Impact Of Internal Marketing On External Marketing

Table of Contents

........................................................................................................................................i Abstract:- .............................................................................................................................i Introduction..........................................................................................................................ii Objective of research:-....................................................................................................iii Research Question:.........................................................................................................iv .......................................................................................................................................iv Research Design Detail:..................................................................................................iv Literature Review ........................................................................................................v Theoretical frame work:-..............................................................................................viii PROBLEM STATEMENT:..............................................................................................x Hypothesis of Study:-.....................................................................................................xi Methodology for Research:-...............................................................................................xi Data collection Methods:................................................................................................xi Population & Sample:....................................................................................................xii Data collection:.............................................................................................................xiii Data Analysis: ......................................................................................................xiii Result and interpretation detail:-.......................................................................................xiv Regression Table...........................................................................................................xiv Hypothesis analysis:-....................................................................................................xiv Conclusion:......................................................................................................................xvii Recommendation:............................................................................................................xvii Acknowledgement:.........................................................................................................xviii Appendix............................................................................................................................19

Abstract:Internal marketing’s main focuses is to acquire and retain customer-oriented employees. A development-oriented economy requires organizations to attract and retain customers to ensure a sustainable competitive advantage. To achieve this aim, organizations must

focus their efforts on developing and sustaining an organizational culture that emphasizes internal customer well-being as a means to attract and retain external customer. This paper explores the relationship between internal marketing and external marketing. We propose that in order for firms to undertake successful marketing activities in dynamic business environments, employees must be willing to offer the required effort to adapt rapidly and fluently to external environmental change. Based on the literature in internal marketing and external marketing, we propose a model that relates five key internal marketing practices to external marketing that build customer satisfaction and loyalty. Key words: internal marketing practices, external marketing, customer satisfaction.

Introduction Marketing is the business function which identifies customer needs and wants, determines which target market the organization can serve the best and designs appropriate products, services and programs to serve these markets. So we can say that it

is a philosophy that guides the entire organization. The goal of marketing is to create customer satisfaction by profitably. The marketing department can not accomplish this goal by itself, it must co-operate closely with other departments in company and partners with other organizations throughout its entire value delivery system to provide superior value to the customer. Organization gain market leadership by understanding customers through superior value. Marketing is not something to satisfy customer but also employees. Before going to explain the affect of internal marketing on external marketing first we would like to define these two terms. Internal marketing is a process which trains, motivates and empowers employees at all management levels to consistently deliver a satisfying customer experience. External marketing is the forces outside of an organization that control a market. So we can say that internal marketing is within the organization and external marketing is outside the organization. Internal marketing focuses on employee’s motivation to provide superior value to the customers. If customer is satisfied with the company’s product, it means that company’s marketing is good for making profitable relationship. If company is weak in internal marketing. It cannot achieve its major objectives that are profit maximization through sales marketing. The main aim of this study is to investigate which internal marketing practice effect external marketing. The research subjects consist of employees in banks at Blue Area Islamabad of management level.

Objective of research:The core objectives of this study are given as follows;

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First objective of this study to get insight that "how internal marketing of any organization influence on externalities of that organization".

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Second to know how the employee job satisfaction effects on external marketing.

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Organizational commitment helps to improve externalities of an organization.

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Mostly external market is affected by organization's loyalty.

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Most of the external factors affect the trust on management issues.

Research Question: We want to describe “Which internal marketing factor effect strongly external marketing”? People influenced and discarded any organization; we explore the underlying causes of these problems caused.

Research Design Detail: In this research we use cause and effect study so regression analysis supports this study as research design. We calculate multiple regression coefficient to analysis our research in order to quantify the result for the purpose to estimate the assumptions. Multiple regressions allow examining the effect of factors effecting on outcomes. In this study, in order to test the mentioned hypothesis, all of the internal marketing factors selected in this research like job satisfaction, organizational commitment, organizational loyalty, trust on management and internal communication have been summed up and then

multiple regressions has been run with these as independent variables and external marketing as dependent variable.

Literature Review This research is all about the marketing strategy of a company. This strategy is divided into two parts internal marketing and external marketing. Internal marketing is attracting, developing, motivating and retaining qualified employees through jobs that satisfy their needs. The satisfaction of employees strongly influences by the quality of services extended to external marketing that satisfy to customers. Both have direct impact on company’s success. Those companies who run their programs more efficiently by providing different benefits to their employees are successful in external marketing. According to Berry (1981) Employees are internal customers in internal marketing are just like external customers. Internal customers would like to have their needs satisfied. The reason is that by satisfying the needs of internal customers, an organization will be in a better position to deliver the quality desired to satisfy external customers. By fulfilling the employee needs enhances employee motivation and retention and also employee satisfaction, the higher the employee satisfaction generates external satisfaction and loyalty. So we can say that internal marketing enhance employee motivation, creativity, innovation and performance. Internal marketing is often connected with customers and sales people as a goal to get as loyal customers. According to Cowell that Internal marketing is a management approach which enables and motivates all members of the organization to understand their role and to satisfy their customers by providing them high quality services

The basic way to achieve employee satisfaction is treating employees as customers. The company should recruit those employee who are highly motivated, customer oriented and sales minded. Employees also need the right type and the level of training to perform their jobs. This can help to reduce uncertainty surrounding their role and help employees to meet the needs of customers more effectively. According to Bansal et all (2001) that internal marketing can improve the organizational commitment and job satisfaction when employee job satisfaction is enhanced, employees adopt a positive attitude when serving external customers, a situation that can help to enhance customer loyalty. So we can say that firms can use internal marketing activities to transmit organizational vision and goals to employees. Through the design and implementation of human resource management systems for internal marketing, internal marketing is available to enhance employees' job satisfaction, motivate employees to achieve organizational goals and promote employee perceptions regarding organizational commitment. Internal marketing is based on the considering that no single organization function is effective if it operate in individually. Multi operations and people with different skills have performed activities in creating and delivering products and services. These crossfunctional activities and the people who perform them have major influence upon the outcomes. In today’s world, managers must ensure that all the workers are actively involved in the delivering high quality products. According to Barnes, (1989) that the loyalty of customer is based on the service satisfaction, however it requires the collaboration and commitment of employees. Employees commitment to the organization and their effort towards the achieving

organizational goals or in other words we can say that employees loyalty build customer loyalty. Employee commitment affects the external marketing factors. Encouraging the employees to buy their own services and products, this can increase the sales and confidence for external customer.The key aims of internal marketing are the development of internal and external customer awareness and the removal of functional barriers to achieving organizational effectiveness. Employee motivation is also very important, and it can be done by giving incentives or rewards to them According to Heskett, Jones, Loveman, Sasser, and Schlesinger (1994, pp. 164–165), Profit and growth are primarily achievable by customer loyalty. Loyalty has a direct relationship with customer satisfaction. It is largely influenced by the value of services provided to the customers. Satisfied, loyal and productive employees create value. Employee satisfaction, in turn, results primarily from high-quality HR practices that enable employees to deliver results to the customers. It is clear that the success of external marketing of a service organization is dependent on the success of how well it markets itself internally. According to Barnes & Morris, (2000), Morrison, (1996). Internal marketing practices mean to retain the most qualified and skilled workers, because these are the assets of any organization. If the employees are satisfied they can better take care of the external customers and high quality customer satisfaction is derived by internal employee’s loyalty. If the internal structure of any organization is strong, it will defend the external factors. A successful internal marketing process produces highly motivated and well-trained customer-support employees, who always do the right things first in the right way, and

perform the right behavior when treating their customers. Employees with flexible nature are the need of today’s competitive environment. Marketers have to concentrate on the internal market as much as on the external market, if they want marketing plans and strategies to be successfully and effectively implement within their organization. Therefore, it is very important to build the right and appropriate internal environment to build strong customer relationship. If the internal structure of the organization is standing on strong bases, like employee satisfaction that organization can satisfy their external customers easily. After studying the articles, we seem that for the success of external marketing, internal marketing is very important. In internal marketing we found five independent variables like job satisfaction, organizational commitment, trust on management, organizational loyally and internal communication. Now we will see how these variables impact on external marketing.

Theoretical frame work:-

Dependent Variable: External marketing is the dependent variable. External Marketing: It represents the whole externalities of an organization like expectation for job or carrier or for services provided by the organization when people come to an organization in order to use its provided services and get satisfied. External marketing plays an important role in the success or failures of an organization. If a customer is satisfied from the organizational services then behaviors would be positive towards the organization.

In dependent variables: Following are the key factors of internal marketing used in this research study Job Satisfaction: .We use the following question for job satisfaction .I always look ahead to go to work -5 .I enjoy doing my work -6 .I have natural inclination to my job -7 Overall I am satisfied with my job. 8Organizational commitment:

We use the following question for Organizational commitment. .Our organization is sincere with employees -9 .This organization has a great deal of personal meaning for me -10 .I would be happy to spend the rest of my carrier in this organization -11 .For solving problem your organization likes to have discussions -12 Trust on Management: We use the following question for Trust on Management. .I trust on my organization’s management -13 .Management generally solves my personal problem -14 .Management is friendly with the employee -15 16- In case of problem, I feel free to contact with management. Organizational loyalty: We use the following question for Organizational loyalty. .This organization deserves my loyalty -17 .I feel strong belonging to this organization -18 .I believe in the value of remaining loyal to this organization -19 .The recognition given for effort/good work -20 Internal communication:We use the following question for internal communication. . Our organizational goals are clear to all employees -21 .Our organization offers employees a vision that they can believe in -22 .Our organization communicates to employees to improve their service roles -23 24- Our organization emphasize on effective communication with employees.

PROBLEM STATEMENT: “Impact of Internal Marketing on External Marketing.” Employees and customers are the main focus of this research study; we explore the causes and its effect when they go for an organization for job or as a customer. The external marketing is productive when it is in the favor of customers.

Hypothesis of Study:In order to investigate the effects of internal marketing factor on external marketing and importance of these factors. The following research questions have been proposed: Which internal marketing factor effect strongly external marketing? Also the set of related hypothesis have been formulated to link the factor of internal marketing to external marketing as follows: Ho: External marketing effected through internal marketing HI: Job satisfaction has positive impacts on external marketing. H2: Organizational commitment has positive impacts on external marketing. H3: Trust on management has positive impacts on external marketing. H4: Organizational loyalty has positive impacts on external marketing. H5: Internal communication has positive impacts on external communication. .

Methodology for Research:This research study is cause and affects study so; we used regression analysis which is a statistical tool through which we learn about which factor influence strongly on external marketing.

Data collection Methods: The data used for this study were obtained from basically these sources. •

Observation

•

Secondary data

•

Primary data

•

Analysis

•

Conclusion

statiscal tool can be found the most suitable mean for the research of this study, which can lead us a better understanding for the research problem. To understand the main idea, it can be very helpful to use the statistical analysis to see the impact of independent variable on dependent variable.

Population & Sample: For getting the data for research we select the banking sector because banking sector provide a lot of benefits and facilities to their employees just to ensure their customer satisfaction. There are several reasons for selecting this sector. One of reason is to choosing these groups is that banking people have some knowledge about internal and external marketing and also convenient to collect and analyze the data. Sample is 100 people of management level employees in banks of five different age groups. They are divided among different target groups to find out the attitude towards external marketing.

We categorized the people into five age groups: •

Under 25

•

26-35

•

36-45

•

45-55

•

56 and Above

Data collection: We design the questionnaires for the purpose of data collection. It is important for this research to use multiple sources of data to get the most possible wide view about this research. We also use the secondary data because it is relatively cheap and quick to obtain, and also reliable and accurate. We collect the articles and gain the information through internet. We apply the statistical tools such as means, regression. We find the results through statistical tools. The major data for the work were collected by means of structured questionnaires. One hundred copies of questionnaires were distributed in the banks of BLUE AREA Islamabad

Data Analysis: We use the secondary data because it is relatively cheap and quick to obtain, and also reliable and accurate. We collect the articles and gain the information through internet.

We apply the statistical tools such as means, regression. We find the results trough statistical tools.

Result and interpretation detail:For results and their interpretation we use regression analysis in order to calculate accurate results.

Regression Table.

Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations

Observation was 100 In above table our multiple regression is R = 0.40 or 40% The value of regression coefficient is R2 = 0.16 or 16% And adjusted R2= 0.116 or 11.6% Stander error is SE= 0.724 or 72.4%

Hypothesis analysis:-

0.400838727 0.160671685 0.116026562 0.723797359 100

On the behalf of regression coefficient we accept or reject our alternative hypothesis again null hypothesis.

Intercept X Variable 1 X Variable 2 X Variable 3 X Variable 4 X Variable 5

Coefficie nts 2.062019 399 0.324776 329 -0.167702 218 0.133301 676 0.015770 825 0.138890 48

Ho: External marketing effected through

internal marketing Our Ho is positive and grater then 1.Any hypothesis which are positive it is accepted and strength of acceptance is shown with its value that how much it effected on Ho. Now we check that which alternative hypothesis is accepted or rejected against null hypothesis and its reason. H1: Job satisfaction has positive impacts on external marketing. H1 is accepted against Ho because it is positive and it is more then zero. Its present age of effect is 33% which means that job satisfaction affects the external marketing with the percentage of 33.so we accept h1 because it shows that job satisfaction has positive effects on external marketing. The reason for this factor effect is that employees are satisfied with their jobs. The reason may be work load, timing, culture or compensation and punishment if something commit against rules and regulation of organization H2: Organizational commitment has positive impacts on external marketing. H2 is also is accepted against Ho because it is positive and it is more then zero. Its present age of effect is 17% which means that Organizational commitment affects the external marketing with the percentage of 16.so we accept H2 because it shows that Organizational commitment has positive effects on external marketing but its effect is not as stronger as job satisfaction. The reason for this factors weak effect is that employee are

not as much committed with their jobs they just do job in order to earn not do job as duty. The reason may be environment of organization or discomfort while working organization

H3: Trust on management has positive impacts on external marketing. H3 is also is accepted against Ho because it is positive and it is more then zero. Its present age of effect is 13% which means that Trust on management effects the external marketing with the percentage of 13.so we accept H3 because it shows that Trust on management has positive effects on external marketing but its effect is not strong as compare to job satisfaction. The reason for this factors weak effect is that employee has not strong trust on their upper man agent. If in organization there is some problem or an employee get in problem employee are not rushed to share with management for solving the problem may be they are scare of file from job. H4: Organizational loyalty has positive impacts on external marketing. H4 is also is rejected against Ho because it is negative and it is less then zero. Its present age of effect is 17% negatively which means that Organizational loyalty effects the external marketing with the percentage of 17 but negatively. So we reject H4 because it shows that Organizational loyalty has negative effects on external marketing but its effect is strongly negative as compare to job satisfaction. The reason for this factors effect is that employee are not loyal to organization. If they get a good job they leave the organization. Reason behind this is mostly wrong person for wrong job and not awarded satisfactory compensation against job. H5: Internal communication has positive impacts on external communication. H5 is also is accepted against Ho because it is positive and it is more then zero. its present age of effect is 14% which means that Internal communication effects the external marketing with the percentage of 14.so we accept H5 because it shows that Internal communication has positive effects on external marketing but its effect is not strong as compare to job satisfaction. The reason for these factors weak effect is might be autocratic leadership style use in the organization.

Conclusion: Internal marketing in is acknowledged as an important activity in developing a marketing oriented organization. Fundamentals aims of internal marketing are to develop internal and external customer awareness and eliminate functional barriers to organizational efficiency. While spending more time doing marketing internally will produce more knowledgeable and dedicated employees who will, in turn, seek the goal of providing excellent services to customers. This study also identifies a positive relationship between internal marketing and external marketing. This study did not cover the opinions of customers, only opinions of managers and employees are covered about customers. Customers were neglected in this study. Another draw back was that only five independent were analyzed for studied not all variables were studied.

Recommendation: From the research we seem that external marketing is positively correlated with internal marketing. So managers need to pay significantly more attention to the communication of marketing and other organizational strategies and objectives to employees so that they understand their role and importance in the implementation of the strategies and achievement of marketing and organizational objectives. It ensures that employees are highly motivated and customer oriented and also provides employees with the right type and level of training to perform their jobs is very important. The organizations should

also pay attention on the quality of products because customer satisfaction is based on the quality of products.

Acknowledgement: In the name of Allah, the most merciful and the most beneficent. First of all we are grateful to our ALLAH almighty who awarded us blessings for such effort and also to our holy Prophet Hazart Muhammad PBUH who introduced the light of knowledge in darkness of ignorance. We also like to thank our parents who encouraged us and also to our companions and friends who gave their suggestion where we were on the wrong way. We extend our deepest gratitude and profound regards to Mr. Arif Vaseer and Mr. Saqib who remain a source of inspiration for us through their guidance and teaching. Esteemed appreciation and recognition to our friends, colleagues and family for their support and encouragement throughout this endeavor

Appendix External marketing .Our customer is fully aware of given service 1-1 2 3 4 1 2 3 4 Media is creating strong influence on buying behavior of our customers. -2 2 3 4 .3- Marketing tools plays effective role for organizational1goals 1 2-43 4 .This organization has achieved its objective through marketing

5 5 5 5

:Job Satisfaction .I always look ahead to go to work -5 1 2 3 .I enjoy doing my work -6 1 2 3 .I have natural inclination to my job -7 1 2 3 Overall I am satisfied with my job. 81 2 3

4 5 4 5 4 5 4 5

:Organizational commitment 1 2 -3 .Our organization is sincere with employees 9 4 .This organization has a great deal of personal meaning for1me2-10 3 4 .I would be happy to spend the rest of my carrier in this organization 1 2 3-11 4 .For solving problem your organization likes to have discussions 12 1 2 3 4

5 5 5 5

Trust on Management:-: 1 2 3 4 .I trust on my organization’s management -13 1 2 3 .Management generally solves my personal problem -144 1 2 -15 3 4 .Management is friendly with the employee 16- In case of problem, I feel free to contact with management. 1 2 3 4

5 5 5 5

:Organizational Loyalty 1 2 -17 3 .This organization deserves my loyalty .I feel strong belonging to this organization 1 2 -18 3 .I believe in the value of remaining loyal to this organization 19 1 2 3 .The recognition given for effort/good work 1 2 -20 3

4 5 4 5 4 5 4 5

Internal Communication 1 2 -3 . Our organizational goals are clear to all employees 21 4 5 1 3 4 5 2 -22 .Our organization offers employees a vision that they can believe in 2 3 roles 4 5-23 .Our organization communicates to employees to improve their 1service 1 2 3 4 5 -24 .Our organization emphasize on effective communication with employees

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References Bansal, Harvir, S, Mendelson, Morris B., Sharma, Basu, The impact of internal marketing activities on external marketing outcomes”, Journal of Quality Management, 6, pp 61-76, 2001. Barnes, J.G. (1989), “The internal marketing programme: if the staff won’t buy it, why should the customer? Proceedings of the Marketing Education Group Annual Conference, Glasgow, pp. 453-74 Barnes, B. R., & Morris, D. S. (2000). Revising quality awareness through internal marketing: an exploratory study among French and English medium-sized enterprises. Total Quality Management, 11, 473–483. Berry, L.L. (1981), “The employee as customer”, Journal of Retail Banking, Vol. 3 March, pp. 25-8. Cowell, D. (1984), The Marketing of Services, Heinemann, London. Heskett, J. L., Jones, T. O., Loveman, G. W., Sasser, W. E. Jr., & Schlesinger, L. A. (1994). Putting the service profit chain to work. Harvard Business Review, 164–174

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