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THE ROLE OF INTERNAL MARKETING IN CULTURAL CHANGE IN ORGANISATIONS

SAROLTA VÁRNAI BA (Hons), MSc Lecturer in Marketing & Management Keleti Károly Faculty of Economics, Budapest Tech varnai.sarolta@kgk.bmf.hu DR JÁNOS FOJTIK Senior Lecturer in Marketing Department of Business Administration Faculty of Business and Economics at the University of Pécs fojtik@ktk.pte.hu ABSTRACT Marketing, according to the traditional view, focuses on external customers, rather than paying attention to the organisation’s employees as “internal” customers. Internal marketing is an important part of organisational development and change, moreover, if there is an absence of internal marketing in the given firm management may face with resistant staff toward change processes and adaptation. Marketing tools are essential and necessary in order to shape a given firm environment, also to establish the basis of the achievable new stage of change. Internal marketing in cultural change flows down from upper level management through the strategies, new values and objectives they set for the organisation. Therefore the elements of internal marketing have core competitive value in building effective business performance. Keywords: internal marketing, cultural change, change management Introduction

Marketing, according to the traditional view, should focus on external customers rather than paying attention to the organisation’s employees as “internal” customers. Since the second half of the 1970s in such industries as services it has been realised that employees have not been just a resource in traditional sense but they play a central role in attracting, building and maintaining relationships with customers. A number of firms have gradually recognised and utilised the internal marketing program. One possible reason for this has been the growing interest in internal marketing as a prerequisite for successful external marketing. In a number of services (insurance, etc.) it is a common sense that frontline officers would operate successfully only if they are deeply convinced in benefits of the service or product they offer

Berry and Parasuraman 1991. 1995). and in designing effective implementation strategies. Essentially. and (2) they will do the best possible work. The recognition of the key role of employees in services marketing has given a rise the internal marketing programmes strongly oriented to employee development (Tansuhaj et al. Berry (1984a) and Grönroos (2000) argue that treating employees as internal customers and their jobs as internal products will raise employee job satisfaction. In its simplest form. Or. has had important implications for the customer satisfaction issue both in analysing the barriers we may face. Lings 2000) claim that implementing internal marketing campaigns will result in an increase of service quality. several authors (Gummesson 1987. It seems to be a very useful approach in service industries because the customer-employee interaction determines a significant part of the market offering. p. as well. It can also be claimed that internal marketing was probably first defined by Berry (1984a. Others argue that the quality of service and efficiency of the distribution of the service as well as effectiveness of the communication effort would depend more directly on the actions of employees of the company. Grönroos. On the other hand.2 to customers. This view. internal marketing focuses on engendering marketing-oriented management (Varey 1995).” At last. in a more sophisticated manner: the attraction of the internal marketing framework for studying problems of . 1988. by the early 1990s it had been recognized that companies faced two kinds of markets and customers: internal and external (Piercy. In addition. which had been successfully adopted by many organisations to manage the implementation of their strategies. 1994. (1976) as a solution to the problem of delivering consistently high service quality. p. customer satisfaction and repeat purchase behaviour of service customers (Grönroos 2000). Internal Marketing Defined and Approached Rafiq and Ahmed (2000) claim that internal marketing was first proposed by Berry et al.32) as “applying the philosophy and practices of marketing to the people that serve the external customers so that (1) the best possible people can be employed and retained.14). internal marketing is exactly what one would presume it to be: the application of marketing techniques to the internal workplace. Greater attention to customer-employee interactions would result in an increase in perceived service quality.

Therefore. In summary. 1988. is a philosophy that actively promotes motivation. as well as being a set of marketing tools. and then. Supporters of this expanded definition believe that it is important to address issues of change . effects of training (Harrell & Fors 1992. and effects of teamwork.3 implementation and change is that we can use exactly the same models and methods inside the organisation as we do in the external marketplace. 1990. this will result in delivering better services to final customers in effective and efficient ways (Grönroos. Grönroos 2000). events. and retain employees. it bridges marketing with HR to attract. internal public relations. employees. A major literature review by Rafiq and Ahmed (2000) indicates that a number of internal marketing researchers have expanded the definition of internal marketing to include the concepts of change management and organisational strategy implementation.e. Tansuhaj et al. 1994). for instance the very active members of the Nordic School of Service Marketing. In this sense. p. with an emphasis on getting employee commitment to marketing and organisational goals. we can say that the basis of the internal marketing concept has three aspects. Brown et al. 2000). Think of it as an umbrella concept encompassing all activities. that reinforce the importance of customers and the employees who take care of them. underline strongly that internal marketing. There are practitioners and scholars who approach internal marketing from a slightly different standpoint. So.. Secondly. Elements of the latter approach to internal marketing which have been identified by several authors include: selecting right personnel (Berry 1984b. considerations of empowerment (Shostack 1987. These customers are so-called internal customers (Brown et al. Firstly. 1994. Grönroos. i. we can define internal marketing as the application of marketing inside an organisation to establish customer-focused values. It should be noticed here that some experts. Grönroos 2000). Thirdly.8). it is important to notice that internal marketing concept is a kind of corporate marketing philosophy which leads the organisation towards higher level of marketing success via higher level of (both internal and external) customer satisfaction and more integrated approach to marketing and human resource management. so as to satisfy them. motivate. every employee working in the organisation has his/her own customers. etc. employers need to provide benefits and services for their employees. rather than using the passive approach used traditionally. it is important for employers to apply the marketing strategies and tools used for external and/or final customers to the internal customers. Cahill 1995.

and customer satisfaction are undeniably linked. applying internal marketing. it addresses the role that motivation plays in an employee’s willingness to deliver quality service to internal as well as external customers. an organisation can be able to develop an atmosphere and environment in which workers are appreciated and susceptible to improve business performance and generate long term competitive advantage through the creation of . On the basis above we can say that internal marketing is a process that operates among the various departments within the given firm. the definition adheres to internal marketing’s basic tenet that employee commitment. motivate and interfunctionally co-ordinate and integrate employees towards the effective implementation of corporate and functional strategies in order to deliver customer satisfaction through a process of creating motivated and customer oriented employees. internal marketing is an important part of organisational development and change. Although this understanding of internal marketing represents a revision and expansion on offerings of Berry (1984b) as well as Grönroos (1994). p. Finally. This combines all the activities of the company to convince employees to respond to the market. management may face with resistant staff toward change processes and adaptation. it is neatly tied together by the definition that Rafiq and Ahmed (2000. Thus. Therefore. Secondly.454) developed after conducting their review. Firstly. it encourages managers and those interested in implementing internal marketing programs to understand that internal marketing is an ongoing process. service quality. the definition addresses the importance of enlisting every employee in every department in efforts to deliver high quality customer service. According to Varey & Lewis (2000). also between staff and management.” This definition gives those interested in the practical application of internal marketing a place from which to proceed. if there is an absence of internal marketing in the given organisation.4 management and organisational strategy implementation because they provide a means by which organisations can encourage departments and the employees within them to overcome the inertia and resistance associated with organisational change. which includes the capability of adapting quickly change within the external market. Thirdly. moreover. According to them internal marketing is: “A planned effort using a marketing-like approach to overcome organisational resistance to change and to align. there is a strong need for marketers to motivate and influence employees to change the internal process as expected according to an effective external market orientation.

5 strong organisational cultures. Although a strong organisational culture which encourages and rewards positive responses to change provides the environment to generate high levels of job effort. This is a general internal marketing activity that requires companies to focus on customers and adopt market orientation. especially in the service sector. it is. Intensive and high quality communication should be treated as a competitive advantage in order to inform employees always in time about the current nature of the external environment change. and relational competencies of individual employees should be taken in consideration. As it was seen by Ozment and Keller (1999). this can be a distinctive competency of the firm that creates value for the customers. internal and also external marketing orientation must be deepened in order to improve both employee and company performance. that is whether they are willing to exceed requirements or to meet expectations. which through a firm can enhance its knowledge about their services. According to Wheatley (1987). The relationship between internal marketing. Internal marketing. of course. Organisations’ human resource approach. awareness of market opportunities and marketing skills. Workers have to “desire” to provide individual effort required to adapt. also the marketing orientation of the given firm. From another aspect. therefore for more responsibility and control over those decisions that affect them and their environment. capabilities. internal marketing orientation. internal marketing should be also seen as a training asset. therefore. also efficient interaction between management and different groups within the given company instead of operating in a rather bureaucratic organisation (Ahmed & Rafiq 2003). Research has shown that employees are also looking for more interaction with management. Strong communication pushes staff to recognise the need of change. however. can affect a change in behaviours and attitudes to market responsiveness. also to make them feel comfortable about adopting quickly. This can be enough in itself to warrant success with marketing activities. It means that open communication within effective internal market orientation are key factors to enabler staff retention. flexible. money is an important motivator in leading employees. relying on the individual discretion of each employee as to nature of the effort they will put in. The result of interaction between employees is seen as a strategic factor to the final product that the customer receives. when it is required. . not the only factor in guidance. This can be generally attained through developing face-to-face.

unless there is some major shock to the organisation (Boddy and Buchanan. On “macro level”. namely basic assumptions. this is the healthy attitude. however the individuals’ behaviour can also form this level. where assumptions are usually unconscious regarding the solutions of organisations’ problems. The Cultural-Change-Onion Model helps to recognise and understand the most important elements existing at different levels of awareness. Of course. These factors were also analysed by Burnes (2004).6 Cultural Change That cultures do change is not in questions. however in a different setting. 2002). values and norms of each individual in the organisation. These are rather intrinsic. Cultural change should be recognised on two basic levels. Norms: this is the third level. this type of organic change is rather incremental. norms and artifacts. values. Values: this is the second level of awareness. This means nonconfrontable presumption regarding the environment. and what they have to pay attention to. On “micro level”. culture within the organisation changes as well. These are unwritten. it is difficult to measure what is ethical and . Values explain to the members of a given organisation what is important. No organisation’s culture is static. which includes general values regarding those activities that ought to be in an organisation. closely related to ethical behaviour. relative quickly in order to rebuild fundamental assumptions. when the different personalities have influence on the firm’s culture. cultural change is about the people within the organisations that means it is locked into the beliefs. internal values. These “rates” are set by the firm. activity and relationships. however known and understood roles within an organisation. just under the surface of cultural awareness showing how members of an organisation should behave in a given situation. moreover. nature of human being. as external and internal influencing factors change. cultural change is a form of organisational transformation that usually managed radically. Basic assumptions: this is the deepest level of cultural awareness. and because these are difficult constructs to alter. generally by the management. developed step-by-step and slow.

it may vary among different countries and their cultures. parallel. These include observable behaviours of members. as well as the structures. rules.7 not. systems. it might differ among distinct business environments. Artifacts: these are on the highest level. Basic assumptions Values Norms Artifacts Figure 1: Cultural-Change-Onion Model . which are built on the former three levels. procedures. These hold together all those factors which provide an individual with an objective picture about the given firm that we look into and measure. and physical aspects of the organisation.

managerial activities can be explained as the equivalent of an external market orientation of the firm. It means that a strategic overview of cultural change helps the given organisation’s marketing orientation as well. senior managers and leaders should be highly committed to the new values and the need to create continual pressure for change. strategy which includes the necessary shared values and expected behaviour in order to operate the new corporate strategy.8 Internal Marketing Orientation and Cultural Change As it was mentioned previously. operation and management style. change should be valued as a strategic decision making process in order to meet customers’ needs: Developing a clear strategic vision – an effective change process should start with the formulation of a new. one may find a linkage between internal marketing orientation and cultural change program. Throughout the six-step guideline based on Cummings and Worley (2001). Modify the organisation to support corporate changes – cultural change should be followed by supporting modifications in organisational structure. Their behaviours need to symbolize the values and norms being linked together with the new culture. 1996). The role of management is to influence employees’ behaviours in ways that will positively affect customer’s perceptions of the levels of service they receive (Hartline and Ferrell. Top management involvement – cultural change should be initialized by the top managers of the organisation. Therefore. . Model culture change at the highest level within the organisation – top management should communicate the new culture and changes through their own actions. These types of features can lead to a new type of orientation in people’s behaviours toward new culture. public relation. communication. According to this guideline. clear vision. information and control system. It means they should be pioneer in order to push change through the organisation. internal marketing orientation crosses marketing and human resource management functional boundaries. therefore. human resource system.

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