What Is Internal Marketing

Published Date: 02 Nov 2017

Contents

1. Introduction.

1.1. Company background.

Since 2005 when the ANZ Royal Bank (Cambodia) started operating, it is the first Cambodian Bank proves International standard banking services. This Bank is a joint investment between The Royal Group, a leading conglomerate in Cambodia and Australia and New Zealand banking group limited (ANZ), a global corporation whose World Headquarters base in Melbourne, Australia. (Royal Group possesses 45% of total share on issues and the remaining 55% is controlled by ANZ Group)(Long, 2011).

Getting advantage from strong network of Royal Group and on the other hand from successful banking experiences of ANZ Group, ANZ Royal bank quickly captures a significant market share and becomes a leading commercial banking among top 4 in the sector.

Indeed, the bank is highly advantageous from ANZ’s strong international image for effectively promoting of the awareness of ANZ Royal in the market as well as for building trust among community. As the result ANZ Royal becomes the most trustful bank in the country with regards to the highest number of depositors if compares to other peers in the industry.

1.2. Problem identification.

According to Long (2011) ANZ Royal is already RM driven organization and the relationship programs are being implemented. Based on its vision "to be the foremost bank in Cambodia that builds deeper customer relationships with a reputation for convenience, superior customer service and innovative solutions ", RM application is seemingly at the core of business strategy in particular to retail banking, however there are still two main issues facing the organization and needed to be ratified.

- Internal rivalry: the Bank has put a lot of effort in positioning customers that ANZ Royal is unique for everywhere. However, it seems that the implementation at branch level is not fruitful as what the organization wishes to reach because each branch is strongly focusing on and putting a lot of effort in attaining its own target set by the top management. Sometimes, conflicts happen when each branch tries to maintain FUM level and to increase sales. Therefore, the coordination of all braches is sometimes not smooth and fragile and as the result the customer’s satisfaction is still limited by services offered.

- Staff competency and proficiency: As highlighted by the research in 2007, almost 75% of the total employees have less than 12 though in 2009 the percentage might change according to the time passed by. In general, the competency and proficiency of the staffs could be identified if and only if the staffs are in the role for at least years. In this case the bank found itself difficult to implement a good customer relationship program which is consistently aligned with the organizational vision and long term strategies. Besides that, technologies facilities and for banking system and process take more times for staffs to learn to be proficient.

1.3. Purpose and structure of the report.

The report aims to bring the knowledge about Customer relationship management to explain and solve a real business issues. Since the problem of the ANZ Royal Bank (Cambodia) is most likely referred to employees’ issues, the report will examine this problem under the view of internal marketing literature in order to understand and sort out the situation of the Bank. Eventually, based on the fundamental of internal marketing, several recommendations will be introduced in details which assembly is a part of practical work outcome of the module.

2. Literature review.

As mentioned above, the issue of the bank is around staff and internal rivalry. In order to examine the issue of AZN Royal bank of Cambodia, this section is going to review the theory of internal marketing.

Internal marketing aids to ensure that employees understand the product or service and believe in the purpose of the organization. Lutsch et.al (1992) depict that internal and external exchanges are viewed as mutually exclusive rather than they are at the opposite ends of a "spectrum" or "continuum". Firms those are doing well at internal marketing threat the consumer brand and the employer brand as two side of the same coin and integrate their communication As the result, it is important to balance both the external and internal orientation ( Lings and Greenley, 2005).

2.1. What is internal marketing?

Internal Marketing was first initiated by Berry et al (1976) and later by other researchers like George (1977), Thompson et al. (1978). The idea of Internal Marketing was presented in some articles like such of Sasser and Arbeit (1976) but without however using such terminology.

Many definitions of IM are found within the literature with some authors viewing IM in different perspective: philosophy, management practice, relating to HRM, service marketing and change management. Berry and Parasuraman (1991:151) define internal marketing is the process of handling employees as "internal customers" and projects as "internal products" that satisfy the needs and desires of the customer and adhere to the company’s goals. Varey and Lewis (1999) evolve that staff constitute an internal market within the organisation, which needs to be informed, educated, trained rewarded and motivated to meet external customers ‘needs and expectation. On the other hand, Jaworski and Kohli (1993) stick with the idea that internal marketing is the process of promoting the company and its products to the employees. Above all, companies have to develop programs that will be emerged to the internal market as well as the external customer market (Gronroos, 1990).

Majority of the works on IM is of conceptual nature. The IM concept has evolved from the original conceptualization of employee satisfaction/motivation by treating employees as customers and job as products for improving service quality (Sasser And Arbeit, 1976; Berry, 1981), to customer orientation/market orientation and the use of marketing-like approach and marketing-like tools internally to motivate employees (Gronroos, 1990), the use of IM for the Implementation of external marketing programmes (Piercy And Morgan, 1991), and the extension of IM to its implementation of any functional strategy (Rafiq and Ahmed, 1993). The existing empirical work concentrates mainly on levels of adoption of IM by organizations (Sargeant and Asif, 1998) or the impact of IM. programmes on service quality (Richardson and Robinson, 1986).

On the other hand, there is a limitation of existing IM research is that there is little agreement on what mix of policies can be used effectively to influence employees so that they are motivated and act on a customer-oriented fashion. However, despite a lack of implementation framework in the IM literature, a number of key elements of what we term as the IM mix (or the controllable elements inside the organization that can be used to influence and motivate employees), can be identified from the IM literature, including communication, training, education and information (Gummesson, 1994); motivating and developing employees. In addition, Foreman and Money (1995) found that the three components of IM are rewards (rewarding and motivating employees), developing and providing a vision. George and Gronroos (1990) clearly state that IM is basically as philosophy for managing the organization’s human resources based on a marketing perspective. Tansuhaj et al, (1988) have specifically mentioned employee.

Recruitment, training, motivation, communication and retention efforts as part of the mix, Gronroos (1990) urged that IM must also consist of a work environment that will motivate employees to respond to management’s demand.

2.3. Internal marketing approaches.

As the complicated of literature of Internal Marketing, researchers are following different perspectives, however the contemporary internal marketing has three major approaches: including IM as a change management tool IM as a social process IM as knowledge renewal.

Internal marketing as change management tool.

For over 10 years, many researchers have considered internal marketing as effective instrument in business management. Finney and Hansen (2010) depict some of its application included creating an internal customer orientation increasing employee motivation to work toward a common goal, increasing productivity improving staffing procedure and changing organisational culture among others.

According to Amenakis and Harris (2002), however stakeholders play a significant role in changing organisation and in order to motivate employees, the staff must believe that something is not going right and need to change. It is believed that internal marketing can play role in the creation or realization. Recent work by Causon (2004) concludes that people resist change because the old way of doing things is always easier; she believes that IM is necessary for employees to understand the reason behind the change. Additionally, IM is perceived as a planned effort to overcome organizational resistance to change and to align, motivate, and integrate employees toward the effective implementation of corporate and functional strategies (Rafiq and Ahmed. 1993). Finally Piercy (1990) reveals that effective change requires a resourced and realistic implementation process that confronts the structural and process issues that have been aligned with new strategies.

Internal marketing as social process.

An internal marketing requires that a process, or met structure, 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.

Internal marketing as knowledge renewal.

Disucssion.

The first approach is one that views the internal marketing from the viewpoint of organizational behaviour and marketing and the third one treats it from the marketing and strategic management viewpoint, while the second approach is a comprehensive approach which looks to internal marketing in a systemic, comprehensive way. In this approach, the viewpoints of strategic management, marketing, human resources management and organizational behaviour are integrated and a total image may be developed of internal marketing in which the whole organization contributes to the process of rendering service to the external and internal customers. It may be concluded that the marketing department is not the only one engaged in the marketing process of an organization, but the whole organization and all the employees contribute to the process and their failure to contribute will cause the process to fail.

2.4. Staff competencies.

Enlargement of competencies is related to the individual employee’s possibility of personal development and self-realization, and is viewed as a very significant element by employees. The greater the possibilities of developing competencies and self-realisation are, the greater the experience of job satisfaction and loyalty will be among the employees.

Mathieu and Zajac (1990) found that employees who perceive themselves as being very competent were significantly more committed and loyal than employees who perceived themselves as being less competent. This condition is also mentioned by Graversen (1992).

To a large degree, the point is to create a feeling of safety and to reduce the fear of failure. Fear leads to inefficiency and poor performance, and thus always to loss rather than a rewarding ‘winwin’ situation. Nobody can perform at their best unless they feel secure – this can be accomplished by making sure that the employees have the necessary and relevant knowledge in relation to their jobs – knowledge that can be obtained through training and education. If an employee does not have the necessary skills and knowledge to do her/his job, s/he may feel inadequate and experience increasing pressure and high levels of stress as a result of the job (Dahlgaard, 1999).

Most people have an inner need for self-realization and personal development. An employee should therefore be given the opportunity to improve and develop her/his skills and abilities in her/his job. Several studies confirm this point of view and further emphasize the significant effect of training and education on job satisfaction, commitment and loyalty, e.g. McCusker & Wolfman (1998)

The development of competencies and knowledge also affords better possibilities of promotion and career prospects. Maslow and Herzberg mention promotion in relation to the need for self-realization and as a motivational factor. Based on this discussion, we believe that the possibility of promotion and good career prospects have a direct effect on job satisfaction as well as employee loyalty.

2.5. Customer satisfaction in the banking industry.

The service quality provided determines in great extent the level of customer satisfaction and analysing the latter can help banks identify their weak points and act as a wake-up call for management and employees alike. For this reason most banks consider customer satisfaction as the primary criterion in their strategic planning since it is directly related to the institutions’ profitability (Kessler, 1996).

Research conduct in order to measure customer satisfaction has become a necessary tool for banking marketing ( Kessler, 1996). Banking marketing can be defined as the sum of organised business activities conducted by a bank on the basis of banking deontology in order to cater for both the existing and future target market needs. According to Heskett et. al., 1994 research, those businesses famous for the high standards of customer service,

• Have significantly higher degree of maintaining their customers;

• have extensive benefits from word-of-mouth advertising;

• Earn a significant market share from those businesses with low -level customer service;

• Have good reputation that help attract and retain skilled employees and

• Have doubled their capital and sales performances in relation to that of institutes with lower standard customer service.

According to Heskett et al., (1994) in order to improve the quality of its internal and external services, a banking organisation has to take a number of steps such as: increase training levels especially on techniques aiming to improve communications, provide services knowledge, sales skills, reward and recognition system improvement, increase of employee morale and hiring of experienced staff.

Heskett et al. (1994) presented an interesting concept of the Chain of "service-profit". They support that there is a relation between the profitability deriving from loyal and satisfied customers and the loyal and productive staff of the company itself. In particular they believe that loyal customers contribute in the business’ profitability as their satisfaction is determined by the quality of the services delivered by the company employees. The latter deliver quality services when they are satisfied with the returns they achieve from the company they work for.

3. Recommendation and conclusion.

1. Develop a "Touch-Point" exercise to identify all the places that your organization comes into contact with the marketplace.

2. Measure Employee Awareness and Satisfaction - see if this ties into customer satisfaction.

3. Create an internal advisory board that positions top performers as internal consultants on new marketing messages or HR issues.

4. Hit the road with a salesperson. See what you can learn from the experience.

5. Develop an in-house radio program to provide consistent information.

6. E-newsletters.

7. Educational seminars.

8. Co-market events with cross functional departments.

9. New employee orientation programs that include marketing information such as trends in the market, customer survey results and discussions about why customers choose this company over another.

10. Offer employees subscriptions to publications dealing with your field or marketplace at a reduced cost or for free.

11. Provide brochure racks to educate employees and visitors. Stock it with relevant information about services, employee publications, relevant market information and financial results.

12. Stuff employee pay check envelopes to include information about services, programs or a marketing memo that emphasizes a new concept or important initiatives.

13. Learn from the IT Departments. Publicize HR efforts in a quarterly status report that recaps each initiative’s business case, strategic alignment and associated measurements and then summarize the status of every major project.

14. Designate someone to be in charge of organizational change or someone who knows how to connect with the people. This person should create messages and help keep the department on track.

15. Tell the story keeping your audience in mind. Executives want it short and sweet with results.

16. Tie initiatives to business values and the organization’s strategic direction.

17. Create an internal marketing program that focuses on a community service aspect of your organization. Law firms need to organize their pro bono work to both internal and external audiences.

18. Some companies have executive coaching programs in which HR and marketing can work together to align internal and external marketing initiatives.

19. Facilitate training sessions for managers to help them understand how their individual management styles might interfere with brand focused employee performance.

20. Tap into the power of storytelling. Start a tradition of encouraging employees to tell brand-related stories at staff meetings and company meetings. Post stories on the intranet and in newsletters.

21. Encourage dissemination of information by using hyperlinks in your writing. This allows the reader to access your sources or additional information quickly and easily.

22. Know how to use blogs, wikis and podcasts. Recently IBM encouraged its 320,000 workforce to set up their own blogs. Internal blogs can encourage questions and serves to keep employees up-to-date on contract wins, marketing projects, HR functions, etc.

23. Hold training sessions that focus on internal operations and emphasize the links to marketing.

24. Use logo branded items and clothing as rewards to superior employee performance and as mementos at large company gatherings.

25. Mention integrated and coordinated internal and external marketing successes in newsletters and web-site postings.