22

LOGISTICS INFORMATION MANAGEMENT 8,4

Marketing services to satisfy

internal customers
Gilbert D. Harrell and Matthew F. Fors
A case study on occupational health and safety is used to show that internal marketing is an essential
contribution to the process of delivering value to the organization itself and, ultimately, to the end
consumer

Introduction

The internal marketing concept

Nearly every manager who heads a staff function has

been challenged at one time or another to cut costs
sharply and improve service or face the prospect of
surrendering responsibilities to a more competitive
outside source. Current trends towards vertical
disintegration and outsourcing have left many staff
managers wondering how best to respond to the
requirements and expectations of their organizations.
The trend towards cutting back staff functions is
particularly acute in US businesses, where large internal
staffs have become synonymous with non-competitiveness in global markets. Even in companies which have
already trimmed layers of staff, managers of internal
services, such as education and training, marketing
research, MIS, health and safety and others, face an era of
tighter resource constraints in the 1990s. Many traditionally budgeted programmes are now under intense
management scrutiny to assess their contribution to
company objectives and operating performance. Today,
effective staff heads must recognize that their internal
users are in fact their customers and that marketing
inside the organization is an essential part of delivering
value to the company and ultimately to the end consumer.

Industrial firms invest considerable time, talent and

money to understand organizational buying from the
perspective of marketing, an approach that seeks to
understand the needs, wants and expectations of buyers
to develop the firms ability to provide customer
satisfaction effectively, efficiently and profitably.

Despite growing attention in marketing literature to the

concept of the internal customer, little has been written to
show how marketing can be applied practically by staff
units to defend against outsourcing or to garner support
for their function. This article is based on our original
work in 1992[1] and examines internal marketing on the
basis of a case study of one staff function that suffers
from a lack of internal customer focus occupational
health and safety. The study findings and implications
are generalizable to many staff units which themselves
can benefit from an internal marketing approach based
on meeting or exceeding managements expectations.
Logistics Information Management, Vol. 8 No. 4, 1995, pp. 22-27 MCB
University Press Limited, 0957-6053

An understanding of organizational buying behaviour

has long been a first step in the development of interorganizational marketing strategies that is, the
strategies of firms marketing to other firms. In contrast,
most companies devote far too little attention to the
concept of intra-organizational marketing of goods and
services where one organizational unit or staff group
markets its capabilities to other units within the same
company. Yet these internal exchanges constitute an
immense share of the business transactions that move
goods and services through the industrial supply chain to
the end consumer.
Business authors have recently indicated that internal
customers are in many ways similar to external
customers, noting that a broader definition of the
customer may be necessary to maximize the benefits of a
companys marketing initiatives[2-4]. From a more
focused perspective, internal marketing has been applied
by executives to such areas as management information
systems and training to show how staff professionals can
promote products and services to their management[5,6].
Internal marketing, in essence, recognizes that all
employees are customers of managers who wish to carry
out the firms objectives. If the firms objectives are sound
from an external marketing standpoint, individual
functional areas contribute by responding to their
respective internal publics, each of which is directly or

This article first appeared in Industrial Marketing

Management, Vol. 21, 1992, pp. 299-306.

MARKETING SERVICES TO SATISFY INTERNAL CUSTOMERS

indirectly linked to the ultimate customer and competitive

marketplace.

The case study

Objectives
This case study has two objectives:
(1) it identifies the management expectations that
internal marketing must address; and
(2) it outlines practical implications for managers who
market their services within the organization.
The case of industrial health and safety is especially
useful for examining internal marketing issues and
applications. When compared with decisions about
quality and cost reduction, health and safety provide
interesting contrasts that highlight the impact of internal
marketing on management decisions. Health and safety
decisions are among the most important, expensive and
complex decisions that corporations make. However,
these decisions command much less management
attention than do areas such as cost and quality, and are
thereby representative of many staff areas such as
planning, employee education, research and others. The
research suggests that these functions can benefit from
internal marketing to advance their contribution to the
companys objectives and encourage the implementation
of programmes.

supporting exploratory data rather than conclusive

percentages.
As expected, not all managers view these topics in the
same light, although many similarities are evident. Yet,
one fact is clear: a vast majority believe their jobs would
be much easier if health and safety personnel understood
issues from a managerial perspective, and if they would
work towards meeting their expectations with a more
customer-oriented approach.

Results
Management expectations for internal marketing
Five key management expectations were isolated that
strongly influence the success of internal marketing
efforts. These expectations have been incorporated in a
flow diagram to illustrate the sequence and the
relationship to management investment decisions (Figure
1). The research indicates that meeting or exceeding
managements expectations on these five dimensions will
tend to favour investment decisions. Alternatively, if the
staff unit is unable to meet expectations on these
dimensions, then management inaction or a deferral of

Figure 1. Management expectations for internal marketing

1

In all, plant managers from 140 separate manufacturing

facilities in the auto industry were included. Each focused
group was professionally moderated for the two to twoand-a-half hour period, tape-recorded and transcribed.
Analysis involved developing a typology of response
categories, counting mentions and performing content
analysis of the most important areas. The interviews
explored how plant managers made determinations to
support staff initiatives.
As an adjunct to the focused groups, a mail survey was
taken of 200 top automotive plant managers (of whom 107
returned the survey). The instrument was designed to
verify the focused group findings. The sample was not
drawn from a frame representing all manufacturing
plants; rather, it was a convenience sample of auto
manufacturers. Thus, it was intended to provide

Decision priority

Does the decision area have tangible

applications for business performance?

Research method
An in-depth case study involving exploratory research
techniques is appropriate for attempting to discover
relevant variables and understand their relationships.
Plant managers in the automotive industry provided
extensive information and insights in focused group
interviews and a survey about the internal marketing of
occupational health and safety.

23

Expectations met or exceeded

2

Expectations
not met

Corporate commitment
Is top management strongly behind
investments in this area?

I
N
V
E
S
T
M
E
N
T

Expectations met or exceeded

3

Expectations
not met

Centre of expertise

Does the staff possess (or have access to)

experts in the area?

Expectations met or exceeded

Expectations
not met

4 Decision leadership and team building

Can a solution be developed that has the
support of all key people and
groups involved?
Expectations met or exceeded

Expectations
not met

Operational impact
Will investment in the solution positively
affect overall operating performance and
can this be financially justified?

Expectations met or
exceeded

Expectations not met

I
N
A
C
T
I
V
I
T
Y
/
D
E
F
E
R
R
A
L

24

LOGISTICS INFORMATION MANAGEMENT 8,4

the investment decision is likely. We need to look at each

dimension in turn.
Tangible applications
Managers of staff functions need, first, to understand
where their staff services stand relative to other decisions
that command the organizations attention. They can then
take steps to position the internal staff service
appropriately with regard to managements current
priorities. The initial focused group interviews explored
the major types of decisions that require plant managers
time and attention. The intent was to determine indirectly
the relative importance of various decision areas based on
the frequency of mentions, without using a preconceived
list of decision areas.
When asked about crucial management concerns, plant
managers overwhelmingly talked about issues of cost
control and product quality. In fact, it was somewhat
difficult to direct top managements attention to issues
such as health and safety, training and other topics,
except as they related to cost and quality. On direct
questioning, other topics did command attention. The
survey helped establish the relative importance of health
and safety and other decisions. The 107 managers
responding to the survey were asked to rank 13 decision
areas, identified as salient by the focused groups,
according to the amount of time and attention they devote
to each over the normal course of their jobs. As Table I
shows, cost control and product quality are the clear
decision priorities. Consistent with what was learned
from the focused groups, managers, on average, ranked
health and safety lower safety is rated sixth and
employee health is ninth. While health and safety may be
articulated as number one priorities, they command
significantly less managerial attention compared with
other pressing issues on a day-to-day basis.

Table I. Priority ranking of managerial decision areas

Decision areas

When asked directly, most managers indicated that

issues such as health and safety are of primary
importance to them and to their plants. Hence, while
managers say that health and safety are highly
important, they spend little time reflecting on these types
of decisions. It seems paradoxical that health and safety
rank high in importance when managers are asked about
it directly, yet have low salience when all major decisions
are considered through non-directive, free response
questioning. The following statement from an executive
in one of the focused groups captures this perspective:
I think that our two biggest decision areas are cost and
quality on a daily basis. To be very up-front and honest, I
dont know that my people think of safety as being right up
there with cost and quality, although it should be. In the dayto-day battles, I dont think that it really does fall at the top.

It follows that marketers of internal services should

actively seek to establish tangible objectives and promote
systematic tools and techniques to demonstrate the
applications of their service in the industrial environment.
To accomplish this, plant managers indicated that
acceptable expectations or performance standards
should be understood. Plant managers indicated that
health and safety personnel need to help them identify
and define relevant goals one of the overriding topics in
the marketing management perspective. This should
include the development of internal audits to assess
organizational performance critically with regard to the
internal service and determine where performance gaps
occur.
Systematic audits are appropriate for a wide range of
functions and can be patterned after the typical quality
audits most companies use today. Plant managers
agreed that the focus of these tools should be to point out
how well the organization is using internal services to
meet company goals and objectives. Marketers of internal
services can use this self-assessment to consult with inhouse customers and so target support services more
effectively.

Mean rankinga

Cost control
Product quality
Planning
Scheduling and delivery
Union relations
Employee safety
Employee training
Customer contacts
Employee evaluation
Employee health
Community relations
Your own training
Hiring
Total sample
Note: a1 = highest priority; 13 = lowest priority

1.5
1.9
3.4
4.7
5.0
5.7
6.1
6.9
7.5
8.2
9.1
10.5
10.7
n = 107

Corporate commitment
Plant managers, by and large, march to the beat of two
drummers corporate executives and direct customers.
Managers consistently attempt to get all personnel inside
the plant in step with these forces. Consequently, a second
dimension involves plant managements expectations
concerning the emphasis placed on the area by corporate
executives. Regardless of the particular staff function,
plant managers tend intuitively to understand the
importance of their various responsibilities in corporate
executives eyes and direct their attention and effort
accordingly. Staff units should incorporate top executives
in their marketing effort. Plant managers indicated that
evidence of corporate commitment includes a high level
of executive presence at major staff events and meetings,
a focus on the contribution of the staff service to company

MARKETING SERVICES TO SATISFY INTERNAL CUSTOMERS

operations in corporate publications and performance

reports, and the presence of measurement systems that
reward and provide incentives to line management for
superior performance in the functional area.
For many companies, corporate executives do not
communicate health and safety concerns with the same
enthusiasm and clarity as, for example, quality and cost
control. Quality improvement and cost control tend to be
clearly articulated as corporate objectives with welldefined programmes in place to accomplish these goals.
Most managers are asked not only to participate in such
programmes in their plants, but to interface with
organizations that promote programmes to move
systematically in the direction of higher quality and cost
containment. The following focused group comment
reflects this issue:
Quality, cost and safety are not of the same importance. You
dont have the same passion. There is no question in
anybodys mind where our direction is on quality. Top
management preaches quality. Safety programmes in the
corporation are so institutionalized that we just accept
them. But you dont see the emphasis on safety at the top
that cascades to the operational level and down to the
manufacturing end.

To the degree that plant managers have formed clear

expectations of a staff function, they seek support to
arrive at these goals. Because quality improvement and
cost objectives tend to be clearly articulated, most plant
managers seek support from quality personnel and
process engineering to gain compliance. As in-house
customers begin to recognize that the corporation places
high importance on the support services, the internal
marketing task becomes easier customers are more
receptive to new approaches, and highlighting internal
success stories has greater impact on other
organizational buying units.

25

little specific competence in the discipline of health and

safety. By contrast, they will quickly point to specialists
in areas such as quality control at the plant level. The
common expectation is that health and safety personnel
do not typically have the rigorous training that is
fundamental to other line disciplines such as finance,
engineering, or quality control. A related belief is that
some union people are appointed to health and safety
positions, not because of their technical competences, but
because of their status in the organization or for political
reasons. This contributes to perceptions of nonprofessionalism in the field:
When you talk about a quality programme and a cost
programme, I see a group of analysts trained people who
know that it is part of their everyday job to provide us with
that kind of information. In quality, weve got a
diagnostician and a quality staff all the way up to the top of
the corporation. We dont have that in health and safety.

While health and safety problems have grown

increasingly complex, the competences of individuals at
the plant level are not believed to have increased at a
commensurate rate. For example, committees are often
appointed on an ad hoc basis to study specific health or
safety incidents. The incident is likely to represent an
easily identifiable health or safety breach to which
common-sense solutions are sought. This incidentresponse orientation fosters reactive rather than
proactive activities. Proactive approaches require specific
programmes and expertise that go beyond simply
stimulating general awareness of health and safetys
importance. Yet, managers indicate that this halo of
awareness often characterizes the thrust of health and
safety promotion.

Centre of expertise
A third important management expectation involves the
level of expertise provided by the staff function.
Establishing the internal service group as a recognized
centre of expertise in the organization is essential to the
marketing effort. Staff personnel must be viewed as
experts to be consulted by plant management on
important issues. This may result in providing services
or acting as a referral to the outside. In either case, the
staff serves as the broker or manager for that function in
the customers eyes. Plant managers indicate that the
background and experience of the staff are highly
influential in this regard. Equally important is the degree
of networking that the staff can provide to bring in
outside solutions and share information across units in
the company.

The extent of internal networking is also crucial to

establishing an expectation of expertise; that is, the
degree to which the staff function acts as a conduit or
information hub for solutions to management problems
experienced in other areas of the company or by other
companies in the industry. Most plant managers indicate
that limited corporate and divisional assistance has been
provided to plants in health and safety. In general,
managers contend that manufacturing plants initiate,
develop and implement their own health and safety
programmes. Plant managers believe they act
independently of other operational units in identifying
areas that require attention and in finding the resources
to develop health and safety programmes. The result is
that many plant managers believe plants are on their
own in health and safety areas. Focused group
participants expressed a pervasive sense of isolation,
particularly in the areas of health and safety planning,
training and programme development. Two typical
comments follow:

In the case study, a majority of managers believe health

and safety personnel are predominantly generalists with

We developed our own programme. I dont see the back-up

support out of the corporation that I see flowing in the other
areas. I dont see safety institutes that we can send our

26

LOGISTICS INFORMATION MANAGEMENT 8,4

executives to. We even have a cleaning school now, which

is good, but we have nothing like that for health and safety.
We have internal safety programmes in our plants. Weve
taken on a lot of them, like lead safety and confined entry.
But that has all been done by internal people who have a
number of other things to do. We havent had one accountant
come up and offer to help with safety. We havent had one
quality engineer come up and help with safety. It is unfair to
say that safety programmes dont exist, but they are very
local programmes, spearheaded at the manufacturing level.
I dont see the corporate or organizational support in safety
at any comparable scale with those of other programmes.

Decision leadership and team building

Plant managers seldom make decisions in a vacuum.
Typically, when the stakes are high, they seek input from
many individuals and groups on policy issues. Internal
marketing must recognize the complex decision process
involved. Managers will be more favourably disposed
towards investment if they expect to gain support for a
solution by assuming leadership or building an internal
team. Modelling the organizational buying process
reveals who participates in decision making and suggests
how team building can build a consensus and reduce the
internal customers perceived risk.
Without exception, plant managers agreed that
responsibilities for health and safety should reside at the
plant level. Although divisional and corporate levels may
provide input to health and safety decisions, managers
point out that health and safety problems ultimately fall
on their shoulders. The common rationale for this strong
belief in localized responsibility is that specific
manufacturing situations are best understood at the local
level. Consequently, plant managers see themselves as
ultimately responsible for plant health and safety.
While managers accept ultimate responsibility for health
and safety in the plant, they do not always assume a lead
problem-solving role. In the majority of cases where
decisions are complex and multifaceted, the manager
enlists the help of several representatives to consider the
situation jointly and form recommendations, such as:
supervisors;
engineers; and
the union.
Such teams help to access and integrate expertise while
strengthening support for the eventual solution among
the groups involved. These teams may be formal, as in
the case of task forces or committees, or an informal
group of advisers, consulted by the manager on an ad hoc
basis.
The degree to which managers expect that a team can be
formed to arrive at an acceptable solution is instrumental

in decision making. Effective staff units will foster team

formation and orchestrate cross-functional input to
facilitate management investment decisions. This aspect
of internal marketing can reduce risk perceived by
management and pave the way for decisions that have the
support of all important parties.
Operational impact
A fifth management expectation for internal marketing
involves the link to operating performance. The ability to
justify decisions financially for the internal service is
crucial to getting favourable buying decisions. This
requires an understanding of how such justifications are
developed by the organizations financial people and
enlisting their support to prepare the necessary analysis.
In the case of many internal services, it is only after
preference is determined for a particular solution that
managers actively seek financial justification. That is, the
financial impact is not in itself a decision criterion, but it
is essential to acquire funds to carry out the decision.
Many managers are uncertain of how to build effective
justifications to satisfy the requirements of financial
personnel, yet they recognize that these justifications are
necessary to get funding. In some instances, managers
may take funds from other areas or miscellaneous
accounts to enact a solution before receiving the actual
approvals and allocations.
Health and safety professionals and those in other
internal service functions can fulfil important marketing
roles with regard to financial justifications. There is a
clear need to assist management in developing
justifications that are consistent with accepted corporate
approaches to obtaining funding. At the same time, staff
should recognize that stressing cost or benefits early in
the problem-solving process may not always be an
influential catalyst for management investment in staff
functions. Often, such decisions tend to be based on nonfinancial criteria. In essence, managers determine what is
the right thing to do and then build a financial case to
support doing it. Thus, internal marketers must be:
(1) aware of the stage in the decision process at which
managers seek to justify investments financially;
(2) able to work closely with managers and financial
people to build a convincing case linking the
investment to operational performance.

Summary
The case study identified five prominent management
expectations that influence decisions to invest in staff
services. The indications are that staff who market their
services internally should direct their efforts towards
meeting or exceeding management expectations in these
important areas. The following recommendations
summarize the implications of the research for internal

MARKETING SERVICES TO SATISFY INTERNAL CUSTOMERS

marketing. Managers of in-house services and staff

functions should:
Help decision makers determine which problems
warrant their involvement and focus attention on
the tangible applications of their staff units to
business performance. This will ensure that
important initiatives for the service are not
overlooked and demonstrate staff contributions to
the organization.
Engage corporate executives to help communicate
a prominent and consistent message throughout
the organization regarding the importance of the
staff function. This helps plant management
recognize that investments in this area will be
supported at higher levels.
Establish a centre-of-expertise perception for the
function and build the professional image of staff
personnel as specialists in their disciplines. If
managers expectations of expertise are met or
exceeded, they will be more likely to consult with
the staff and have confidence in their
recommendations.
Encourage team building through formal and
informal group processes. In-plant task teams that
are charged with providing recommendations to
management will help narrow the range of
alternatives, reduce perceived risks and provide
vital support for the eventual investment
decisions.
Establish systematic procedures to justify internal
programmes and services where financial
approvals are required. These justifications should
be developed in conjunction with the financial staff
to build acceptance and support managers in their
efforts to gain funding or key programmes.
The case example of health and safety decisions illustrates
how marketing can be applied when the customer is

27

internal to the firm. Like other internal staff functions,

industrial health and safety decisions range from relatively
inexpensive, routine purchases to major corporate
investments where the solutions are complex and the
outcomes uncertain. In this setting, the proper role of
marketing is not simply one of promotion or demand
generation. It requires an understanding of the expectations of managers as internal customers. Marketing, inside
or outside the firm, involves understanding the needs,
wants and expectations of customers and tailoring the
organizational approach to provide customer satisfaction
effectively and efficiently. The implication is that staff
professionals can effectively market their services
internally by addressing management expectations in the
decision process and adjusting their approaches to meet or
exceed those expectations.
References
1. Harrell, G.D. and Fors, M.F., Internal marketing of a
service, Industrial Marketing Management, November
1992, p. 299.
2. George. W.R., Internal marketing and organizational
behavior: a partnership in developing customerconscious employees at every level, Journal of Business
Research, Vol. 20, 1990, pp. 63-70.
3. Grnroos, C., Relationship approach to marketing in
service contexts: the marketing and organizational
behavior interface, Journal of Business Research, Vol. 20,
1990, pp. 3-11.
4. Johnston, W.J. and Bonoma, T.V., Purchase process for
capital equipment and services, Industrial Marketing
Management, Vol. 10, 1981, pp. 253-64.
5. Bobbitt, H.R. Jr and Ford, J.D., Decision-maker choice as
a determinant of organizational structure, Academy of
Management Review, Vol. 5, 1980, pp. 13-24.
6. Trumbly, J.E. and Arnold, D.R., Internal marketing of a
management information system, Journal of Systems
Management, Vol. 40, 1989, pp. 26-30.

Gilbert D. Harrell is Professor of Marketing and Logistics at the Eli Broad Graduate School of Management, Michigan
State University, East Lansing, Michigan and Matthew F. Fors is a private Business Consultant in Michigan, USA.