PERCEPTIONS OF THE CONCEPT OF INTERNAL MARKETING- A PILOT STUDY

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1 PERCEPTIONS OF THE CONCEPT OF INTERNAL MARKETING- A PILOT STUDY ABSTRACT This study focuses on the perceptions of Internal Marketing in the higher education sector of Australian Capital Territory and Regional New South Wales in Australia. This is a pilot study and therefore the sample size is small. There are two reasons for study. The first is to investigate whether this relatively new concept of Internal Marketing is being applied in the education sector or not. The second reason of the study is to find out the extent of familiarization and implementation of this concept to the HR and Marketing directors. Initial results indicate that the concept has been heard of but not literally applied in the universities. The HR department is already doing its job of trying to retain their employees and making sure they are happy during their job, so may-be they don t need another term or concept. The biggest challenge faced in the effectiveness of Internal Marketing is the lack of cooperation from heads of schools within the university. The biggest and foremost limitation of the study is its sample size and also the same type of respondents. Different heads of schools or deans might give a different picture. INTRODUCTION: The Internal Marketing (IM) concept was first proposed in the mid-1970s as a way of achieving consistent service quality- a major problem on the services area. Its basic premise was that to have satisfied customers, the firm must also have satisfied employees (Perveiz & Mohammad, 2002) and that this could be best achieved by treating employees as customers, i.e. by applying the principles of marketing to job design and employee motivation. Since then, the concept has seen a number of major developments and its application is no longer confined to the services area. It has been shown that any type of organization can use IM to facilitate the implementation of its external marketing strategy or any other organizational strategies. However despite 25 years of development, the concept has not yet achieved the widespread recognition amongst managers that it deserves. The major reason for this might be that the concept was well ahead of its time Internal marketing requires: The acceptance of marketing techniques and philosophy; Customer orientation/market orientation; A participative approach to management; A strategic approach to human resource management (HRM) to ensure the alignment of HRM strategy with organizational strategy and The coordination of all management activity to achieve customer orientation or market orientation or customer/market-focused management. (Perveiz & Mohammad, 2002)

2 LITERATURE REVIEW: Berry et al. (1976) proposed Internal Marketing as a solution to the problem of delivering consistently high service quality. However, despite the rapidly growing literature on IM, relatively few organizations actually apply the concept in practice. In early stages, the essential presupposition of internal marketing regards employees as internal customers and the work as the products provided to the internal customers, in which the most representative scholars are Gronroos (1981) and Berry (1981). Gronroos (1981) is the earliest scholar defining the concept of internal marketing. He advocates that internal marketing is a management concept and activity regarding employees as the internal customers of a business and the work as the internal products, the purpose of which enables the employees to generate higher satisfaction and further makes the business develop into a customer attractive or market oriented firm. Berry (1981) deems that internal marketing applies the philosophy and practice of marketing to the employees inside an enterprise, and work products satisfying internal customers needs and desires are provided to hire and maintain the employees with the most service consciousness. Marketing and the marketing philosophy came into prominence in the 1960s, yet it was not until the 1980s that it became widely accepted, practiced and seen by most organizations as indispensable. Similarly, participative management gained wide acceptance in the 1980s and the 1990s saw the emergence of the strategic approach to HRM. The need to align human resources to the organizational strategy is widely accepted and more recently the need to focus organizational resources towards customer/market orientation has gained ground in the emergence of market focused management. These developments mean that conditions for the adoption of Internal Marketing are optimal. This can be seen in the growth of interest in Internal Marketing by managers and the rapid growth in the number of organizations adopting Internal Marketing practices. This is because Internal Marketing tackles the issues and problems of implementing organizational strategies head on. This issue is neglected in most discussions of strategic management and marketing strategy. (Perveiz & Mohammad, 2002) Foundations of Internal Marketing Some of the earliest contributions to considerations of internal marketing were related to the roles of people in the delivery of services. This is in part linked to a growth in the marketing mix resulting from new contributions to service marketing theory. Since the early 1960s, marketers had been using a four P marketing mix of Product, Price, Promotion and Place (distribution channels and the place of sale). Marketers attempt to identify the relative impacts of change to their Product, Pricing, Promotion and Place on the meeting of objectives, and then develop the optimum approach for delivering their strategy. However, the four Ps approach proved to be limited in its application to the marketing of services. Services involve direct contact between customers and employees as well as processes to support the delivery of that service and people and processes are not addressed through the four Ps only. Gilmore and Carson (1995) provided further bridges between HR, marketing and organizational behavior by identifying six components of internal marketing: 1. The internal and external marketing interface; 2. The application of the marketing mix to internal customers;

3 3. The use of marketing training and internal communications methods to engage staff in their role in the organization; 4. The involvement and empowering of employees regarding their relationships with customers; 5. The development of cross-functional participation; 6. The integration of responsibility for internal marketing across functions. Internal Marketing & HRM A supportive personnel policy is also crucial in order to ensure that employees with the requisite skills, competencies and attitudes are recruited. Retention of good employees requires competitive remuneration policies and career progression paths. Remuneration policies need to reflect strategic objectives such as customer orientation and service orientation to achieve external and Internal Marketing objectives. Training is essential to ensure that employees have the skills and competencies needed to produce the products and services at a level of quality expected by customers and to take advantage of marketing opportunities that arise. Training is also required to inculcate the core values of customer orientation and other attitudes (such as service orientation). The adoption of changes in policies and new ideas are generally more likely to be successful if the employees that are affected by the changes are involved in the planning process. (Perveiz & Mohammad, 2002) Galpin (1997) has performed a study in the field of Internal marketing in Malaysia and has applied indexes of organizational plans in the form of, strategic rewards, internal communications, education and development, employment, reward systems, empowerment and processes in order to measure and evaluate Internal Marketing. Also, Forman and Money (1995) have utilized internal communications, education, creating of motivation, empowerment, guidance and organizational incentives as indexes while consider Internal Marketing synonymous with human resources management. Ling (2004) has performed a study about the relation between Internal Marketing and job satisfaction in Greece. He used organizational dynamic structure, participatory decision making, empowering, and being aware of the circumstances of the working market, internal relations among managers and employees, existing job descriptions in the organization, education and organizational rewards indexes in order to evaluate Internal Marketing. METHOD Semi-structured interviews with the Human Resource and Marketing Directors of Universities of Canberra and regional New South Wales in Australia were utilized for this study. Since these interviews are a part of a bigger study, only five interviews have been selected for pilot study. The purpose of these interviews was to find out the applicability and its extent of the concept on Internal Marketing in the Higher Education sector. Following were the universities selected: 1) University of Canberra, Canberra 2) Australian National University, Canberra. 3) University of New South Wales, Australian Defence Force Academy Campus, Canberra 4) University of Wollongong, Regional New South Wales. Two interviews from the University of Canberra were conducted and one each from the other universities. The respondents were Directors/Heads of HR and Marketing Department. There

4 were 15 semi structured and open ended questions in the interview. The questions focused around the familiarity with the concept, its applicability (if any) and strategies used (if any). ANALYSIS: Analysis of the five interviews was done just by interpreting and giving meaning to what the respondents said. NVIVO or any other software was not used due to the small sample size. There was a major difference between the application of the concept by the marketing department and the HR departments. The Marketing department clearly were not targeting the internal customers which are the staff of the university. Their main focus were the students, domestic and international. Therefore, all the responsibility of using the strategy comes on the HR department. The directors of HR were all familiar with this relatively new concept but were not practically using the term. According to them, they are already doing internal marketing but under different umbrellas. The most common strategies used by them are the professional development trainings, opportunities to attend conferences, research opportunities and fast track career progression. The effectiveness of these strategies is checked by the Staff survey or Voice survey which gives them a suitable answer whether to improve or change their strategies for the next year. The Staff survey is a questionnaire with a likert type scale comprising of questions regarding the satisfaction level of the employees in their jobs. It has questions like whether employees are happy with the environment of the organization, do they agree with the vision and mission of the organization etc. One very important aspect arising from the interviews is the emphasis of the HR directors on the importance of the role of the school heads, faculty heads and the deans. According to them, the faculty heads or the deans are the ones who are in direct contact with the teaching staff and are the real persons using internal marketing strategies. Sharing the same vision and mission of Internal Marketing by all the heads of the faculties is an important element for them. The lack of communication amongst them is also a major challenge implementation of Internal Marketing. Because a university is a very large organization, many s are sent out to faculty by different departments. It sometimes gets difficult to read and acknowledge every . Therefore, the response rate towards the strategies is low. Limitations of the study: Since this is a pilot study and the sample size is very small, it is the first and foremost limitation. Increasing the sample size by including more HR directors, Deans, Faculty heads, Vice Chancellors, Rectors, can give a broader vision and picture of the reality. Justified Claims cannot be made by just doing research in one region of a country. Taking a sample from every region can give us better results to generalize our claims and results. Using NVIVO or other qualitative analysis software might have given more objective results. Conclusion: It is concluded from the study that Internal Marketing needs more research into its conceptualization and its application, so that the users are clearer on how to utilise this concept.

5 REFERENCES Berry, L. L., (1981). The employee as a customer. Journal of Retail Banking, 3: Berry, L. L., Hensel, J. S. and Burke, M. C. (1976). Improving retailer capability for effective consumerism response. Journal of Retailing, 52 (3), Fall, 3-14, 94. Galpin, T. (1997). Making Strategy Work. Journal of Business Strategy, 18(1), Gilmore, A and Carson, D (1995), Managing and Marketing to Internal Customers in Understanding Services Management, pp john Wiley and Sons, Chichester Gronroos C. (1981), Internal marketing an integral part of marketing theory, in, American Marketing Association s Services Conference Proceeding, pp Lings, I.N. (2004). Internal Market Orientation: constructs. Internal Marketing, Directions for Management. Routledge, London, Mohammed Rafiq, and Pervaiz K. Ahmed (2000). Advances in the internal marketing concept: definition, synthesis and extension. Journal of Services Marketing Vol: 14 Issue: 6