employees providing a typical service and the interaction
between the employees and customers over the process by which the
services are provided. 'here is a relation between the activities of an
organization2s personnel and the customers. 4uch activities serve as a
critical factor in the development of efficient relations with customers.
'herefore, the s(ills, attitudes and behavior of personnel are important,
as people will eventually be responsible to render services of a &uality
which is expected by the customer. !mong the most important factors
which may employ the personnel2s behaviors, attitudes and interaction to
render services of even better &ualities is internal mar(eting. 'he
philosophy of internal mar(eting is an important thing that is the
personnel are counted as internal customers. :otler and :eller ("##;) stated
that services re&uire three types of mar(eting9 internal, external and
interactive (0ig. ,). External mar(eting means preparation, pricing,
distribution and promotion of services render to customers. )nteractive
mar(eting explains the personnel2s s(illfulness in rendering services to the
customer and is mostly concerned with the personnel2s way of behaving
toward the customer. )nternal mar(eting gives priority to the training and
motivation of personnel in rendering services. !ccording to :otler and
!rmstrong (,---) internal mar(eting must be ahead of external
mar(eting. Narver and 4later (,--#) remar(ed that the development of an
internal mar(eting approach will lead to the creation of a certain culture
which will act to form behaviors, in a most efficient and effective manner,
that will enable rendering superior services to customer. 'herefore, the
most important element of the service mar(eting is internal mar(eting.
<hen an organization lac(s the internal resources and human capital
appropriate to its mar(eting goals and strategies it will be so hard to
attain the goals. ! strategy will be an efficient one if the internal and
external settings of the organization are in harmony with regard to the
strategy.
0ig.
,9
1ar(eting in 4ervice
)ndustry (:otler and :eller, "##;)
INTERNAL MARKETING
! very important element in strategic planning is the core competency of
an organization. )f the core competency is properly managed, it will bring
a competitive advantage for organization (=itt et al ., "##$). One form of
competitive advantage is offering proper services to customers, whose
result will be the customer2s robust loyalty. One of the approaches to the
attainment of this ob%ective is internal mar(eting, which is a (ey factor in
offering superior services and success of the external mar(eting of an
organization (>reene et al ., ,--?37aye% et al ., "#,#). @ery and >ronroos
introduced the concept of internal mar(eting in the ,-6#2s. =eart of
internal mar(eting is that employees constitute the internal mar(et of an
organization (Aapasolomou*Bou(a(is, "##"). 'his means that organization has
an internal mar(et with internal customers and suppliers and meeting the
needs of the internal customers is essential to the success of the
organization in external mar(et.
Need for real enhancement of an organization2s capabilities to provide
customers with valuable services which are in the right proportion to the
customers needs, as the fundament of a competitive strategy and
competitive advantage, has become a very important issue in the
management literature (Carey, ,--/). 'oday, human capitals and intangible
assets are counted as the ultimate source of sustainable value (+ahill, ,--/).
'herefore, employee of an organization bears a ma%or part of attaining a
sustainable competitive advantage. )f the needs and expectations of the
this people don2t met and if employee viewed as an expense and not as a
ma%or capital of the organization, it will be impossible to provide
customers with proper, valuable services. 'he main assumption in internal
mar(eting is that the personnel should be viewed as the most valuable
assets of the organization and should be treated as internal customers, an
approach which will cause the organization2s attainment of competitive
advantage (Aapasolomou*Bou(a(is, "##"). )n service management, internal
mar(eting is viewed as employing the concept of mar(eting in the internal
environment of the organization (Carey, ,--/).
DEFINITION
)nternal mar(eting is focused on proper internal relation between people
at all levels of an organization (7aye%, "##6). 'herefore, a service*oriented
and customer*oriented approach will be promoted between the employees
in contact with customers (>ronroos, "###). 4o, internal mar(eting acts as a
comprehensive management process that integrates various functions of
an organization in two ways. 0irst, it will have all employees at all levels
of the organization experience and understand various business and
activities and processes in the context of an environment. 4econd, it will
cause all the employees to become prepared and enthusiastic in a
service*oriented way (>ronroos, "###). +ahill (,--/) perceives internal
mar(eting as a type of philosophy of strategic management that ensures
the attraction, development, motivation and maintaining prominent
employees by creating a high*&uality wor(ing environment by meeting
their needs. )nternal mar(eting is a management technology to resolve
the issues relating to the productivity of internal services, mar(et
orientation, successful execution of appropriate programs and customer
orientation (>ronroos, "###). =ogg and +arter ("###) defined internal mar(eting as
an integral part of mar(et orientation which re&uires using mar(eting
techni&ues inside an organization in order to create and communicate the
values in a company. One of the most comprehensive definitions of
internal mar(eting was proposed by 7afi& and !hmed ("###), that is an
organized attempt using a mar(eting*li(e approach in order to cope with
the organizational resistances to changes and balance, motivate and
coordinate the employees in line with efficient execution of strategies with
the aim of the customers satisfaction through the process of creating
motivated, customer*oriented employees.
>ummesson (,--,) perceived internal mar(eting as a critical component of
mar(et orientation and :otler and !rmstrong (,---) stated that internal
mar(eting ought to be ahead of external mar(eting. 'herefore, internal
mar(eting is critical to an organization for creating a value for customers,
both internal and external ones.
APPROACHES TO INTERNAL MARKETING
>ronroos, ("###) states that the mar(eting process includes four parts9
D Enderstand the mar(et and individual customers
D 4elect suitable situations and mar(et sectors and
customers
D 4elect programs and activities for planning and
execution
D Arepare the organization for the execution of the
plans (internal mar(eting)
>ronroos, ("###) perceived the fourth part as very critical. =e states that
once the activities and programs has been accepted inside the
organization, the program may be executed properly and be successful for
the external customers. )t might be argued that internal mar(eting is the
same thing as human resources3 however, human resources management and
internal mar(eting are not the same, although they share many aspects.
=uman resources management provides tools that are used in internal
mar(eting, such as training, employment and %ob career planning3
however, internal mar(eting provides instructions on how to use such
tools (>ronroos, "###).
'he concept of internal mar(eting has introduced three topics to human
resources management of a typical organization9
D Employees constitute the first mar(et for an organization
(i.e., an internal mar(et)
D !n active, coordinated and ob%ective*oriented approach to
individual*oriented attempts, where the internal processes
and activities will be combined with the external efficiency
D Emphasis on viewing individuals, duties and internal
departments as internal customers
'herefore, one can say that internal mar(eting originates in the concepts
of mar(eting, human resources management, organizational behavior
management and strategic management. !s a result, one can predict to
identify various statements and approaches in the internal mar(eting
literature. 'here is no common consensus on the aspects and approaches
of internal mar(eting (7afi& and !hmed, ,--F), although three ma%or
approaches to internal mar(eting have been identified in the literature9
'he first approach is focused on the employees who are in contact with
customers in the processes of service provision and is based on the
assumption that happier employees who have more incentive to provide
services to customers will be necessary (@erry and Aarasuraman, ,--,3 @erry,
,-6,).
'he second approach is based on the process of providing services
throughout the organization and is based on the philosophy of a 'otal
8uality 1anagement ('81) and assumes that service may be created in a
chain form for delivery to customers. )n this approach to internal
mar(eting, every department treats its output2s receiver as an internal
customer and attempts to obtain the satisfaction of the internal customers
(7afi& and !hmed, ,--F3 >ummesson, ,-6$).
'he third approach is focused on the mar(eting of mar(eting concepts
and creation of common values among all employees. )n this approach to
internal mar(eting, the internal sections are considered as the receivers
of the assignment and strategy of the organization and ob%ective which is
attained by proper relations (Aiercy and 1organ, ,--,3 Aiercy, ,--/).
'he first approach is one that views the internal mar(eting from the
viewpoint of organizational behavior and mar(eting and the third one
treats it from the mar(eting and strategic management viewpoint, while
the second approach is a comprehensive approach which loo(s to internal
mar(eting in a systemic, comprehensive way. )n this approach, the
viewpoints of strategic management, mar(eting, human resources
management and organizational behavior are integrated and a total
image may be developed of internal mar(eting in which the whole
organization contributes to the process of rendering service to the
external and internal customers. )t may be concluded that the mar(eting
department is not the only one engaged in the mar(eting process of an
organization, but the whole organization and all the employees contribute
to the process and their failure to contribute will cause the process to fail.
MIXTURE OF INTERNAL MARKETING
'he clearest picture depicted of internal mar(eting mixture was provided
by Aiercy and 1organ, ,--,) and was developed by 7afi& and !hmed (,--F). Aiercy and
1organ (,--,) stated that using internal distribution, communication, price
and product will facilitate the process of organizational change through
techni&ues and systems, the structure of power and political culture inside
the organization. 7afi& and !hmed (,--F) perceived internal products as the
values and attitudes needed by employees to achieve successful
mar(eting strategies and training courses to promote the (nowledge of
the internal customers. 'hey have defined the price as an expense which
the employees ma(e to obtain new (nowledge. )nternal promotion has
been considered as an effective relation with the employees, such as
using face*to*face interactions, recognition and reward systems. 'hey also
pointed out to the means of products distribution to the internal
customers as an internal place. 'hese means of distribution may be
presented in such forms as official meetings and using consultants to
provide advanced inter*organizational training (7afi& and !hmed, ,--F3 Aiercy
and 1organ, ,--,3 :eller et al ., "##;). Aiercy and 1organ (,--,)and 7afi& and !hmed
("###) attempted to show the use of four A2s (?As) in a typical
organization. 'able , contains the constituting elements of internal
mar(eting from the viewpoint of other researchers9
'able
,9
+onstituting elements of internal mar(eting
'able
"9
! comparison of mixtures of internal mar(eting and external
mar(eting
One of the most important differences between internal and external
mar(eting is in the mar(eting mixture. 'he following table summarizes a
review of the literature on internal mar(eting and its main elements
(mixture of internal mar(eting). ! ma%or difference between the two
originates in the fact that internal mar(eting focuses on internal mar(et
and external mar(eting focuses on external customers and mar(et. One
of the main elements of the external mar(eting mixture is product. )n
internal mar(eting, product may be studied at the three levels of
fundamental, strategic and duty. Aroduct at fundamental level is a %ob,
which has been considered by most authors. !t the strategic level, the
product includes values and attitudes existing in the organization and at
the duty level it includes new functional measures and new ways in
customer management. !nother element in the mixture of external
mar(eting is price, which is the psychological expense of learning new
ways of wor(. !nother important factor which is very important in
external mar(eting is promotion (or relations). )n internal mar(eting, this
important factor refers to the motivation of employees and influencing
employee attitudes. )f the employees do not have sufficient incentive or
their attitudes are not in line with the philosophy of the organization or its
values, the organization will undergo deviation and failure. 'herefore, the
promotion or relations are so critical elements of internal mar(eting.
!nother element of external mar(eting is distribution. Bistribution is a
very important part of internal mar(et. 1eetings, conferences, seminars
and face*to*face visits are some examples. Bistribution may be used to
express the goals and strategies as well as to have the employees
contribute to the process of decision ma(ing ('able ").
COMPETITIVE ADVANTAGE
! typical organization will have a competitive advantage when the
strategy that is being used by the organization may not be imitated by
competitors, or will ta(e the competitors a high cost to imitate (=itt et al .,
"##$). @y having a competitive advantage, a company will be able to
perform wor(s better than its competitors, or may do the wor(s in a way
that may not be imitated by competitors (=itt et al ., "##;). @y doing wor(s
differently from, or better than, the competitors, the organization will be
able to provide more valuable products and services to the customers. )t
is the competitive advantage, resources and the capabilities of an
organization that can be valuable, rare, irreplaceable and incapable of
being imitated (=itt et al ., "##$). )n today2s world, thoroughly competitive,
the traditional sources of competitive advantage such as technology,
economic scale have declined under the influence of such factors as
globalization and environmental changes. Nowadays, a s(illful, motivated
and flexible wor(force will bear the load of creation of a sustainable
competitive advantage.
'able
F9
=uman capital and competitive advantage (=itt et al ., "##;)
Human ca!"a#$ The u#"!ma"e source o% a""a!n!n& a sus"a!na'#e
come"!"!(e a)(an"a&e$ 'he resources of an organization consist of two
sources9 'angible and intangible resources. 'angible resources of an
organization include the assets, e&uipment, machinery and physical
property. )n the past, these types of sources were counted as the ma%or
tools of competition in the mar(et. )ntangible resources include human
capital, brand, confidence between the directors and the grass roots and
relations with the suppliers and customers. 'he maximum value will be
created when the whole intangible assets of the organization are brought
into harmony with each other as well as with the tangible assets and the
strategy (=itt et al ., "##$). !mong the most important intangible assets is the
human capital. =uman capital includes the s(ills, (nowledge and attitudes
of the employees. 'oday, all organizations create and maintain, their
sustainable value by use of such intangible assets as human capital. =ow
the human capital will bring a sustainable competitive advantage to an
organizationG =itt et al . ("##;) stated that when a human capital is valuable,
rare and hardly capable of being imitated it may create a sustainable
competitive advantage.
)f the human capital in an organization meets all the conditions (i.e.,
valuable, rare and hardly capable of imitation), it will then create a
sustainable competitive advantage9 human capital should be of value for
the execution of an organization2s strategy, should be rare and should be
hardly capable of imitation by competitors ('able F).
@eing valuable, rare and hardly incapable of imitation are necessary for a
human capital to create a competitive advantage, but not sufficient. !s a
result, the three factors determine the potentiality of human capital. )n
order for an organization to turn the human capital from potential to
active, it will need to use the human capital as an effective instrument. )f
the organization has a smart, s(illful wor(force, so that the wor(force is
rare, valuable and incapable of imitation in the industry, the human
capital will be unable to create a competitive advantage unless it is
protected and motivated by the directors. 'herefore, with regard to the
persons, the competitive advantage is dependent not only upon the s(ills
and attitudes of persons, but upon the way of behaving and the manner
they are employed in the organization. 'he manner of behavior and the
way they are employed, motivation and the relation between directors
and employees, are all influenced by internal mar(eting in an organization
(=itt et al ., "##;).
In"erna# mar*e"!n& an) come"!"!(e a)(an"a&e$ 'o achieve a
sustainable competitive advantage is so critical for organizations which
wor( in a complicated world competition environment and the service and
scientific economy. 4uch competitive advantage will be attained by the
satisfaction and faithfulness of customers. )n service organizations, the
most important competitive advantage is the &uality of services. :otler and
!rmstrong (,---) stated that in service organizations, one of the basic ways
that can ma(e a typical organization distinguished from its competitor is
service &uality. 'he &uality of services provided is dependent upon a
number of factors such as the place services are provided, process of
rendering services, the manner services are provided, etc.
0ig. "9 7elation between internal mar(eting and competitive advantage
(@erry, ,-6,)
One of the most factors that influence the &uality of services is the
organization2s employees. Employees that are directly in contact with
customers in the process of rendering services play the main role in
creating values and perception of the &uality of service on the customer2s
part. 'herefore, paying attention to the employees is so important,
employees who bear the load of competitive advantage in today2s world.
@y attracting and maintaining customer*oriented and service*oriented
employees, organizations may distinguish themselves from their
competitors. )nternal mar(eting may play a ma%or role in line with this.
)nternal mar(eting perceives the employees as customers, who are as
much important as the external customers to the organization. )nternal
mar(eting is focused on proper internal relations between persons at all
levels in an organization. 'herefore, a service*oriented and customer*
oriented approach is created among the employees in contact with
customers (>ronroos, "###).
0igure " shows the external mar(eting model presented by @erry
(,-6,). @erry(,-6,) argue that treating the employees as internal customers
and the %obs as products presented to such employees and using
mar(eting techni&ues inside the organization will bring about the
employees satisfaction (internal mar(eting). 'he employee satisfaction
will cause services to be rendered to customers with better &uality and, as
a result, bring about the creation of a sustainable competitive advantage
inside an organization (@erry, ,-6,).
!s a result, organizations will be able to create competitive advantage out
of their human capital that their human capital is valuable, rare and
incapable of imitation by competitors. =owever, there is a sufficient
condition for creating a sustainable competitive advantage9 when the
employees of an organization are well motivated, main proper, sustainable
relations with customers and, most importantly are service and customer*
oriented.
+onsidering 0ig. " one can deduct that internal mar(eting is as much
important as external mar(eting and it is of much importance in service
organizations. ! typical organization can ma(e sure about its mar(eting
strategic successes when it analyzes both internal and external mar(eting
strategies at the same time (0ig. F). <hen a company is focused only on
external mar(eting approaches, it will get far from its internal
environment, which may cause a strategic deviation in a dynamic
environment. )f the resources and facilities inside the organization are not
in good proportion to the organization2s strategies and, in service
organizations, if there are not employees suitable to the type of service to
be rendered in the organization, the organization will be unable to achieve
its long*term goals and strategies.
0ig. F9 4ystematic approach to mar(eting
strategy
'herefore, a systematic approach to both internal and external mar(eting
is needed to facilitate attaining a sustainable competitive advantage.
CONCLUSION
'oday, intangible assets play a ma%or role in the competitiveness of a
business3 as such assets are more sustainable and less capable of being
imitated. =uman capital can be considered as one of the most important
intangible assets that includes (nowledge, s(ill and attitudes of
employees. !s a result, management of the capital is needed to attain
competitiveness. ! ma%or approach to this is internal mar(eting, which
treats the employees of a typical organization as customers whose needed
should be supplied. 1anagers must understand that their employees2
satisfaction is as much*sometimes more*important than satisfaction of
external customers. )nternal mar(eting is of an interdisciplinary nature.
'he philosophy of internal mar(eting is that employees of an organization
constitute its internal mar(et, which has customers and suppliers and as a
result, a chain of value if formed inside the organization which must be
intended to supply the needs of both the internal and eternal customers.
<hen the internal customers of an organization are satisfied they will
perform better and maintain better interaction with the customers. !s a
result, the customers will get more satisfied, which will bring about their
faithfulness in the long run and ultimately a competitive advantage will be
obtained from the internal customers. )nternal mar(eting influences the
customers2 understanding of the &uality of services and, on the other
hand, can influence both the &uality of services and the customers2
satisfaction. !s internal mar(eting and the role it can play in organizations
has not been of much interest in )ran up to present, the authors
recommend that the influence of internal mar(eting on the &uality of
services, customers satisfaction and attainment of a competitive
advantage be studied, as the &uality of services is more based on the
relations between the employees and customers.