Implementation processes and internal marketing: Making it happen Lecture 11

A route-map for market-led strategic change Part I Customer value imperatives Part II Developing a value-based marketing strategy Part III Processes for managing strategic transformation The strategic pathway Change strategy Market sensing and learning strategy The Customer is always right-handed Strategic gaps Strategic market choices and targets Strategic thinking and thinking strategically New marketing meets old marketing Organization and processes for change Customer value strategy and positioning Implementation process and internal marketing Value-based marketing strategy Strategic relationships and networks

Agenda - 1 Why do we need to make an issue out of strategy implementation? Implementation versus strategy So, what is the thing about implementation? Implementation denial So, why doesn’t it work? Building implementation strategies

Agenda - 2 Strategic internal marketing Where does that leave us with strategy implementation?

Why do we need to make an issue out of strategy implementation? Many company change initiatives fail Implementation capabilities The need for internal marketing getting employees on our side getting managers on our side getting collaborators on our side changing culture

How groups can block effective change in a company Energy Low High The “yes … but”s or malicious obedience The ideal High Understanding The dinosaurs The dangerous enthusiasts Low

Implementation versus strategy Traditional approaches: organization, resources action lists, control systems Creates a dichotomy between strategy formulation and implementation Need better ways of integrating strategy and implementation

So, what is the thing about implementation? Implementation failures associated with separation of planning from management hopeless optimism implementation recognized too late denial of implementation problems implementation bolted-on at the end fixation implementation is a black-box

Implementation denial Failure to recognize the implementation problem Need to recognize problems and prepare for change

Recognising the implementation problem and preparing for change Perception that there is a problem High Low Ready to go Blissful ignorance High Willingness to change Low Worried stayers/ frightened rabbits Closed minds

So, why doesn’t it work? Strategy versus implementation skills diagnosing implementation problems means comparing strategy (appropriate or inappropriate) with execution skills good or bad)

Diagnosing the implementation problem Strategy Appropriate Inappropriate Success Roulette Good Execution skills Trouble Failure Bad

So, why doesn’t it work? Organizational stretch what is the relationship between the fit of the strategy with company capabilities, systems and structures and the strategy itself (new or old)?

Matching strategy to company capabilities Fit of strategy with company capabilities, systems, structures Good Poor Synergistic strategies Stretch strategies New Market strategy Conventional strategies Obsolete strategies Old

So, why doesn’t it work? Testing out the strategy versus blaming the salesperson Lip-service to strategy caused by management by assumption structural contradictions empty promises marketing bunny marketing Counter-implementation emerges

Testing market strategies Test the strategy Results Reason Is this really a coherent and complete strategy? No No implementation This strategy does not tell us what to do Yes Lip-service - we may agree with the strategy but we cannot put it into effect Is this strategy capable of being implemented by this company at this time? No No implementation Yes We do not accept this strategy - let’s see what counter-implementation can do! Have we communicated the strategy - adapted it, won support for it? No No implementation Yes Implementation (maybe)

So, why doesn’t it work? What about execution skills and competences? interacting skills allocating skills monitoring skills organizing skills

Building implementation strategies Screen strategies for implementation problems Isolate and evaluate priority implementation problems Evaluate key players in implementation Develop implementation strategies

Screening strategies for implementation problems 1. Screen strategies for implementation problems early 2. Isolate and evaluate implementation problems in detail 3. Identify and evaluate key players 4. Develop credible, costed implementation strategies - or reject the strategy

Internal and external marketing Strategy Plan Internal marketing programme Product Price Communications Distribution External marketing programme Product Price Communications Distribution Targeted at key groups in the company, alliance partner companies, and other influencers Targeted at key customers, segments and niches, and other external influencers

Role of Internal Marketing The managerial actions necessary to make all members of the organization understand & accept their role in implementation internal products-marketing strategies internal prices-changes that must be undertaken to implement the marketing strategy internal distribution-how the strategies are communicated internally (training) internal promotion-persuasive communications

Models of internal marketing Source: Ahmed and Rafiq (2002) Internal Marketing Butterworth Heinemann Chapter 2

Berry’s model of internal marketing Employee involvement and participation Treating employees as customers Attitudes towards service mindedness Jobs as products Perceived service quality Employee satisfaction Customer satisfaction Competitive advantage Application of marketing techniques internally Attraction and retention of customer conscious employees

Gronroos’ model of internal marketing Pre-launch information regarding marketing campaign Employees realise the importance of their role Interactive marketing Increased sales Supportive recruitment practices Motivated customer conscious employees Perceived service quality Customer satisfaction Increase profitability Goal interaction Supportive management Training Participate management Employees’ satisfaction Employee discretion

Rafiq and Ahmed meta-model of internal marketing Pre-launch information regarding marketing campaigns Employees realise the importance of their role Supportive recruitment practices Training Participative management Employee discretion Word of mouth promotion Increased loyalty Motivated employees Service quality strategy Supportive senior management Customer conscious/ customer orientated employees Perceived service quality Good interaction Customer satisfaction Increased profitability Jobs as products Sales minded employees Increased sales due to interactive marketing Application of marketing techniques internally Employees’ satisfaction Attraction and retention of customer conscious employees

A framework for internal marketing of services Inter-functional Co-ordination and Integration Employee motivation Marketing-like approach Job satisfaction Customer orientation Empowerment Service quality Customer satisfaction

The tools of internal marketing Source: Ahmed and Rafig

Caveats Employees as customers products may be unwanted (e.g. new methods of working) employees must accept the ‘product’ or be forced into acceptance under the threat of disciplinary action or dismissal

Caveats problem with idea of customer sovereignty make impossible demands on organisation and its resources In this approach employees do not know that they are customers even though they are treated as such

INTERNAL MARKETING MIX Number of elements under the control of management are combined and integrated in order to produce the required response from the target market. Use extended seven P’s of service marketing Explicitly recognises inter-functional interdependence and the need for an integrated effort for effective service (or product) delivery Major aim of an internal marketing programme

Levels of internal marketing Surface Structural Processual Organizational levels Critical questions What are the plans, systems and procedures in this business? Product: Plans and strategies Price: Opportunities given up Communications: Information, market research Distribution: Reports, presentations Who runs things here? Product: New strategic direction Price: Loss of control, status, initiative Communications: Sponsorship, agenda-setting Distribution: Policies, participation Who has influence here - sets the agenda, owns key processes, is an “expert”? Product: individual’s job, status, role Price: Adjustment to change, new culture Communications: Persuasion, image, influence, choice of criteria Distribution: informal communications network, social interaction Internal marketing levels

Strategic internal marketing Programme Product Price Communications Distribution Contents The strategy and the plan, including the values, attitudes and behaviours needed to make them work What we are asking internal customers to “pay” – other projects abandoned, personal and psychological adjustment to change Media and messages to inform and persuade Physical and social venues for delivering the product and communications Examples For example, the written plan, the new company initiative For example, stepping out of comfort zones for new types of operations For example, reports, plans, presentations, videos, roadshows For example, meetings, work-groups, training sessions and workshops, informal meetings, social occasions

INTERNAL MARKETING MIX PRODUCT Strategic level refers to marketing strategies sell values and attitudes needed to make a plan Tactical level, e.g. new performance measures new ways of handling customers Refer to services and training courses provided by HRM

INTERNAL MARKETING MIX Fundamental level job managers need to concentrate on the benefits of the product rather than its features employees perspective and benefits they seek consider: training needs, level of responsibility and involvement in decision making, career development opportunities, working environment facilitate hiring retention and motivation of employees Fundamental level job to achieve acceptance of new initiatives, managers need to concentrate on the benefits of the product rather than its features look at jobs from perspective of the employees and benefits they seek from it consider training needs, level of responsibility and involvement in decision making, career development opportunities, working environment

INTERNAL MARKETING MIX PRICE Psychological costs of adopting new methods of working projects have to be forgone in order to carry out new policies (i.e. opportunity cost) or to transfer pricing and expense allocation between departments opportunity costs difficult to measure precisely employees tend to overestimate costs of undertaking new practices and are inclined to resist change Benefits of adopting new policies need to be clearly explained and any fears allayed by providing employees with appropriate information

INTERNAL MARKETING MIX Internal communication/Promotion Need co-ordinated use of various techniques personal selling face-to-face presentations to individuals and groups more effective than in external marketing presenter has implicit authority behind what they are saying face-to-face communication regarded has having far greater impact than other communication methods.

INTERNAL MARKETING MIX Incentives cash bonuses awards recognition programmes prize draws competitions used to overcome short-term resistance or to motivate employees toward consistent behaviour or to increase productivity.

INTERNAL MARKETING MIX Advertising Companies need to take care of image projecting of themselves and the workforce in external advertising seen be employees as well as customers positive when positive customer-orientated attributes portrayed which employees can attempt to emulate Narrow casting developments Business TV Webcasting

INTERNAL MARKETING MIX Place/distribution Place and channels (or third parties) that are used to get to customers place is the locations where policies are announced : meetings conferences channels refers to third parties used to deliver training programmes consultants and training agencies

INTERNAL MARKETING MIX Physical/tangible evidence Environment in which a product is delivered and where interaction takes place between contact staff and customers, as well as any tangible goods that facilitate delivery or communication if the product Physical evidence essential or peripheral (tangible cues that a product has been delivered) Peripheral evidence e.g. memos, guidelines, training manuals Essential evidence - environment in which the product is delivered Special significance of particular policies may be signalled by holding conferences or by sending employees for special training to external agencies such as universities

INTERNAL MARKETING MIX Tangible cues important Documentation of policies and changes in policies important if employees are required to perform to certain standards then it is important that these standards are fully documented Training sessions tangible manifestation of commitment to standards or particular policies

INTERNAL MARKETING MIX PROCESS How customer receives a product customer consciousness may be inculcated into employees by training (or retraining) staff Can refer to whether new policies are introduced through negotiations with unions or imposed unilaterally Also refers to delivery method e.g. circulars, videos or line managers are sued to convey messages

INTERNAL MARKETING MIX PARTICIPANTS People involved in delivering product and those receiving the product who may influence the customers perceptions Source of internal marketing programme plays a crucial role in their effectiveness Inter-departmental or inter-functional communications are likely to be least effective Most effective means through immediate superior who needs to be motivated by strategic management. Direct contact between strategic management and contact staff would not by itself be sufficient for the implementation of internal marketing programmes.

INTERNAL MARKETING MIX Market segmentation process of grouping employees with similar characteristics and needs and wants include types of benefits that employees want, and roles and functions that they perform need to be segmented along motivational lines rather than departmental or other lines traditionally used in HRM Market research identifying needs and wants of employees monitoring the impact of HRM policies on employees long history in HRM in form of employee attitude surveys.

Implementing Marketing Activities Good communication is key upward communication from the front line allows management to understand problems & needs of the employees Employees must understand the implementation timetable specific activities to be performed, time required, sequence, & who is responsible

Implementing an Internal Marketing Approach Conscientious recruitment, selection & training of employees Top managers must be completely committed to the marketing strategy & overall plan Employee compensation must be linked to marketing strategy implementation Open communication must exist at all levels Organizational structure, processes & policies must match the marketing strategy

Strategic internal marketing Operational internal marketing service marketing and quality brand ambassadors internal communications innovation management corporate positioning Internal markets instead of external markets

Strategic internal marketing internal market orientation internal marketing strategy the structure of SIM

Strategic internal marketing The internal marketing programme internal market measurement internal marketing targets internal marketing evaluation The hidden face of strategic internal marketing

Causes of Improper Implementation Marketing strategy is inappropriate or unrealistic Implementation was inappropriate for the strategy or was simply mismanaged Internal &/or external environment changed significantly between the development of the marketing strategy & its implementation

Where does that leave us with strategy implementation? Execution skills versus process management in strategy implementation weak implementation management-driven implementation implementation-driven strategy integrated strategy and implementation

Process management Execution skills Execution skills versus process management in marketing strategy implementation Process management High Low Integrated strategy and implementation Management- driven implementation Strong Execution skills Implementation- driven strategy Weak implementation Weak

A route-map for market-led strategic change Part I Customer value imperatives Part II Developing a value-based marketing strategy Part III Processes for managing strategic transformation The strategic pathway Change strategy Market sensing and learning strategy The Customer is always right-handed Strategic gaps Strategic market choices and targets Strategic thinking and thinking strategically New marketing meets old marketing Organization and processes for change Customer value strategy and positioning Implementation process and internal marketing Value-based marketing strategy Strategic relationships and networks