Internal Marketing The Magic Wand And The Mantras

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

The success of external marketing of an organization largely depends upon the effectiveness of internal marketing of that organization.Customer attraction and retention has become a challenge for the modern marketers that is why knowing whether or not a customer is satisfied is of utmost importance.. Another established fact is that the behaviour of the employees reflect upon the satisfaction of the customers hence giving impetus to concept of the internal marketing. Internal marketing has become the most important buzzword in the service sector.It is being considered as a magic wand which can transform the organization interanlly in reflect upon its external market as well. The present study is an attempt to understand the concept of internal marketing, effective tools of internal marketing and problems and issues emerging out of internal marketing.


The service imperative has added newer dimensions to the modern economy. The service sector has become the driver of all the economic activities. The gap between tangibles and intangibles is decreasing. Effective service delivery has become primary consideration even in tangible dominant product domains. Quality of service delivery is not only restricted to intangible products(services) but has taken a forefront in tangible products(goods) as well. The extended Ps: physical evidence, processes and people (Boomes & Bitner, 1981) (Rafiq & Ahmed 1995) are equally relevent for effective marketing of goods as well as services. Whether a customer is buying a medical counselling- a pure service or he is buying an automobile- a good, his consideration to the physical environment, promptness of process and behaviour of contact personnel hold equal relevance for both the clinic of the counseler and the automobile dealer's showroom.

Purchasing now- a- days is not merely an act but an experience. When a customer approaches an organisation with the intent of buying a good or a service, it is not only the product but the entire experince of buying the product that matters.The right combination of seven Ps of marketing mix: Product, price, promotion, place (McArthy,1960), physical evidence, processes and people (Boomes & Bitner, 1981) (Rafiq & Ahmed 1995) gets instrumental in creating great service experience.Given that all other Ps befit customers' expectations, it is the 'people' p that makes all the difference. The power of generating customer delight or customer dejection is vested with this 'people' p that represents the participants of a buying process- the employees and the customers that has led to the emergence of a new market - internal market, based on the fact that the organizations have to keep their employees ( internal customer) happy and satisfied to ensure satisfaction of their customers.

As per the Servuction Model (E. Langeard et al,1981), there are four factors that directly influence customers' service experience. These factors are: serviscape, Invisible organization/systems, other customers and contact personnel/service providers. Amongst all this factors, it is the contact personnel/service providers that hold the reign( Hoffman, Batesn, 2006).Regardless of the service delivery location, interaction between customers and customer-contact employees are commonplace. As a result, frontline employees have a dramatic impact on the service experience.Customers no longer simply purchase the products, they co-produce them.( Prahalad & Ramaswamy, 2000), attributed to this co-production, customers expectations regarding quality of service delivery has risen to a considerable high. Such high expectations of customers result in gaps between customers expectations and perception of service quality. This gap needs to be bridged for successful sevice encounter. (Peters, Waterman, 1982) brought the imperative of staying 'close to the customer'.Researches have proved that employees know the reactions of their customers an their level of satisfaction with the service receive. Keeping in touch with the employees may well be the first step in keeping in touch with customers as well. The fact that only a happy employee can create a happy customer is a reason strong enough for ever-growing relevance of internal marketing.


Berry (1981) pioneered the term internal marketing and originally define it as viewing employees as internal customers, viewing jobs as internal products that satisfy the needs and wants of these internal customers while addressing the objectives of the organization.

Parasuraman, Berry, and Zeithaml (1991) stated that internal marketing is attracting, developing, motivating, and retaining qualified employees through job-products that satisfy their needs. Internal marketing is the philosophy of treating employees - indeed, wooing employees … - and is the strategy of shaping job products to fit human needs

Internal marketing encompasses effectiveness of the training , compensation, work load, satisfaction, recognition, challenges, growth opportunities provided by the employer to his employees. If these areas of employees needs and wants are not taken care of then the satisfaction of external customers is difficult, if these expectations are met then employees become committed, co-operative, and enthusiastic about the organization. This is accomplished by treating employees as internal customers. This process involves the use of marketing techniques to sell the product internally and employees become customers of the organization when they purchase products or services. The more effective be the internal marketing practices of the organization, the better will be the performance. Internal marketing has also been previously proposed as an important precursor to the successful external marketing activities ( Groonroos, 1982). The ability to increase performance involves customer satisfaction, and it was described as an outcome of internal marketing (Ahmed & Rafiq, 2003; Prasad & Steffes, 2002; Rafiq & Ahmed, 2000). Harper P Johns( 1992) emphasised that employees can predict customers perception of many determinants of service quality. They are particularly accurate for service quality area such as responsiveness and understanding of the customer functions. Gronroos (1994) stated that without active and continuous internal marketing efforts the interactive marketing impact on customers will deteriorate, service quality will suffer and customers will defect.

IM is an interaction process between the organisation and its employees within a given company context. IM works at the level of creating precisely the right type of atmosphere and environment in which employees are encouraged to create, co-ordinate and improve the whole business. This means that IM works towards actions, interactions and adaptations that enhance customer satisfaction. This is engendered by creating an environment in which quality enhancing behaviours become a reflexive part of employee action. This environment and the accompanying quality enhancing behaviours by employees are formulated as a fundamental source of competitive advantage. What is the implication of this assertion? At the basic level, it suggests the need to understand and manage all these internal relationships, functions and interactions in an effective and profitable manner so as to gain long-term competitive advantages. However, at a higher level it is suggestive of the fact that employee perceptions of corporate programmes are affected by their perceptions of other elements of the corporate package. Employee motivation to do as the organisation bids is driven by what they are being offered, not just from the programmes they are being asked to implement, but also their perception of the whole company. This higher-level interpretation indicates the need for companies to establish a "high contract partnership" with employee along multiple dimensions. The question then is: "What is the nature of this partnership and what are the tools and mechanisms of establishing this?" We suggest that IM works by establishing, developing and maintaining successful reciprocal exchange relationships within the organisation through: . understanding and intimacy; . trust; and . commitment. IM cannot work without the presence of these key ingredients. To attempt IM without these would be disastrous, ultimately leading to employee cynicism and disillusionment. A necessary condition, from an employee's vantage is psychological safety. Psychological safety is a state in which people feel safe to be candid in wha they think and how they feel. Behaving in new ways and doing things differently can involve some degree of fear. People act transparently and with integrity when they are psychologically safe from threat. This means that IM processes must be conditioned in trust: trust in leadership, trust in the processes and system, and specifically, trust in the "rules of the game" maintained in the organisation. For instance, getting people to share their knowledge requires new processes but more importantly, it requires setting a new covenant between employer and employees. Workers have to be reassured that they will still be valued after they give up their "know-how". In short, it involves treating the employees as partners in the firm. This requires a big shift from the current reality of organisational practice. A pertinent question here is to probe how many companies have made this shift and how, as well as how well, have they managed this change.

IM is built on "trust". When people trust that the organisation will do what it says, then it encourages behaviours within the organisation that allow for quality to be embedded through the entire supply-chain process. To build trust and commitment a company must intimately know and understand its people and itself. By systematically aligning interactions through explicit considerations to a full set of stakeholder needs, IM helps in th development and growth of trust and commitment among parties. B looking after the needs of the employees, IM provides a clear signal to the internal market that the company values its employees. This begins the circle of reciprocity: when the company can demonstrate that it is committed to its employees, only then is it likely that its employees respond in kind and becom committed to its success. Trust and commitment constructs have received considerable attention in the relationship marketing literature (Morgan and Hunt, 1994; Gundlach et al., 1995; Geyskens et al., 1996) but remain under-researched in relation to IM orientation. It is an area highly worthy of further investigation.


Yes internal marketing is taken as a power steering to drive the external market. So, effective tools need to be designed to ensure that the internal customers find the internal marketing a beneficial offering. There is no great distinction in terms of marketing technique between external and internal customers. What changes is the strength and type of the very different forces at work:


Tom Peters compared recruitment as a "two-way courtship ritual"whether it is for janitorial staff or for top level managers. The recritment process in itself must imbibe the elements of trust, commitment, respect and mutual support in order to attract and bind prospective interanl customer.the applicants should be treated as customers considering the inter-relatedness of advertising, customer service, marketing and recruiting activities.(Peters, 1994),)( Harris and Barranick, 1999)

Training & Development:

Internal services must include employee training and development in preparation for rcareer advancement and continuous professional learning. Instilling an ethos of high customer service involves training programs that communicate that message clearly and inspirationally. One employee noted that ''Many of the training courses are aimed at changing staff attitudes towards their colleagues and customers'', something that is absolutely fundamental to IM's success. Employees have to believe in IM and practice it if it has any chance of working. They should also have their people skills developed as much as possible

Service standard expectations. Service standards become as important internally as they do externally. The central point of IM is to motivate employees to put service in all directions first. Every department has its service standards set and every other department is made aware of them. Everyone thus understands the level of input and performance they should expect to be able to take for granted from the people around them as well as themselves. Thus every part of the overall system should run smoothly, providing excellent service to the customer.

Employee incentives. It is no surprise that performance always improves if staff is motivated to improve it, and thus many banks are developing reward schemes for good customer service, especially if it results in the sale of a new account or other product. Despite the effectiveness of these initiatives, it should always be noted that incentives may discourage that vital sense of team atmosphere, especially if customer-facing staff are rewarded independently from employees in the background.


There is a link between motivated staff and satisfied customers. Improving internal service quality will improve motivation level of employees which in turn will lead to better services to external customer.(lings, 2000)


Internal customers should be given sufficient opportunities to rise and grow. In an effort to retain solid performers, progressive companies offer a clear career path and proactively support the leadership development of their top people. People want to grow personally and professionally and wise managers encourage and accommodate this need by providing a wide range of opportunities. Access to ongoing training and personal development is important and often provides a strong incentive.


Empowering your employees may be a very effective tool to make them love their jobs. Empowered employees will show great deal of improvement in the level of commitment and hence their dealing with the external customers.

Responsiveness: The internal department must take steps to understand the client in depth - their problems, policies, aspirations and activities so that effective response es can be generated. Once these steps are successfully accomplished it is possible to start active marketing. This could include identifying opportunities for the client department and helping to exploit them, thus improving the client's performance. It is also possible to bolt together relevant "packages" from components of the service, which are standard in themselves but unique in their combination.


Internal marketing practices are a paradigm shift for the organizations. When everyone is talking about the companies marketing themselves to itas employees, the question here is who will do the internal marketing. It is not the the company will hire new people from outside to market itself internally. It automatically becomes the prerogative of the employees. So aset of emplyees of a company marketing to another set of employees of the same company. In other terms, some employees will be the sellers and some will be the buyers and vice-versa. Such situation may give rise to many issues and challenges such as

The targets

Obviously internal clients are the objective. Marketing to them has to be proactive. The skills to be acquired are those which identify client needs, even those they cannot or will not verbalize themselves - and then convince the client that the department can meet them.

The politics

While political issues are never absent in commercial marketing, their influence is far more pervasive in internal marketing where buyers and sellers compete with one another in the same organizational structure. Buying is most usually, but decreasingly, adversarial. Buyer and seller each manoeuvre and negotiate to obtain the best possible deal to enhance their opportunities for promotion, recognition and wider authority. The success of the buyer (or vice versa) in out-negotiating the seller (or vice versa) can, over time, have a pervasive effect on the career development of the individuals involved. They may even compete for the same post. There is no equivalent to this in the open market.

The skills

Few internal departments have the necessary marketing skills since, under the old system, there was no need to market. The time-honoured approach of "This is what the department offers - take it or leave it" did not even require diplomacy let alone persuasion. Internal marketing is more than persuasive communication: it also encompasses the development of new service products and packages which clients can be shown to need. Clearly the skills to be acquired have to be those that will bring the department at least to parity with the commercial competition. There is no way it is going to compete profitably unless it can achieve this.

The motivation

"I did not train and qualify as a personnel manager just to become a salesman" was the comment of one internal section head when instructed to sell internally the department's skills - recruitment, appraisal, career counselling, etc. The low regard for marketing, which is usually equated with selling or advertising, never manifests itself more blatantly than when internal services managers and staff, who previously simply made their skills available, are called on to market them proactively. It is here that the internal department attempting to sell its services is at the greatest disadvantage, because commercial competitors do not employ salesmen who do not want to sell.

Emphasis and attitudes

Internal marketing is more than a change of emphasis: it is a substantial change of attitude.. Neither attitudes nor values are changed overnight. New criteria exist for assessing managers' performance which were never previously part of the job specification, and were certainly never considered in the individual's career agenda. Managers who pride themselves on the skills with which they practise their individual disciplines - architecture, law, information technology, health care and many others - now have to add marketing skills and, more important and much more difficult to achieve, marketing motivation.


Internal Marketing is being considered as a magic wand that will aid the companies to resolve the issues of customer satisfaction and loyalty.Using this magic wand effectively can lead to te success of external marketing actvities of a oranization. A happy and satisfied internal customer will generate many happy nad satisfied external customer. It is nothing new that the marketing people are expecting, IM is like an old wine in a new bottle.Whateverever the Human Resource people were already doing is now to be marketed as well as a special offering by the company to its employees. Internal Marketing imperative is a major shift for people at all levels of the organization. The idea of internal marketing first needs to be marketed to the minds of the people at all levelsonly then it can be successfully adopted organization wide. The new task is to achieve close working relationship which are based on a genuine mutual interest.. Improved co-ordination is required and the in-built assumption that the customers' needs are known has to be removed. Internal co-ordination involves more than just the personnel actually delivering the service. It extends to and involves the most junior member of the unit. Everyone has to be customer-centred. To match commercial offerings, more and better back-up services will have to be provided. Just because the customer is internal it does not mean (though it is often unwisely assumed) that all the information required about them is known or is obtainable so the primary stept is to generate internal market intelligence.