Internal Marketing - Implications for Leadership, and Change - Essay Example

Internal Marketing: The Implications for Leadership, Change and the Organization (Yahoo) The Concept of Internal Marketing Internal marketing is oneof the management strategies to ensure that high service quality if delivered to the company’s clients. It is the opposite of external marketing wherein the management is concerned about the satisfaction levels of their employees, their customers and whether any current management strategies need to be changed or modified. More often than not, the initial phase of internal marketing focuses on the motivation and satisfaction levels of the employees of the company. This is due to the fact that the main reason why internal marketing is needed in the first place is so that it can develop and improve the quality of service being provided to the customers. It so happens that the employees themselves are very much a part of delivering a certain quality of service. However, it must be noted that all employees are not consistent in their performance levels, and such inconsistencies may result in variations with the quality of service being exhibited or delivered. Secondly, internal marketing also focuses on developing customer orientation. There is a need that any management or marketing strategies implemented by the company is responsible to their needs (Ahmed & Rafiq, 2002). Gudmundson & Lundberg (2010) says that the main purpose of internal marketing is to encourage all members of the organization (especially those who are directly involved in service encounters) to boost their performance levels. In fact, the main goal of the entire internal marketing process is to make sure that the organization is able to put suitable employees into higher positions, such as managerial positions. In addition, the aim of the process is to also boost the retention rate among all staff members, plus encouraging the employees to be more customer-oriented. According to Grönroos (1994), in order to encourage customers to patronize a certain product or service by the company, it is important that the company does not just focus on the interactions that take place between the buyer and the seller. It is also important that the actual interactions that take place provide the company with the opportunity to market their organization. Thus, there is a need for managers to train their employees to be both ‘sales-minded’ and ‘customer oriented.’ The third phase of internal marketing, as was mentioned, pertains to the implementation of management strategies and bringing about change within the organization. The key to making an organization successful is to make sure that the tasks being performed by all the members of the organization fit well with the objectives of the company. In the same process, it is also important that the employees are able to understand and recognize the reason behind strategy implementation and the need for changes (Ahmed & Rafiq, 2002). Varey & Lewis (2000) mentions that there are three principles of internal markets. In any organization with the intention to conduct internal marketing, there is a need to 1) change the hierarchy of personnel and instead convert them into ‘internal enterprise units.’ In this context, instead of simply having different departments within the company, these are replaced with ‘internal enterprises,’ that are part of the entire internal market system. Thus, all enterprises are held accountable for their performance, and they are also given more control over the tasks that they have to accomplish, just like an external enterprise. Once internal enterprises are able to hold alliances with other internal enterprises, corporations are able to establish form a global economy. Another principle that companies must look towards 2) creating an economic infrastructure that would be used in order to help in the decision-making process. Under this second principle, executives are in charge of designing and regulating the infrastructure of the organization’s economy, in the same way that the governments manage the economy of the nation. This principle also means that the management is responsible for encouraging the establishment of different business arrangements. Examples of these are venture capital firms, distributors and the like. The third principle is 3) companies have to provide leadership in order to encourage collaboration within all the members of the organization. In an internal economy that fosters collaboration, activities include the solving of problems as a group and the sharing of technology. Berry & Parasuraman (1991) believe that when a company practices internal marketing strategies, and the strategies being practices are effective, the company will find itself 1) competing for talent in a more aggressive manner than before, 2) offering a vision for its employees to have a definite purpose to come to the workplace, 3) equip the employees with sufficient knowledge and skills so that they can accomplish their tasks in the best way possible, 4) being able to establish relationships among employees, and this in itself also allows all staff members to benefit from each other, 5) being able to ‘leverage the freedom factor,’ 6) measure performance levels and reward good performance exhibited, and 7) being able to ‘base job design decisions on research.’ Khosrowpour (2004) mentions in his paper that many companies in the dotcom sector have failed in the past because of their lack of marketing strategies. Managers working in a dotcom company usually do not understand that in order for their company to survive, there is a need for ‘sound prices, costs and profits relationships.’ There are also some managers who do not place too much importance on the acquiring of customers and boosting their loyalty. Consequently, companies that do realize the importance of loyal customers spend too much on keeping their customers, and even more so, encouraging their loyalty. With the focus being on internal marketing, one of the reasons why many dotcoms have also failed is because there is not so much attention being paid to human resource management. In fact, from the very beginning of the recruitment process, managers fail to hire employees that are competent and efficient enough to contribute to the company’s development. Framework Utilized According to Paley (1999), the main problem being faced by most web-based companies in the world today is the tough competition that similar companies bring. Thus, such companies need to constantly be on their feet in order to claim a large piece of the market share. Apparently, there are two major components or elements of competitive analysis. The first is ‘external analysis’ and the second is ‘internal analysis.’ The latter allows companies to establish their own views and opinions about their competition, and it also allows them to analyze and assess the abilities of their own organization. For this paper, the researcher has decided to make use of the Competitive Analysis Framework, which is beneficial in the field of internal marketing. The framework shall be displayed in Figure 1 below. The main idea behind these strategies is that when it comes to managing an organization (especially those that have to deal with really heavy competitors, there is a need for companies to strike a balance between their own internal activities and external market conditions. For instance, companies should not only focus on cutting costs and they should also not just focus on their customer base in order to retain its profitability. At the same time, they should make sure that they also take care of their own employees, while at the same time, satisfying their customers by giving the best performance (Paley, 1999). Since what is being discussed are companies who have set up shop in cyberspace, there is a need for these companies to focus on their technical and customer service. The following sections shall present three of the most popular and most used websites on Cyberspace, namely Facebook, Google and Yahoo! and how each of these companies exhibit internal marketing within their organization. In order to facilitate detailed analysis of the following websites, the researcher shall make use of the framework above. Facebook One of the most popular social networking websites of today is Facebook, which was founded by Mark Zuckerberg, and his fellow students Eduardo Saverin, Duston Moskovitz and Chris Hughes, while all were still studying at Harvard University. At first, membership to the website was only limited to students studying at Harvard, but it later expanded to include other university students, high school students and soon, everyone who had access to the Internet, and had valid email addresses. At the moment, the website has around 400 million users all around the world, and this number continues to grow. These users make up what the company may call its customer base, and there is currently no age limit as everyone can sign up for an account no matter what their age. Since the websites gathers its finances from ad hosting, this makes up its ‘financial resource’ and is also one of the website’s strengths. The website allows its users to connect to each other by allowing them to add friends, send messages, post content (whether they be photos, videos and the like). The friends of a user would also be able to get notifications about the activities of other users, and all users also have access to all sorts of applications, mainly for the purpose of entertainment. Thus, users can also play games with other users (Sarah, 2008). The website is basically free for the users, but it is able to generate profits by hosting advertisements. When it comes to hosting such banner advertisements, Microsoft is actually the website’s exclusive partner (Facebook.com, 2010). Based on a marketing research study conducted by conScore, Facebook collects the same amount of data from its visitors in the same way as Google and Microsoft does. However, Yahoo! is still at the top, collecting more data than all the websites just discussed (Story, 2008). Thus, Yahoo! is quite a tough competitor for Facebook to beat, especially since Yahoo! has been around for a longer time than Facebook has, in the cyber world. The concept of ‘enterprise social software’ refers to the usage of social software within a business organization. This involves social and networked modifications to the company’s intranets and other software platforms that are used in order for companies to organization their communication. Companies in both the public and the private sector are actually trying out these tools, and they also try to find ways wherein they can create business value and enhance the level at which the employees are engaged with their work. Previously, companies have exhibited a ‘command and control’ approach when it comes to the management of the technologies that they use. In a company, the information technology (or IT) departments have the responsibility of making sure what people have access to what products. This is not always seen to be a positive thing in the eyes of some employees who feel that they should have access to some technology that they also have access to when they are at home. The usage of Facebook is a perfect example. Since social software is mostly free, more and more employees tend to experiment with new tools even without the knowledge of their organization (Marfleet, 2008). Clearly, Facebook has grown to be quite popular among business organizations all around the world. This information can be useful for the company in conducting its customer analysis since they can conceptualize and produce new products to offer such business organizations. At the moment, there are also quite a large number of business organizations that have decided to make use of Facebook as part of their own marketing plans. It has been suggested that one of the best ways through which Facebook can practice its internal marketing strategies would be to first examine the culture and the leadership being exhibited by the company and its staff members. This has to be done in order to determine how the employees behave. The leader and founder of Facebook, Mark Zuckerberg, has been reported to not always provide the community with what it wants or expects. In fact, there have been reports saying that the Facebook headquarters is very much similar to a dorm room, which employs young employees (Owyang, 2009). In this context, it seems that Facebook has a lot of catching up to do in terms of assessing their own internal marketing strategies. Such a description of how Facebook manages itself also shows how their 1) strategy 2) strategic priorities and 3) cost. Clearly, Facebook does not want to spend a lot for office space in an extravagant location. This may cut costs, but at the same time, may not allow them to give off a good impression to the rest of their competitors in the cyber industry. On the other hand, this may also prove to be the strength of the company since they have more financial resources to spend elsewhere instead of simply focusing on matters that its founder believes to be quite unnecessary. When it comes to dealing with the employees and helping to boost their performance levels, Facebook founder Mark Zuckerberg believes that the behaviours of human beings can be influenced by the incentives with which they are given. This makes up the company’s performance analysis. The same belief is also what Zuckerberg practices, and he feels that employees will only work harder if they are motivated enough. Since there are different employees working for different departments, all employees need different incentives to help boost their work performance. The engineering department for instance, can be expected to work better if they are provided with the best products to build with. Business executives who are also part of the company may be motivated even more with incentives that come in the form of finances. In addition to such incentives, Zuckerberg has also come up with a compensation scheme that’s unlike other companies in the IT sector. This is because other companies usually follow the scheme of providing their employees with a ‘single set of stock options.’ This means that although the employee is entitled to a bonus if he/she performs well, it is impossible that the stock option grant will be increased. However, in Facebook, if employees do well in their assigned tasks, they have the opportunity to increase their stock option count in a year and a half ‘refreshing cycles.’ The only major condition is that managers have to ‘force-rank’ the staff members. In other words, if the employees are not ranked well enough, they would not be entitled to the incentives due to them and the compensation scheme as described (Marshall, 2009). Google Google was first launched in the year 1996. Its founders are Larry Page and Sergey Brin, both of whom were students studying at Stanford University at the time. In fact, Google was first part of a student project, named the Stanford Digital Library Project (or SDLP) at the time. The aim of the project was to develop technology in such a way so that it forms an ‘integrated and universal digital library.’ In the beginning, it received its funds from the National Science Foundation, in addition to funding being provided by other federal organizations. Such made up the company’s primary financial resource at the time, although recently, its financial resources have definitely expanded considering its immense popularity. Google actually got its name from a typo- ‘googol,’ which actually means a number that is represented by 1 and one hundred zeroes following it. It was in the late 1990’s when Google began to attract followers, who frequented the website in order to conduct their Internet searches. One of the reasons why they were attracted to Google was because of the simple design of the website itself. The simplicity of Google’s design and its ability to remain at the top-of-mind of web surfers when conducting an internet search may be considered to be among the company’s strengths. In the first few years of the 12st century, to this day, Google started to sell its advertisements that are linked to ‘search keywords,’ which again makes up part of Google’s financial resource. In order to maximise the speed of the webpage loading, the ads were ensured to be presented as text, thus the presentation in itself is uncluttered. Google basically sold keywords by combining both the price and the number of clicks that other websites received. For instance, per click that a website receives entitles Google to $ 0.05. Today, in the United States alone, it has been identified that Google is utilized for about 2/3 of online searches. In the same country, the company has been able to acquire 70 percent of the revenue that it earns from advertising. 90 percent of its revenue on the other hand, comes from Europe (Swift, 2010). What with such revenue increasing every day, there may be a need for the company to analyze their resources and make appropriate budget assessments, especially when it comes to marketing themselves. When Google started to become a household name, other dot-com competitors were losing their share of the Internet market, (among them being Yahoo!) thus making Google one of the world’s leading companies to this day. However, in a recent article released by Swift (2010), Google competitor base has been enlarging, especially with the increasing popularity of social websites. Among their competitors include social networking websites such as Facebook, Twitter and Yelp. Judging from such intense competition with these websites, there is indeed a need for Google to step up. According to Pappalardo (2008), Google’s internal marketing system is just as important as the products and services that it offers to its consumers. Despite Google being a large company, its own company culture and atmosphere is still relatively small and does not fit with its size. Through its tools and services, Google intends to make the world a smaller place, by connecting its consumers. Since the company does not discriminate and it continues to diversify, it has been very successful in becoming one of the top search engines in the world. Another reason why Google has also been successful is because it focuses first on its internal marketing process instead of marketing externally. Of course, the latter is also important, and the success of Google lies in the fact that it offers its services to a cause that will benefit the whole world, through the help of information and technology. Aside from being a search engine, the company also supports and initiates projects that aim to search and develop more renewable energy sources that help make the environment even healthier. One such example is RechargeIT, which helps to cut down carbon dioxide emissions (Pappalardo, 2008). Another popular and successful project that the website has launched would be Google.org, wherein the company can practice philanthropy. The main objective of Google.org is to make sure that issues such as global warming, public health and poverty are all addressed to (Hafner, 2006). Such aims constitute part of the company’s strengths since it focuses on doing its own share for the benefit of the environment, clearly showing that it is not focused on gathering revenues for itself alone. Yahoo! Yahoo! is one of the leading companies that provides Internet services all over the world. It was first founded by David Filo and Jerry Yang in the year 1994, and at the moment, the chief executive officer of the company and a member of the company’s board of directors is Carol Bartz. It is actually the oldest brand being presented in this paper, and its best known for being a search engine. However, it also hosts a number of services for its consumers such as Yahoo! Mail, wherein its consumers can gain access to their emails, Yahoo! News, wherein the consumers can read the latest news about any subject online, Yahoo! Video, wherein consumers can upload and share their videos with the public, Yahoo! Directory, wherein consumers can communicate with their contacts. Other products also include Yahoo! Messenger, Yahoo! Finance and Yahoo! Groups. Yahoo! Mail has in fact, been considered to be the largest email service in the world, gathering almost half of the world’s market share. Yahoo! Mobile, on the other hand, is a new service, but nevertheless taking the world by storm. It basically allows its consumers to gain access to their email, their instant messenger and their blogs with the use of the mobile phones. They can also gain information from their phones, and they can also search for new information and acquire other alerts as well (Yahoo Investor Relations, 2009). In January 2010, Yahoo! has been named as possessing the world’s market share when it comes to displaying advertisements online. The percentage of Yahoo! in the US market is actually 17 percent, making it ahead of Microsoft (which follows it) at 11 percent and AOL, which managed to gain at least 7 percent of the US market share (comScore, 2008). It has been said that one of Yahoo!’s strengths lies in its ability to be present in several parts of the world, making it a global competitive force to reckon with. What with cyberspace expanding, and numerous popular websites sprouting, among Yahoo!’s strategies would be to take advantage of such expansion, and establish further business opportunities with their business units, located in continents such as Australia, Asia and Europe. One of the biggest problems being faced by Yahoo! today is the increasing competition that it receives from websites in various areas around the world. Although it already receives intense competition from websites such as AOL and Google, improvements in technology have shown that other countries have their own search engines. For instance, China has developed its own search engine in its own language, thereby minimizing the need of the Chinese to depend on a search engine that is US-based (Marketingteacher.com, 2010). Such characterizes just some of the company’s weaknesses, thereby increasing its need to think of more effective marketing strategies to take hold of a larger share of the global market. When it comes to internal marketing, one of the perfect examples of how Yahoo! exhibits its internal marketing strategy is by establishing the Yahoo! Employee Foundation, which was founded in the year 1999. This organization is actually one that is non-profit and focuses on utilizing the time, the talent and skills of the employees in order to serve various communities all around the world. Of course, in order to carry this out, there is also a need for Yahoo! to contribute its financial resources to the organization. However, all these finances are contributed by the employees themselves, and all the activities are done voluntarily. Basically, the organization allows the employees to practice their leadership skills, by using them in community services. Some of the events being supported by the Yahoo! Employee Foundation include Habitat for Humanity, Classroom Buddies (where employees volunteer at schools), and Rebuilding Together (For Good, 2010). Conclusion From this paper, it can be seen that all three companies operate in a different manner despite belonging to the same sector in the IT industry. Facebook, one of the most popular social networking websites in the world today, conducts its internal marketing by focusing on the needs and wants of their employees. Zuckerberg, the website’s founder, believes that in order to improve the behaviours of their employees and boost employee performance, there is a need to identify the needs and wants of a certain employee according to his line of work within the company (Marshall, 2009). Google, on the other hand, focuses on exhibiting corporate social responsibility within the organization, in the hopes that this could influence the behaviours of their employees to improve their work performance. For instance, Google has decided to participate in a variety of programs that help save the environment, and the company also fosters philanthropy to other charities and non-profit organizations, with the intention that the proceeds go to a good cause. The company believes that by exhibiting such good behaviour, the employees are likely to follow suit (Pappalardo, 2008). Yahoo!, the oldest of all the websites previously mentioned, believes that by allowing their employees to form and operate other projects that is not necessarily related to the company, employees are able to hone their leadership skills. Such leadership skills may indeed be useful towards the improvement of the company’s operations, since the employees are better prepared to undertake more complex and demanding tasks. Through the framework discussed above, these companies can actually make use of such a concept in order to increase its chances of keeping a foot in their chosen markets. Clearly, this paper has shown that each company has several competitors all of whom gain strength every day, despite the fact that some companies (such as Yahoo!) have been around for longer. To the researcher, what seems to be important is that these companies must evaluate their own respective core competencies. This may be done by first tapping into the efforts and the ideas of other members of the organization, all of whom are capable of contributing something worthwhile for the benefit of the company. This results into increased competencies, thanks to the input of several team members. The researcher also feels that there may be a need for these companies to focus more on balancing their efforts in several areas. For instance, instead of simply focusing on how the company should please its market or customer base, they should also focus on pleasing their employees, all of whom play a very important role in ensuring the company’s success. References Ahmed, P. K., and Rafiq, M. (2002) Internal marketing: tools and concepts for customer focused management. Berry, L.L. and Parasuraman, A. (1991) Marketing services: competing through quality, Free Press, Illustrated Edition. comScore (2008) Fox interactive media ranks No. 1 in page views, Yahoo! sites attract the most unique visitors. Business Week. Retrieved on April 2 2010 from http://www.comscore.com/press/release.asp?press=1152 Facebook (2010) Product overview FAQ. Retrieved on April 2 2010 from http://www.facebook.com/press/faq.php#Facebook+Ads For Good (2010) Encouraging our employees to give back. Retrieved on April 2 2010 from http://forgood.yahoo.com/social_responsibility/employee_volunteerism.html Gronroos, C. (1994) Service management and marketing: customer management in service relationship management approach, 2nd Edition. Gudmundson, A., and Lundberg, C. (2010) Internal marketing- a way of improving service quality. Retrieved on April 2 2010 from http://www.wasa.shh.fi/konferens/abstract/d6-gudmundson-lundberg.pdf Hafner, K. (2006) Philanthropy Google’s way: not the usual, The New YorkTimes. Retrieved on April 2 2010 from http://www.nytimes.com/2006/09/14/technology/14google.html Khosrowpour, M. (2004) Innovations through information technology, Volume 1. Marfleet, S. (2008) Enterprise 2.0: What’s your game plan? What, if any, will be the role of the information intermediary, Business Information Review, 25, 152. Marketingteacher.com (2010) Yahoo! SWOT. Retrieved on July 20 2010 from http://www.marketingteacher.com/swot/yahoo-swot.html Marshall, M. (2009) Matt Zuckerberg: the evolution of a remarkable CEO. Venture Beat. Retrieved on April 2 2010 from http://venturebeat.com/2009/10/02/mark-zuckerberg-the-evolution-of-a- remarkable-ceo/ Owyang, J. (2009) Web strategy. Retrieved on April 2 2010 from http://www.web- strategist.com/blog/category/facebook-strategy/ Paley, N. (1999) The manager’s guide to competitive marketing strategies, 2nd Edition, CRC Press. Pappalardo, M. (2008) Marketing 101: Google’s internal and external environment. Retrieved on April 2 2010 from http://markpappalardo.blogspot.com/2008/10/googles-internal-and- external.html Sarah, P. (2007) A brief history of Facebook, The Guardian, London. Story, L. (2008) To aim ads, web is keeping closer eye on you. The New York Times. Retrieved on April 2 2010 from http://www.nytimes.com/2008/03/10/technology/10privacy.html?_r=1 Swift, M. (2010) Google’s stated list of competitors grows from 2 to 10. Retrieved on July 20 2010 from http://www.physorg.com/news187517187.html Varey, R.J. and Lewis, B.R. (2000) Internal marketing: directions for management. Yahoo Investor Relations (2009) Frequently Asked Questions. Retrieved on April 2 2 010 from http://yhoo.client.shareholder.com/faq.cfm Read More