Impact of internal marketing

Impact of internal marketing

marketing on employee job satisfaction and its subsequent effect on consumer satisfaction (patient) in healthcare institutions of Jammu and Kashmir, India

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Antecedents of internal marketing
practice: Some preliminary empirical
evidence
ARTICLE in INTERNATIONAL JOURNAL OF SERVICE INDUSTRY MANAGEMENT · JUNE 2008
Impact Factor: 0.86 · DOI: 10.1108/09564230810875039
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Spiros Gounaris
University of Strathclyde
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Retrieved on: 30 October 2015
Antecedents of internal
marketing practice: some
preliminary empirical evidence
Spiros Gounaris
Athens University of Economics and Business, Athens, Greece
Abstract
Purpose – Service employees are reported to influence negatively the development of a market
orientation hindering thus the service company’s effort to become more customer centric. A way to
overcome this barrier is the implementation of internal marketing (IM) programs. However, the extant
literature reports that the number of companies practicing marketing internally is disproportionate small
compared to the number of companies trying to adopt the market orientation concept. Hence, the purpose
of this paper is to offer a preliminary insight regarding the antecedents of practicing marketing internally.
Design/methodology/approach – To do this, data were collected from 583 first-line personnel from
29 five and four stars hotels in Greece through personal interviews in order to investigate the impact of
company culture and internal-market orientation (IMO) as antecedents of IM and investigate the effect
that the company’s culture, IMO and IM have on employee’s job satisfaction at the individual’s level.
Findings – The analysis involved multilevel SEM and demonstrates that the company’s culture
influences the adoption of the IMO concept, which in turn is an important antecedent to the
implementation of IM programs. Moreover, employee’s job satisfaction level is directly conditioned by
the degree to which the company has adopted the IMO concept and practices IM, although the effect of
the former is significantly stronger than the latter.
Research limitations/implications – Various directions for future research open from this study,
which address the limitations of this study while facilitating further understanding of how the
adoption of the IMO concept can complement the company’s espousal of marketing philosophy. For
instance, although assessing the impact of the IMO concept adoption and IM practice on the adoption
of a market orientation and on customer satisfaction is beyond the scope of the present study, future
research towards this direction through an integrated conceptual framework would be particularly
helpful and welcome.
Practical implications – The practical implication from this paper is that IM programs, in order to be
effective, require that the company is willing to invest in adjusting its culture and also in adopting the
IMO concept, which translates to investing in understanding what the employee’s value, developing
bidirectional communication channels and becoming responsive to the needs of its employees.
Originality/value – This is the first study addressing the role of company culture and IMO adoption
as antecedents of IM programs. Hence, it makes a contribution for both scholars and practitioners alike
since the former derive a more comprehensive framework of studying further the practice of marketing
internally while the latter obtain a more pragmatic picture of the actions required prior to launching an
IM program.
Keywords Internal marketing, Market orientation, Job satisfaction, Organizational culture
Paper type Research paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0956-4233.htm
The author would like to acknowledge Mr Gary McGrath, doctoral student, Nova Southeastern
University for his assistance in editing the final version of this paper. Also, the author
acknowledges the contribution of the two anonymous reviewers whose constructive comments
and latitudinarian and open mind approach allowed this paper to improve significantly.
IJSIM
19,3
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Received 16 February 2007
Revised 17 October 2007
Accepted 30 October 2007
International Journal of Service
Industry Management
Vol. 19 No. 3, 2008
pp. 400-434
q Emerald Group Publishing Limited
0956-4233
DOI 10.1108/09564230810875039
Introduction
Competitive intensity drives many service companies to seek a competitive advantage
through market-orientation and improved customer service in order to derive customer
satisfaction (CS) and loyalty (Van Egeren and O’Connor, 1998). However, service
employees condition the company’s ability to implement market-orientation in practice
(Harris and Ogbonna, 2000) and this explains the need to “marketing” the company’s
customers to the company’s employees remains strong (Webster, 1992; Piercy, 1995).
For this purpose, companies apply “Internal Marketing” (IM) programs (Berry et al.,
1976; Berry, 1981; Gro¨nroos, 1981; George, 1990).
The rationale is that IM programs influence employees’ performance and CS by
increasing employee’s level of job satisfaction. Along this line, marketing scholars
focusing on the internal role of the marketing function concur that employees’ job
satisfaction is an internal, intermediate, objective of the marketing philosophy with
service excellence and CS in mind (Gro¨nroos, 1983, Deshpande´ and Farley, 1998,
Bansal et al., 2001; Gounaris, 2006). Hence, the need to practice IM.
Ahmed et al. (2003) repost that IM programs influence positively employees’ level of
job satisfaction. Along the same vein, an earlier study by Boshoff and Allen (2000)
investigated selected elements of an IM program, such as empowerment, reporting a
positive impact on employee’s performance and job satisfaction. This growing body of
knowledge regarding the impact of IM on employees’ job satisfaction and performance
and the significance of employee’s job satisfaction on CS would lead one to expect that,
as the number of companies adopting customer orientation increases so would
the number of companies practicing IM. However, this is not entirely the case
since the number of companies implementing IM remains relatively small (Rafiq and
Ahmed, 2000). It appears thus that scholars need to further elaborate on the
antecedents of IM practice.
Towards this direction, a very relevant research paradigm from which an analogy
can be drawn is the research stream on the market-orientation concept (Gounaris,
2005). Extant literature has substantiated that the adoption of the market orientation
concept improves the level of adoption as well as the effectiveness of marketing
practice (Narver and Slater, 1990; Hooley et al., 1990). Moreover, there is empirical
evidence, albeit slim, that the company’s cultural archetype influences both the
adoption of the market orientation concept and, indirectly, the practice of marketing
(Deshpande´ et al., 1993; Day, 1999).
By analogy then, one can expect that adopting the internal-market orientation (IMO)
concept will have a positive impact on the practice of marketing internally (Berry, 1987;
Greene et al., 1994). Similarly, the company’s cultural archetype should also have some
explanatory power when trying to establish what drives companies to practice IM
or not.
To this end, the scope of this paper is to provide a preliminary investigation
regarding the precedent role of the company’s cultural archetype and degree of IMO
adoption on the implementation of IM programs, while investigating the impact on
employee’s job satisfaction within an integrated research model. The rest of the paper
is organized as follows. First, an extensive literature review is offered and relevant
hypotheses are developed. Then the methodology of the study and the analysis of
the data are presented. The paper closes with the conclusion and the limitations and
future research sections.
Internal
marketing
practice
401
Employee job satisfaction and its marketing implication for service
organizations
The significance of job satisfaction in order to derive employee-level and
organizational-level success is not new in the marketing literature, albeit most of the
marketing scholars studied job satisfaction in relation to the management of the sales
team (Bagozzi, 1978; Beltramini and Evans, 1988; Brown and Peterson, 1993).
This stream of research produced evidence that the degree of job satisfaction relates to
the sales person’s customer orientation and, ultimately, to CS (Saxe and Weitz, 1982;
Siguaw and Brown, 1994; Burnthorne et al., 2005). Hence, the need to monitor the
degree of job satisfaction of the sales team and ensure their satisfaction with their job,
a task that involves the marketing function in human resource related activities
(Schwepker and Good, 2004). This means that sales people job satisfaction becomes an
important internal goal for marketing.
In the context of service provision the intangible nature of the product renders
employees one of the most crucial parameters in the value generation process of the service
organization. Irrespectively though of the nature of the service, employees working in the
“first-line” interact with customers. They need to understand the customer’s needs and
match their company’s service offering with specific customer needs. Moreover, they
collect intelligence on competition, they help the company clarify what the needs of
customer exactly are and assess the company’s ability to satisfy them, they promote
the company’s overall image and the image of the company’s products and so on.
Although organizationally first-line employees are not part of the marketing or the sales
department, functionally they play a role very similar to the one that sales personnel plays
that justifies their description as “part-time marketers” (Gummesson, 1991).
Back-office personnel, although not directly interacting with customers, they also
affect customer experience. Their willingness to respond timely to customer
requirements that their front-desk colleagues pass them on or to make the “extra
effort” in order to handle a customer request or complain explains why they are a
valuable link in the customer value-generation chain (Zeithaml et al., 2001).
Pertinent to the importance of the service personnel in implementing the marketing
strategy are the findings of a recent study by Harris and Ogbonna (2000). The authors
report that a major difficulty relates to service employees’ reluctance and resistance to
the concept of market orientation and their lack of service consciousness.
The evidence that employees may resist the development of market orientation is
slim but compelling: Kelley (1992) reports that employees’ resistance to change may
deter a company from offering superior service. Morgan and Piercy (1991) argue that
ignorance and lack of training may explain this resistance, while employees may also
feel that they may lose political power and status in the organization by becoming more
customer-minded (Harris, 2002). Moreover, one has to take into consideration that not all
employees are equally enthusiastic with the idea of making the extra effort that is
frequently necessary in order to meet customers’ expectations. Certain personality
characteristics influence the employee’s tendency to be customer oriented or not (Brown
et al., 2002). As a result, employees who lack, for instance, openness and extroversion can
hardly be genuinely customer oriented (Brown et al., 2002). When management attempts
to promote a certain service climate, such employees may strive to match their behavior
with the principles and ways of the marketing philosophy but this effort usually results
to emotional dissonance (Rafaeli and Sutton, 1987), which in turn results to emotional
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exhaustion (Morris and Feldman, 1997), role stress and eventually to job dissatisfaction
(Dewettinck and Buyens, 2003). This eventually becomes an important barrier of the
effort to meet customers’ expectations, jeopardizing thus the entire marketing effort
(Gummesson, 1987; Longenecker and Meade, 1995).
The case for internal marketing and its operationalization
Back in the late 1970s, Berry et al. (1976) recognized the importance of having employees
satisfied prior being able to satisfy the needs of the customer. As a result, they argued
that employee’s needs satisfaction, for the customer-focused service organization, is as
much important as CS is because the company’s ability to keep this promise is highly
dependent on the extent to which employees are customer centered (Narver and Slater,
1990; Kohli and Jaworski, 1990). Thus, particularly for the service organization,
marketing has an additional, internal, role that is to ensure that service employees are
customer conscious and also satisfied with their job. Hence, the need for IM.
Although Felton (1959) was among the first to notice the importance of employees in
delivering superior value to the customer, it is Berry et al. (1976) who first referred to
the need for marketing the customers internally. The original idea is that the
management of the service company can apply “marketing-like” techniques in order to
derive the internal service climate that meeting customer needs requires on the basis
that CS and employee satisfaction (ES) are two interrelated constructs.
Later authors have attempted to provide more evidence regarding the
interrelationship between ES and CS. Heskett et al. (1997) suggests that the
satisfaction of employees “reflects” on customers and vice-versa resulting in a cycle of
“good service”. The ultimate result of the cycle Heskett et al. (1997) proposed was
increased profitability.
Several investigators have attempted to demonstrate the existence of the
satisfaction mirror, however, the results are quite controversial. For example,
working in a retail setting (grocery supermarkets) Silvestro and Cross (2000) confirmed
linkages between CS and revenue, but failed to show a linkage between ES and revenue
or CS. Similarly, Pritchard and Silvestro (2005) were unable to find a relationship
between EM and CS. Along the same line, in an extensive study of the retail banking
industry in Brazil, Kamakura et al. (2002) were unable to support the proposed
satisfaction-mirror effect proposed by the service profit chain.
On the other hand, Tornow and Wiley (1991) using data from the computer-based
processing services industry (e.g. payroll, tax filing services to business customers),
they reported a strong positive association between ES and CS. Similarly, Schmit and
Allscheid (1995) using data from 9,000 employees of a large security systems company
report that the customers’ satisfaction level increases as the employees’ attitude
towards the company and their supervisors improves. Also, more recently, Schneider
et al. (2003) report similar results from a survey of the most “admired companies in
America” while, in addition, they also established a relationship between ES and
company financial performance.
While from the above discussion it appears that the results regarding the ES – CS
relationship are controversial, it should be noted that the empirical findings in favor of
this relationship are derived based on multilevel analysis. This analysis is
more appropriate when there are good reasons to expect that the structure of a
sample itself may explain a significant fraction of the variable’s variance (Heck, 2001).
Internal
marketing
practice
403
Therefore, in this study we tentatively adopt that ES and CS are indeed two
interrelated notions and this interrelationship justifies the need to practice marketing
internally.
Nevertheless, the operational description of IM remains disputable. For instance,
Naude` et al. (2003) report that socialization (e.g. organizational fit, identification with
the company), employee participation in decision making, commitment, accuracy and
openness of communication are aspects of an IM program. According to Bansal et al.
(2001) an IM program entails training with an emphasis on the specific service tasks
that employees have to accomplish, employee empowerment, sharing information
pertaining to customer needs and rewarding employees based on the customer service
level they offer. Berry and Parasuraman (1991) suggest that IM entails the company’s
effort to improve its attractiveness as potential employer so that the company can
attract, select and retain the best employees in delivering excellent quality of service to
external customers.
Thus, although a consensus of the operational meaning of IM has not yet developed,
it appears that the “marketing-like” techniques implied by Berry et al. (1976) involve
actions such as employee attraction and selection, employee socialization,
empowerment, participation in decision making and establishment of accurate and
open information between employees and management. These facets of an IM program
help managers to derive greater levels of employee job satisfaction and scholars to
operationalize the notion of IM. However, what both managers and scholars have to
bear in mind is that all these actions take place under a specific framework that is
customer driven and focused, which in turn explains why IM is different from human
resource management.
To give an example, increasing the company’s attractiveness as employer is clearly a
task for the human resource management function. The issue is what kind of employees
the company would like to attract. Pertinent research findings suggest that customer
orientation starts at the individual’s level and certain personality traits make it easier for
the employee to focus on customer’s needs and be responsive to these needs (Brown et al.,
2002). An IM program would thus aim to understand what such employees’ value and
try to become responsive to their needs in order to increase the company’s attractiveness
as potential employer to the specific segment of future employees who share such
personality characteristics as openness and extroversion. Consequently, unless the
practice of IM takes place with the company’s external customer in mind it is likely to be
nothing more than standard human resource management practice (Mudie, 2003).
In summary, 20 years of scholar enquiry regarding IM would seem to converge on
the following:
. IM grounds on the relationship marketing paradigm (Gro¨nroos, 1981);
. the scope of IM programs is to increase the company’s service effectiveness and
ability to attain customer related objectives such as CS (Piercy, 1995; Gro¨nroos,
1997);
. to do this the objectives of an IM program are increasing ES and improving
interdepartmental integration (Berry, 1981; Gummesson, 1987; Ballantyne, 2003);
and
. fulfillment of these objectives requires various employee-related actions such as
empowering employees to take on-the-spot decisions (Hartline and Ferrell, 1996),
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increasing their participation in making decisions pertaining to customer service
policies and procedures (Davis, 2001; Varey, 1995) and decreasing the formality of
the communication between subordinates and supervisors (Infante et al., 1993).
IM and the internal-market orientation concept
Despite that customer consciousness and market orientation become increasingly
popular among organizations, practitioners are not equally favorable when it comes to
implementing IM programs (Rafiq and Ahmed, 2000). A recent study by Ahmed et al.
(2003) has shown that a “marketing-like philosophy” positively moderates the impact
of an IM program on employees’ job satisfaction and organizational market orientation,
increasing thus the likelihood that a company will implement an IM program.
According to Lings (2004) and Gounaris (2006), IMO represents this “marketing-like
philosophy”. However, in order to portray in a comprehensible manner the difference
between an IM program and the concept of IMO the work by Borch (1964), who makes
the distinction between a philosophy and a concept, is particularly useful.
Following his work, there are three possible ways to classify marketing: as a
philosophy, as a concept and as practice. “Philosophy” represents the broad umbrella
that governs the business life; “concept” is the recognized way of operating within the
climate that the philosophy has set; and “practice” is the implementation of specific
actions within the broader framework that a concept defines (McGee and Spiro, 1988).
During the last 15 years a considerable amount of scholar enquiry has focused on the
development of a “market orientation” (Kohli and Jaworski, 1990; Narver and Slater,
1990). Under the market orientation paradigm, the customer becomes the company’s
focus and the company is willing to invest in satisfying the needs of its customers. This
represents the heart of the market orientation philosophy (McGee and Spiro, 1988).
Companies adopting this philosophy become more sensitive to customer-needs related
intelligence striving to understand what the customer expects and become responsive
to these needs (Kohli and Jaworski, 1990). This sensitization manifests the adoption of
market orientation as a concept. Adopting the market orientation as a concept leads
companies to take specific actions such as market segmentation and targeting,
systematic market research, new products development based on specific customer
needs and so on (Gounaris et al., 2004).
However, as pointed earlier service employees’ may be reluctant and resistant to the
marketing philosophy and the concept of market orientation (Harris, 2002; Harris and
Ogbonna, 2000; Kelley, 1992). Consequently, the management may consider the
implementation of an IM program in order to overcome such difficulties and establish
the market orientation concept (Berry, 1981; Gro¨nroos, 1981; Rafiq and Ahmed, 1993).
However, exactly as the adoption of the market orientation concept influences the
company’s (external) marketing practices, the adoption of the IMO concept conditions
the company’s IM practices.
Piercy (1995) was the first to raise the issue suggesting that companies have to attempt
develop a symmetry between their external (customer) orientation and their internal
(employee) orientation. Building on previous literature pertaining to IM, he suggested
that unless the internal climate promotes the adoption of the market orientation
concept the company can never truly adopt marketing as a philosophy and be
customer focused. Hence, the need to develop an IMO, a concept complementing market
orientation under the broader adoption of marketing as a philosophy (Gounaris, 2006).
Internal
marketing
practice
405
As such, IMO is conceptually different from the notion of service climate that Schneider
(1980) discusses, because climate, in general, describes the shared perceptions of
employees concerning the practices, procedures, and kinds of behaviors that get rewarded.
As such, climate is best regarded as a specific construct having a referent – a climate must
be a climate for something (Schneider et al., 1994). Consequently, a service climate
manifests a prevailing perception that the company’s employee may hold regarding the
importance that the company’s management puts on customer service. Nevertheless, this
does not necessarily ensure ES since the adaptation of the employees’ behavior according
to what they know that the company’s management wants and rewards them for may
produce, depending on the individual’s personality (Costa et al., 1984; Wilk et al., 1995),
cognitive and emotional dissonance as well as job dissatisfaction (Phillips et al., 2006).
On the other hand, the conceptualization of IMO is analogous and complementary to
the concept of market orientation and falls under the broader notion of marketing
philosophy. Thus, while market orientation focuses on the needs and the expectations of
the customer, IMO focuses on the needs and expectations of the company’s employees
that, in turn, the company seeks to satisfy through IM programs (Berry, 1981; Gro¨nroos,
1981; Tansuhaj et al., 1988; Rafiq and Ahmed, 1993). Research on IMO is particularly
young. According to Lings (2004) IMO comprises of three sub-dimensions, namely the
effort to collect internal-market related intelligence, the internal communication between
supervisors and subordinates and the company’s response to internal-market
intelligence with the aim of developing employee job satisfaction. Gounaris (2006)
suggests that IMO adoption does not signalize an introverted company. IMO enhances
the effectiveness of marketing practice internally, which in turn results to greater
employee job-satisfaction levels. As a result, service employees become more customer
minded (Gro¨nroos, 1993), which in turn results to increased ability for the company to
meet the expectations of its customers (Mohr and Henson, 1996; Foster and Cadogan,
2000; Conduit and Mavondo, 2001). Figure 1 shows the notion of the IMO concept.
As Figure 1 shows, each of the three major dimensions is comprised of different
sub-dimensions, each capturing a different facet of the concept. For instance, internal
Figure 1.
The concept of
internal-market
orientation
INTERNAL MARKET
ORIENTATION
Internal Market
Intelligence
Generation
InternalIntelligence
Dissemination
Response to
InternalIntelligence
Identify Exchanges of Value
Conditions of External
Employee Market
Segment Internal Market
Internal Segments Targeting
Between Managers and Employees
Between Managers
Job Description
Remuneration Systems

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