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European Journal of Marketing 33,9/10 926

Received August 1997 Revised January 1998

A broadened conception of internal marketing

BNFL Corporate Communications Unit, University of Salford, Manchester, UK, and Manchester School of Management, UMIST, Manchester, UK
Keywords Internal marketing, Employee communications, Marketing theory, Case studies, Literature review Abstract Internal marketing has been of interest to practitioners and academics, in marketing and other disciplines of management, for some years, and published papers focus on definitions, the role of internal marketing in organisations, and various empirical investigations. Discusses the elements of a broadened concept on internal marketing, which emerges from: a systematic review and examination of the existing literature; case study material; ``expert'' opinion from leading academics; and interviews with managers.

Richard J. Varey

Barbara R. Lewis

European Journal of Marketing, Vol. 33 No. 9/10, 1999, pp. 926-944. # MCB University Press, 0309-0566

Introduction Explicit discussion of the marketing concept in use in the internal operations of the organisation entered the marketing and service management literature in the late 1970s. However, this concept has origins in published discussions of the organisation of marketing systems from the early years of the twentieth century. It would seem that the essence of internal marketing is not a phenomenon of the post-industrial era, since there is some evidence of associated attitudes and methods in the early marketing management literature, indicating that programmes to generate commitment amongst employees to company goals are not new. For example, Frederick Taylor stressed an internal focus, which bears an obvious resemblance to the attitude management aspect of internal marketing (Gronroos, 1994). It is the active, market-oriented, approach that is new. Recent studies of managers' concerns show employee communications, involvement and development (a new employer-employee ``contract''), the redesign of business processes, and the perceived relationship between employee and customer satisfaction, as predominant (for example, in the People Factor Study, (Watson Wyatt, 1995)). Further, service-orientation and the need for greater organisational effectiveness have become major features of debate about sources of competitive advantage and the future form and purpose of business enterprise organisations. Internal marketing has been offered as a management technology (see Fisk (1986) and Sweeney (1972), for debate about whether marketing is a management technology or a social process) for solving problems of internal service productivity, marketing orientation, successful implementation of appropriate plans and customer orientation. It has been promoted to a position of some importance and recognition in much of the

management literature of the 1980s and beyond, appearing now in most marketing and service management textbooks. Yet, it is clearly still an evolving subject, with no firm theory or strong base of empirical evidence to show how and why it is of value to managers. Why has the notion of internal marketing come to such prominence in the 1990s? Perhaps its apparent simplicity has immediate appeal for managers. Perhaps another development of marketing principles into a new application is evident, rather than any fundamental development in marketing theory (Arndt, 1979). However, the popular internal marketing theory may be too simplistic to be of real value. In 1992, the opportunity arose to embark on an in-depth research investigation of internal marketing. The objectives of the research were: to study the origins, nature, scope and application of the internal marketing concept; and to consider how the internal marketing concept might be developed to take a greater account of the social and other non-economic needs and interests of people working in an organised enterprise. The intention was to develop and offer a broadened concept and associated system model for internal marketing, as a social (communicating) system capable of providing a means for organisational capability enhancement (e.g. economic performance) and improved quality of working life for organisational members. Data were collected from several sources. A systematic search for and review of the literature in various disciplines pertaining to internal marketing was undertaken, resulting in a bibliography of over 450 publications. Some 38 case studies were examined for content, and 25 leading academics were surveyed for their expert opinion on the essential elements of the concept of internal marketing. Finally, a practitioner view was explored through data generated from 37 in-depth interviews in which managers were asked to compare and contrast internal marketing with employee/internal communications, and to consider its practical impact on business performance. Some of the major findings from the research are presented in this article (see Varey, 1996, for further detail and discussion). Initially, the context of the study is highlighted, and then limitations of the popular concept of internal marketing are addressed. Consideration is then given to the structural impact of internal marketing which leads into the presentation of a broader conception of internal marketing, together with some implications for management. Context of the study In considering the merits of adopting a strategic marketing management and total quality management approach as a response to change in the business environment, internal marketing may be identified as perhaps having scope to deal with the philosophy and behaviour necessary for ``mindful'' management (Langer, 1989), which is committed to managing (Geneen and Moscow, 1986), and which has a will to manage (Bower, 1966). The relationship between marketing and quality at a strategic level, i.e. how to gain sustainable competitive advantage through a customer orientation, becomes clearer, but the problems encountered in implementation are a recurring theme. This is

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often centred, in the literature, on the question of attaining and maintaining effective communicative relationships between organisation members and between work groups and the development of a superordinate goal for cooperative working. A number of current management issues which require strategic treatment (Lambert, 1995), it is thought, can be treated with a broadened concept of internal marketing: . the retention of skilled people in the organisation, by counteracting declining management standards and providing clear corporate and personal direction; . relationships with the management team who share the objectives, experience and skills to build, release, and mobilise individual motivation for economic recovery; . the proper understanding and need for quality for competitive service delivery in a changing economic, social, political, and technological environment; . building a corporate brand which appeals to both customers and organisation members; . communication management with a clear strategy based on research and evaluation, and personal skills development and responsibility; and . productivity through participation requiring leadership, processes and commitment from all. The present research was initially motivated by the recognition that whilst customer orientation was simple to understand in principle, its achievement was largely problematical, from a marketing management and quality management perspective, as demonstrated for example by the work of Christopher et al. (1991):
Internal marketing is F F F an important activity in developing a customer-focused organisation F F F Fundamental aims of internal marketing are to develop internal and external customer awareness and remove functional barriers to organisational effectiveness.

A number of attempts to define internal marketing seemed too narrow:

Looking at the employee as a valued customer is the focus of the new discipline of internal marketing (Thomson, 1991). Where you are thinking of your own employees as customers with needs to be satisfied so that they are enthusiastic is that marketing's job F F F or is it human resources? (Kotler quoted in Mazur, 1991). The same marketing tools used to attract customers can also serve to attract and retain the best employees, who can be thought of as ``internal customers'' (Berry, 1981).

Systematic study was required because:

Internal marketing is at an embryonic stage of development and one where practitioners lead academic research. This area is one which should receive considerable attention over the next

five years and research is needed to identify success factors and barriers F F F (Christopher et al., 1991).

The most recent discussion in the literature has shifted markedly to a managerial perspective, i.e. on how to perform internal marketing, rather than what it is and its philosophical basis. Thus, there appeared to be considerable evidence of the need for a thorough reconsideration of the depth and breadth of the conceptual basis of internal marketing. Limitations of the popular conception A range of criticisms which demonstrate limitations and flaws in the logic of the popularised formula for an internal marketing theory are now discussed. It is clear, from the literature examined, that the concept of marketing which has been appropriated to the internal organisation environment has come from the field of marketing in its more traditional consumer market form, with its origins in mass consumer products' manufacture and distribution. The adoption of the marketing concept for the new context of the ``inner'' and ``internal'' markets of the organisation has been effected, in the minds of most of the writers and managers who have attempted to do so, based on a number of assumptions which require challenging. Writers seem, almost universally, to have adopted the 4Ps ``marketing mix'' perspective. However, Sheth et al. (1988) show that the marketing mix perspective is but one of a number of schools of marketing theory, which are summarised in Tables I and II. A recent paper which is characteristic of the thinking and assumptions which have been customary in the discussion of internal marketing is that by Rafiq and Ahmed (1993). For example, they suggest that such marketing activity will motivate people, thus discounting the possibility that people may be self-motivated and that internal marketing provides an environment in which their motivations are valued; and that internal marketing offers incentives rather than benefits which is a rather instrumental view. They do not indicate that segmentation of the internal market should be from the employees' perspective which can be effected through employee attitude surveys, upward appraisal of managers and suggest that internal marketing would not necessarily solve problems of inadequate training and staffing levels and their effects on customer service. They appear to be suggesting that internal marketing is simply persuasion of staff to a management-determined situation. Further, they believe that the integrative role of marketing is not widely practised and this is why internal marketing is needed to develop the integration based on understanding of the relationship of the organisation's working practices to the external environment, and that commitment to internal marketing (as a tool) should be secondary to commitment to the environmental (customer and competitor) responsiveness (the business objective). In criticising the internal marketing discourse, Hales (1994) provides a demonstration of the pervasive ``managerialist'' perspective on internal marketing. He is critical of the literature on internal marketing as an approach

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``School'' of marketing thought Commodity Functional Regional Institutional Functionalist Managerial

Focus of theory The objects of market transactions i.e. distribution The marketing functions performed in market transactions Spatial separations between buyers and sellers Intermediaries and channels of distribution The function of marketing systems Marketing practice


Useful for IM?

Urges marketers to analyse consumer/ customer needs emphasises the marketing concept too simplistic, constraining and artificial in emphasising the ``marketing mix'' assumes economic values dominant Concentrates on purchase and brand choice behaviour but from consumer, packaged goods field

Buyer behaviour

Marketing from the buyer's perspective

Activist Macro-marketing Organisational dynamics Systems

Ad hoc issues of consumer interests The relationship between marketing and society Psychological aspects of behaviour of marketing channel members All functions and institutions of marketing and marketing as an institution in society The market as the focal point of exchanges Exchange is seen as the fundamental foundation of marketing  Useful if the organisation's stakeholders are the ``society'' ?

Social exchange Table I. The total field of marketing theory

Source: Sheth et al., 1988

Approaches to the study of marketing Commodity Functional Regional Buyer behaviour Activist Macro-marketing Institutional Functional Managerial Organisation dynamics Systems Social exchange Source: Sheth et al., 1988





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Table II. Schools of marketing theory

to human resource management (HRM). In recognition of a diversity of meaning and usage, Hales holds that internal marketing to date has had an ambiguous conceptual status. From his analysis, a number of limitations are identified which can be used more generally to reconsider the application of internal marketing: . Internal marketing as a metaphor: Organisation jobs and employment conditions are ``products'' to be marketed and the manager is to think like a marketer when dealing with people. But it is the employer who is both buyer and consumer in the employment relationship, rather than the employee. . Internal marketing as a philosophy: Managers hold a conviction that HRM requires ``marketing-like'' activities, but this does not address the divergent employee needs and interests and organisation objectives. This is especially the case if the ``marketing'' activities are actually promotional advertising and selling of management requirements. Further, the employee is relegated to the pliable (manipulable) subject of managerial programmes. . Internal marketing as a set of techniques: HRM adopts market research, segmentation, promotional communications and advertising in order to inform and persuade employees. But internal marketing as the manipulation of ``4Ps'' activities imposes a particular, unitarist, point of view that of the prevailing power elite (Rafiq and Ahmed, 1993) and the single common purpose of the organisation. Therefore, it is employees who must change their needs or must understand the

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position of the employer as they respond to the market (Maitland, 1990, p. 255).

Internal marketing as an approach: There is an explicit symbolic dimension to HRM practices employee involvement and participation are indirect control employment terms and conditions carry implicit messages about how employees are regarded in the organisation. A participative management style is required. But there is a preoccupation with manipulation and persuasion in seeking to exploit the symbolic character and promotional potential of HRM practices. ``Hired hands'' are miraculously transformed into valued ``customers'' this is ``transparently manipulative'' (Hales, 1994). Internal marketing shares a key contradiction with normative HRM, between the desire for commitment and the desire for flexibility. Individualism contradicts teamworking, a service culture as defined by the management group which is at odds with employee flexibility and responsibility. The complexities of managing people and their actions and knowledge (organisation resources) are reduced to mere ``techniques'' of symbolic communication.

Whilst Hales' observations are extremely useful in reconsidering the nature and purpose of internal marketing, it is possible to discern a narrow thinking in his criticisms. He holds that internal marketing is aimed at the attraction, retention, and motivation of ``service-minded'', ``customer-conscious'', employees to aid the perceived service quality and effective external marketing of the enterprise as a way to competitive advantage. This accords with other discussions (e.g. Sasser and Arbeit, 1976; Berry, 1981). However, the marketing theory inherent in this argument is one which constitutes marketing as promotional and persuasive communication, i.e. selling. A major review of marketing literature by Sheth et al. (1988) produced a classification of marketing theory which reveals a range of focuses (see Table I). Sheth et al. additionally classified these 12 schools of marketing theory into four dimensions. Table II highlights their perspective on the role and nature of marketing, to identify the schools of thought which might contribute to a broader internal marketing concept. The economic dimension recognises that actions may be driven by economic values, is normative in nature, and is derived from economic theory. The noneconomic dimension considers the social and psychological factors influencing the respective behaviours of the buyer and seller, is descriptive, and is derived from an anthropological perspective. The interactive dimension examines the balance of power between buyers and sellers in interdependent exchange relationships, considers relations and effects, recognises that either party may conduct marketing functions, and adopts an interactionism perspective in recognising that neither party acts in isolation. The non-interactive dimension

considers buyers to be passive and to have their behaviour acted upon by the active producer through persuasion and buying and selling. In considering these dimensions, two particular dichotomies are of interest: (1) Interactive/non-interactive: examines the role of marketing and its objectives. (2) Economic/non-economic: examines approaches to achieving the objectives of marketing. Much of the weakness in prevailing internal marketing theory stems from a failure to address both of these concerns together, and in considering only how marketing objectives can be achieved, thus allowing assumptions about the appropriateness of marketing objectives and the nature and role of marketing often to remain unrecognised and unchallenged. Boyer (1990) suggests that the managerial perspective on marketing is too mechanistic and is reactive. This approach separates the external markets from the internal markets of the enterprise in an unrealistic manner. His model of proactive marketing is characterised by four dimensions: (1) Capricious change the existing business paradigm of the enterprise is impulsively challenged and exceeded to ensure that the organisation of the business does not become too inflexible and predictable. (2) Initiative this is a requirement of a proactive approach, providing for innovation and change. (3) Synergy systems thinking which recognises interaction, reciprocal determinism (Bandura, 1978, p.70) and the value of co-ordinated effort. (4) Superordinate goals co-operation is necessary, and overrides the differences in interests of the various parties for the sake of accomplishment. When applied to traditional internal reactive marketing to create proactive internal marketing, this model transforms separate internal disciplines into a proactive whole and develops marketing-oriented competencies in everyone (in terms of the ability to react, transact and transform). The approach is based on the analysis of wants, needs and expectations of employees as customers and their understanding of the (external) customer's perspective. Proactive internal marketing adopts Kotler and Levy's (1969) recognition that ``an integral connection exists between an organisation, its entire social world, and the role of marketing'', and includes: . consideration of the entire scope of social existence; . the value of non-monetary exchange; . the proactive marketer as a ``changemaker'' (a change-oriented marketing philosophy); . proactive marketing as the key agency for understanding the customer and thus providing the capability for optimally setting business priorities;

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. .

the 4Ps considered as a mechanistic marketing model; recognition of Bandura's (1978) ``reciprocal determinism'' in which each individual is in an interactive triad of person, behaviour and environment; and synergy as defined in General Systems Theory and Organisational Communication Theory (Boyer, 1990).

Webster (1992) sets out the marketing concept at the level (or dimensions) of culture, strategy and tactics in a way that is of help in clarifying the strategic and tactical levels of internal marketing. Marketing as culture is: a basic set of values and beliefs about the importance of the customer that guides the manager; primarily the responsibility of senior managers; the assessor of market attractiveness by analysing customer needs; the promoter of a customer orientation by strongly advocating the customer's point of view. It is also developmental of the overall value proposition of the organisation, and the articulator of the value proposition to the ``marketplace''. Marketing as strategy is concerned with market segmentation, targeting, positioning; emphasis at the business unit level; and a definer of how to compete in the chosen business. Marketing as tactics is the design and implementation of activities, customer relationships and the concern of functional-level managers. The major perspectives on marketing can be thought of as paradigms which provide models for the domain of a science, questions and rules for the interpretation of scientific research results (Bagozzi, 1976). Carman (1980) identified six paradigms of marketing which are summarised in Table III.


Focuses on market equilibrium and resource allocation, emphasising the managerial concern for the profitable manipulation of the marketing mix normative, single actor perspective Micro-normative, information processing usually restricted to the marketing communications element of the ``mix'' a single actor perspective Emphasises why and how conflicts emerge and are resolved Deals with inter-relationships, goals, resources and control mechanisms in human systems Highly abstracted, conceptual treatment of marketing as a system of interrelated structural and interdependent dynamic relationships Deals with the transactions and interactions among institutions, groups and individuals

Persuasion/attitude change Conflict resolution General systems Functionalist Social exchange Table III. Paradigms of marketing

Source: Carman, 1980

Arndt (1983) claims that there has been too much reliance on the microeconomic/marketing management paradigm as a foundation for marketing theory, and this has been largely unchallenged. An alternative paradigm which allows development of the exchange notion is political economy. Arndt's (1983) use of the term ``political economy'' views social systems as ``comprising interacting sets of major economic and socio-political forces which effect collective behaviour and performance''. The emphasis in this view is on the ``interplay of power, the goals of the power wielders, and the productive economic exchange systems''. The political economy paradigm supplements the basis of the microeconomics paradigm of marketing in economics, learning theory, and cognitive and social psychology, with organisation theory, political science and sociology. In the political economy ``world view'', marketing is exchange and the ``social unit'' is a marketplace for the exchange of scarce resources (Arndt sees ``organisation'' as a narrower concept included within ``social unit'', along with groups, families, etc.). The organisation is seen as a coalition of internal and external stakeholder groups with partly common and partly conflicting goals. Marketing must achieve acceptable ``exchange ratios'' for the various interest groups (Arndt, 1979). Political interactions involve attempts to influence the decision premisses of the parties to the relationship. An ``internal economy'' is structured through the distribution, mobilisation, utilisation and limitation of authority in the organisation, to ensure the efficient functioning of the internal productive processes and internal transfers of resources. The internal economy co-ordinates behaviour and allocates resources to produce an output of sufficient interest to external exchange partners. Thus, internal marketing is identified when marketing organisations are conceived as dynamic, adapting, internally differentiated social systems. Arndt identifies three major tasks for internal marketing: (1) the dissemination of information to and from all internal groups involved in or affected by the marketing activities, for the efficient implementation of marketing decisions; (2) the development of competence, especially important where ``the organisation is the product'' (i.e. in service businesses); (3) the development and maintenance of incentive and motivation systems which reward marketing performance. Piercy and Morgan (1991) have also highlighted the limitations of the use of the ``marketing technology'' which assumes rationality, a profit-maximisation motive, the means-end instrumentality of control and a harmonious, no-conflict, world. Thus, they argue, it is necessary to go beyond the superficial aspects of how organisations work, to recognise and treat the underlying power and politics in the pursuit of marketing goals. The internal marketing ``paradigm'' is proposed by Piercy and Morgan (1991) as ``an easily accessible and ``user-

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friendly'' mechanism for executives to analyse the organisational issues which need to be addressed in implementing marketing strategies. The structural impact of internal marketing Internal marketing has been proposed variously as a structured approach to strategy implementation, to the diffusion of innovations, to recruiting and retaining service-minded staff, to creating a service culture, or to increasing internal service productivity. However, few writers have explained or even recognised the implications for organisational arrangements. Should internal marketing be superimposed or supplanted on the ``traditional'' organisation form, that of the formal authority-hierarchy? Maitland (1990) discusses the relationship between internal marketing and organisation theory, and suggests that the human relations approach of McGregor (1960) is most appropriate because it emphasises prerequisites of an internal marketing culture: mutual trust, holistic supportive relationships, internal networks and self-direction (egalitarian management style which implies discretion and autonomy), which enhance commitment, loyalty and motivation (Ouchi, 1981). Further issues are: . the dominant management style must support internal marketing; . the whole organisation must practise internal marketing; . internal marketing must be driven top-down, to match external marketing strategy; and . internal marketing must fit the organisation's ``life stage'' (discussed by Greiner, 1972). A ``new employee relations'' or marketing orientation may well require managers to rethink their role, and to recognise the processes by which value is profitably created for internal and external customers, but this has rarely been addressed in terms of organisation design or development. At best, teamworking has been offered as a means to total quality management and as part of business process re-engineering, but little has been said about this in the internal marketing literature. One exception is the teamworking approach described by Bak et al. (1994), and another articulated in a personal communication with Professor Laura Cousins in which the implications of internal marketing for organisational arrangements were discussed. Halal et al. (1993) have taken a more radical approach in urging managers to redesign their organisations around the notion of a free enterprise market in which operating units freely compete with external suppliers for business within and without the organisation. This approach makes sense in that internal marketing requires the conception of a market in which the required competitive customer-supplier relationships can operate. Halal (1996) suggests that organisational learning may merely be the rebirth of organisation development, in using team learning to encourage change from

the bottom of the hierarchy of authority. This is needed to build effective teams, but does not recognise the growing need to transform organisations into entrepreneurial, democratic systems (Halal et al., 1993; Halal, 1996) which are able to learn about the current world by unlearning outmoded assumptions based on past experience. The parallel (or collateral) learning structure allows people to work in a completely different way from that of the formal organisation (the system of rules and objectives which officially prescribe and allocate tasks, privileges and responsibilities, thereby specifying how the activity of a group is to be carried on). It is specifically designed to solve problems, and allows change and innovation to be managed without disrupting the formal structures and mechanisms required for routine and repetitive tasks. Managers and workers are assigned to tasks within a different context. This provides workers with a chance to affect the formal organisation, and evidence shows that this leads to increased work satisfaction and task effectiveness (Zand, 1981). Cahill (1995) treats metamorphosis into a learning organisation as a prerequisite for internal marketing; alternatively, it may be seen as an outcome by treating internal marketing as a process for organisation development. A broader conception of internal marketing A wide body of literature has been examined from which a number of concerns, relating to limitations and lack of clarity, have been highlighted with the currently popular notion of an internal marketing mechanism for intraorganisational communications and management. From this conceptual review, a number of themes have been identified as offering a contribution to the development of a more sophisticated and valuable conception of internal marketing. These themes (which are discussed in detail in Varey, 1996) are: . marketing-oriented service employee management; . the scope, nature and purpose of marketing; . marketing as exchange; . the political economy paradigm; . organisation as a ``domesticated'' (internal) market; . the internal market paradigm; . internal marketing as a social process; . the individual person in an internal market; . a relational perspective on communication; . empowerment; and . internal marketing as a new form of industrial relations. This broadened theory of internal marketing may be further elaborated on as a goal-oriented social process, and a conceptual system for continually creating rapid strategic organisational change in response to the macro-environment

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(society) and the micro-environment (the community which constitutes the organisation). The literature search and review revealed a pervasive perspective on internal marketing which is narrow and observably unhelpful due to its lack of clarity and poor fit with the realities of organisations and management. The research investigation started as one of searching for evidence of practice in the field and became channelled towards the broadening of the concept of internal marketing, in recognition that conceptual development would be a greater contribution at this point in the evolution of the field. With this goal in mind, it no longer makes sense to treat internal marketing as a specialist functional approach. It really represents the convergence of a number of previously separate management technologies, such as human resource development, employee relations, strategic management, quality management, corporate communications and macro-marketing. It is increasingly recognised that managing a business effectively requires the close integration of several functional specialisms, and that management is a continual and complex process and cannot be seen as a sequence of discrete steps or a set of discrete functions. Indeed, as far back as Mintzberg (1973), it was recognised that the work of the manager is not compartmentalised into different areas but is a portfolio of skills which are not functionally distinguishable and which cut across the traditional functions e.g. the manager as negotiator, resource allocator, information disseminator. It is proposed that the basic ideas which have led to the proliferation of writing on internal marketing are fundamentally sound. However, it is suggested that in order to take into account the real problems of achieving customer orientation, be it through marketing orientation, or TQM, or some other managerial approach, there is a need for managers to develop generalist skills and competencies based on the application of sound macro-marketing principles throughout the organisation. A form of internal marketing can provide the mechanism for the major re-orientation needed in so many organisations. However, the view that internal marketing is solely the domain of marketing or human resource specialists applying a micro-marketing concept and associated tools is too narrow and does not take into account the needs of all internal stakeholders. In this respect, the current interpretations of the internal marketing concept are too ``product'' orientated, being based on the traditional marketing concept, rather than being marketing orientated, and marketers must put their own house in order on this matter before they can hope to demonstrate the true worth of the internal marketing concept as a business management paradigm. Major change programmes and plans clearly present problems and Mastenbroek (1991, p. 243) has suggested that continual internal and external marketing is more effective in bringing about organisational change than any short-lived programme of attention. This is supported by Johnson and Scholes (1989, p. 46) who argue that the consolidation of acceptance of significant change is vital and is achieved through communication:

F F F it is the political and cultural barriers to change that may well provide the major stumbling blocks to the implementation of strategic change.

The role of internal marketing in achieving evolutionary or transformational change has been suggested as:
One of the best ways to overcome barriers to plan implementation is to involve many levels and departments in development of the plan. One of the best ways to do this is to conduct internal research using professionals in order to develop a sense of the current mission and to gather the insights and dream agenda of your executives and staff (Weylock, 1992).

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Thomson (1990) has identified people and organisation issues within the context of the culture of the organisation. The former are concerned with maximising relationships within the organisation where individuals, teams, managers and leaders are seen as internal ``target'' customers with needs which can be satisfied through the generation of internal ``products and services''. The latter includes practices, plans, structure, vision, mission and values, and is concerned with maximising (the effective utilisation of) resources. The terminology is yet to develop fully to the point where a single, clear understanding of the underlying principles of internal marketing is widespread among managers. Some strong resistance to the use of the term ``internal marketing'' has been experienced amongst academics and practitioners, as it suggests that the mechanism of change management being described is the exclusive property of marketers, or there is a narrow perspective on the purpose and form of ``marketing''. The terms ``internal relationship marketing'', ``internal relationship management'', or ``internal social process management'' are proposed as a development of other terms used by the writers discussed. These new terms recognise the applicability of the marketing concept through the identification of (intra-organisational) exchanges in working relationships and between the organisation and its customers, since ``all employees are customers of managers who wish to carry out the firm's objectives'' (Harrell and Fors, 1992). They also recognise differing goals of the parties to these exchanges, within the overall organisational goal of achieving profitable longrun customer satisfaction and loyalty through demonstrated customer orientation. This is pursued in a planned manner by all organisation members, as a means to achieving differentiation of the organisation for the purposes of attaining sustainable competitive advantage. Ulrich (1989) has argued that customer satisfaction is not sufficient and that competitive advantage must be sought in the conscious development of customer commitment, i.e. loyalty and devotion which transcends short-term ``feel good'' relationships by building interdependencies, shared values and mutually beneficial strategies. As yet, there is little empirical basis for the required theory of internal marketing as a change management concept, whilst at the same time there are empirical data to show that internal marketing, in various forms, is being practised as a viable response by managers to the real problems of achieving the objectives required by strategic decision making. Internal marketing cannot be viewed as simply the application of marketing concepts within the

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organisation, nor is it the use of modified human resource management principles. It is a conceptually separate phenomenon which warrants further investigation and development. Further, much of the literature disregards the difficulty of the political processes, i.e. differing ideas, beliefs and values held by managers, supervisors and front-line service providers (Dawson, 1994). The literature is too prescriptive and too narrow in trying to apply the marketing concept as it has developed as a response to (external) market relationships (Mudie, 1987). It was, thus, a ``reform ambition'' (Strauss and Corbin, 1990) which motivated this research project to develop a more appropriate theory of internal marketing, which takes a wider view than that of the traditional economics-based marketing concept (see for example, a recent popular textbook (Dibb et al., 1994)). Implications for managers The adoption of a broadened concept of internal marketing, as a development of a model, has a number of implications for the management of an enterprise. First, a shared set of beliefs about the meaning of customer orientation is required. This will require the promotion of a particular interpretation of the marketing concept and the systems and tools to achieve its objective, i.e. delivering value to customers at a profit. Care must be taken to exclude any practices which further ``marketing'' as a persuasive exploitation of customers. The managers of such an approach will focus on the understanding and acceptance of a ``corporate ideology'', while planning locally for appropriate activities to operationalise it. Skills and attitudes for communication and service will be central requisites. In addition, the role of the manager will be shifted from that of overseer and controller to that of organiser and supporter. ``Employees'' and ``managers'' will have to understand and agree on what is in the organisation's long-run best interest and how they individually gain from this. Further, communication will be seen as the mode of organisation, rather than the means (Drucker, 1973). The achievement of goals will be seen as occurring within relationships rather than in discrete transactions of discrete individuals or groups. This interactional perspective will balance economic (monetary) and non-economic values through a co-operative management system. Above all, there will be a removal of the submissive, subordinate working relationship, at least at the local (team) level. Collaboration will mean the self-regulation of relationships and obligations at work. People will no longer be required to work under the duress of directing, order-bestowing force and, because the system is ambition-driven, their work will be a free act of obedience to their own purposes, which will be widely understood and balanced with the collective purposes (Heilbroner, 1988, p. 103). Internal marketing seen as internal relationship management is an integrative process within a system for fostering positive working

relationships in a developmental way in a climate of co-operation and achievement. Such an internal customer relationship management system has a number of key features (adapted from Howe et al., 1992): . The ``voice'' of the customer is incorporated into product/service decisions. . Customer commitment is earned in a ``social'' contract. . There is open exchange of ideas for mutual gain. . Employees develop a greater identification with the corporation ( just as the supplying corporation must become more customer-oriented). . Customers are involved in product design, production and service. . There is close partnership between suppliers and customers. . Customers are viewed as individual people and so are ``value'' providers. . There is continuous interaction and dialogue between suppliers and customers. . There is a focus on discovering, creating, arousing and responding to customer needs. . Relationships are viewed as enterprise assets. . There is systematic collection and dissemination of customer information (detailing and negotiating requirements, expectations, needs, attitudes and satisfaction). . Communications in the internal market are targeted through segmentation analysis. Subscription to the managerial perspective on marketing management allows the ring-fencing of ``marketing'' as a set of activities to be carried out by a department a number of variables simply have to be selected and manipulated but no commitment to a value creation philosophy is required. This simplifies the complexity of enterprise organisation and direction and permits ``tribal empire-building''. The resulting intra-organisation communication problems are perpetuated through attempts to manage via such a fragmented approach to organisation and management. The broader approach discussed here robs the functionalist/specialist of sole ownership of the territory but the gain to the system, when each individual is able to contribute to the whole enterprise, is realisable in terms greater than mere ``market efficiency''. The needs and wants of the individual can be met as the means to achieving the organisation's success in conducting the business of the enterprise. The structure for this is a network of self-managing teams (or mini businesses (Case, 1995)) who serve each other, develop specialist knowledge, execute projects and sell to ``outsiders''. Internal marketing is the relationship and knowledge management required for the ``new organisation''. The internal-

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external boundary becomes blurred as the traditional organisation form is dissolved. Peters (1992) provides evidence of such a shift towards ``marketisation'' in a flattened organisation with fluid arrangements for projectised work. People have temporary network membership in individual units which aim to own a market through better service and symbiosis with customers. The overall benefit comes from the pursuit of mutually satisfying employment relationships. Conclusion A broader concept of internal marketing requires that a process, or metastructure, perspective is taken for organisational development through learning in a consciously created interactive communication system, i.e. a social system which is not solely concerned with economic transactions. Whilst communication can occur without an economic transaction, any economic transaction cannot occur without communication. If the democratising potential of a goal-oriented inner market, which fosters value-creating enterprise, is to be realised for continuous improvements in business performance and quality of working life for all, then the concept of internal marketing must be capable of engendering the application of marketing principles within the total corporation as a social system which operates like a ``free market''. External marketing focuses primarily on economic transaction due to its managerial bias. The broader internal marketing focus on social values provides for a richer range of exchanges premissed on both economic and non-economic values. Further research and development of application techniques should focus on alerting educators and practitioners alike to the richness of a broader perspective on the marketing process which recognises that when communication is in a dialogue there need be no zero-sum outcome. Considerable added-value can be sought in multi-disciplinary work which raises social, political and technological concerns as well as those of the economic sphere of life. The authors have continued with the work of isolating the elements identified. Their conceptual relationships are explored in a follow-on paper in order to build a model of internal marketing as an intracompany social marketing system. A detailed discussion of the themes identified here is developed into an integrated conception of internal marketing.
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