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European Online Journal of Natural and Social Sciences 2015; www.european-science.com

Vol.4, No.3 pp. 546-552
ISSN 1805-3602

Investigating the Impact of Internal Marketing on Customer

Orientation (Case Study: Insurance Industry of Abadan City)
Sara Bavarsad Shahri pour, Leila Andervazh
Department of Business Management, Persian Gulf International Branch, Islamic Azad University,
Khorramshahr, Iran
Email: Leila.Andervazh@gmail.com

Received for publication: 09 March 2015.

Accepted for publication: 25 July 2015.

Abstract
The purpose of this study is to investigate the effect of internal marketing on the customer
orientation in the insurance industry of Iran. For this purpose, Insurance Industry of Abadan City
was selected as case study. This study is a practical research from purpose view and is a descriptive-
survey one from research methodology view. The statistical population of this study includes 250
members. For this purpose, 250 questionnaires were distributed. The questionnaire consists of 24
questions for employees and 15 ones for customers. The questionnaire was developed in five-point
Likert scale. In order to analyze the research data and test the hypotheses, both SPSS and Smart-PLS
were used. The findings revealed that internal marketing affects organizational commitment
significantly. The findings showed that the positive relationship between internal marketing and
organizational commitment is significant (p≤0.05). Another part of our findings showed that internal
marketing affects customer orientation significantly. Also our findings showed that customer
orientation affects organizational commitment significantly. The findings showed that the positive
relationship between customer orientation and organizational commitment is significant (p≤0.05).
On the other hand, the findings showed that internal marketing affects customer satisfaction through
customer orientation significantly. Finally, the findings also showed that positive relationship
between customer orientation and customer satisfaction is significant (p≤0.05).
Keywords: Customer Satisfaction, Relationship Marketing, Smart PLS

Introduction
In the past two decades, many organizations have recognized the importance of customer
satisfaction. Indeed, the organizations recognize this fact that maintaining the existing customers has
fewer costs than acquiring new ones. This is why that it is necessary to companies to maintain and
improve their interactions with customers. Indeed, organizations should recognize needs and
expectations of their customers and then attempt to satisfy them. As a result, the customers will be
loyal to the organization and its products. On the other hand, customer satisfaction is not sufficient
in the current conditions and the organizations should attain and improve their customers’ loyalty
toward organization and its products. In this regard, creating long-term relations with stakeholders,
especially customers, will decrease customer loss rate. In the current conditions, the successful
organizations create and utilize creative and innovative manpower. In such conditions, service
industries play an important role in development of countries. In this regard, insurance industry is
one of the main service industries which play an important role in the development of economic and
non-economic conditions of countries. On the other hand, intensive competition in the insurance
industry forces many managers and administrators in the competitive environment. Indeed,
managers and administrators of insurance industry are forced to explore ways for making their
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Social science section

customers more satisfied and loyal. Improvement in the quality of insurance services is one of the
most important instruments in this area. It should be noted that quality of internal services leads to
higher levels of customer satisfaction.
Introduction of internal marketing idea has recognized the importance and determinant role
of internal customers (employees) in the success of marketing plans. The purpose of internal
marketing is to insure satisfaction of internal customers and develop and improve quality of
products in achieving customer satisfaction and loyalty. The results of past studies revealed that
there is a significant positive relationship between satisfaction of internal customers and external
customers. Barett et al (1996)1 found that employee satisfaction affects quality of products and
customer satisfaction and loyalty significantly. Indeed, the purpose of internal marketing is to insure
recognition and satisfaction of needs and expectations of internal customers (Papasolomou et al.,
2004)2. This is why that the present study aimed to investigate the effect of internal marketing on the
customer orientation in insurance industry.

Thesis development, conceptual framework and hypotheses

Internal marketing
The idea of internal marketing was introduced in the 1980s for the first time. This theory has
been developed in its evolutionary trend and several different theories have been developed in this
area (Tsai and Woo, 2006). Ahmad Rafigh defines internal marketing as planned efforts to eliminate
the obstacles of organizational resistance. He also refers to internal marketing as integration and
coordination of organizational efforts to implement corporate strategies systematically. As a result,
internal marketing attempt to create and improve customer satisfaction and loyalty among
employees (as internal customers). Internal marketing is one of the main factors which can be
effective in sustainable promotion and development of service quality and customer loyalty. Indeed,
internal marketing is used for developing and utilizing marketing plans in the organizational context
and organizational communications (Rafing and Ahmed, 2008). Internal marketing attempts to
achieve this goal through considering employees as internal customers. It ca be said that internal
marketing is a customer-orientated effort that its goal is to improve quality of services and customer
satisfaction (Gountas and Walker, 2009). Kotler et al. (2006) states that services require three types
of marketing including internal, external, and reciprocal marketing. External marketing requires
preparing, pricing, distributing, and promoting products. Reciprocal marketing requires employee
skills in servicing employees and concentrates on the employee behavior. Finally, internal marketing
refers to employee education and motivation in terms of customer services. Kotler (2006) indicated
that internal marketing should exceed external marketing.
Nauru and Slater (1990) indicate that development of internal marketing perspective leads to
formation of a culture in which the most efficient and effective behaviors will be formed and
reinforced. As a result, customer services will be improved. Robert (2010) introduced internal
marketing for the first time in the marketing literature. A few studies have been conducted in terms
of the relationship between internal marketing and organizational citizenship behavior. In this
regard, Souchon and Lings (2001) believe that adoption of internal marketing efforts affects
organizational citizenship behavior and maintains employees in the organization.
Davis(2001) refers to internal marketing as a kind of strategic management philosophy
which attempts to attract, develop, motivate, and maintain employees in the organization through
providing them with a qualified and appropriate workplace. Koper and Kronin (2000)indicate that
internal marketing is an organizational effort to educate and reward employees in offering the best
services.

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 Sara Bavarsad Shahri pour, Leila Andervazh

Internal marketing is the main prerequisite of customer satisfaction which is a strategic

approach. Indeed, internal marketing challenges employees’ behavior in recognizing and reinforcing
appropriate behaviors. Internal marketing can be considered as one of the main sources of
competitive advantage. This idea, that some of the employees’ behaviors need change and
revolution, leads to market development through educating and motivating employees (Ballantine,
2003). Based on the review of literature, the first hypothesis of this study is developed as following.
H1: Internal marketing affects employees’ organizational commitment significantly.
Orientation customer
Organizational commitment is degree of employee’s commitment to an organization and
his/her involvement with the organization. Based on this definition, organizational commitment
consists of three parts: (1) serious believe on the organizational goals and values, (2) efforts to
achieve organizational goals, and (3) interests to participation in the organization. Indeed,
organizational commitment is considered as identity-based power and participation in the
organization (Sheib, 1998).
Miero and Allen (1991) developed a model of organizational commitment which consists of
normative commitment, affective commitment, and continuous commitment (perceived costs). They
indicate that employees with affective commitment continue their participation in the organization.
Indeed, affective commitment refers to the affective dependence between employees and their
organization. Continues commitment refers to employee awareness of costs of employee loss. In
other words, employees with higher levels of continuous commitment continue their participation in
the organization. Normative commitment reflects employees’ consciousness to work in the
organization. Employees with more normative commitment continue their participation in the
organization because they think that they should be in the organization. In other words, affective
commitment is employees’ inner motivation to remain in the organization. Continuous commitment
refers that employees should remain in the organization because of high costs of leaving
organization. It can be said that normative commitment is different from two other types of
commitment. Employees may experience three types of commitment in the organization. Based on
the review of literature, the second hypothesis of this study is developed as following.
H2: customer orientation affects organizational commitment significantly.
Customer satisfaction
Customer satisfaction is the feeling or attitude of customer toward a product or organization.
Indeed, customer satisfaction is the main result of marketing manager effort which plays as a role of
relationship between different steps of consumer buying behavior. If customer satisfaction is
achieved, he/she repurchase that product and vice versa. In addition, satisfied customers
communicate their successful experiences with others (positive word of mouth). On the other hand,
dissatisfied customers attempt to communicate their band experiences with relatives and friends
(negative word of mouth) which affects organizational success and profitability negatively.
Different definitions and conceptualizations have been developed for customer satisfaction by
marketing theorists. For example, Kotler refers to customer satisfaction as degree of satisfying
customers’ needs and expectations by organizational efforts. According to Kotler, satisfaction of
customer needs and wants leads to customer satisfaction.
Naser and Jamal (2008) refers to customer satisfaction as positive feeling or attitude toward
a product of supplier. They indicate that customer satisfaction is the main result of marketing
manager effort as the relationship between customer and organization. Based on the review of
literature, the third hypothesis of this study is developed as following.
H3: internal marketing affects customer satisfaction significantly.

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Social science section

Methodology
This study is a practical research from purpose view and is a descriptive-survey one from
research methodology view. The statistical population of this study includes 250 members. For this
purpose, 250 questionnaires were distributed. The questionnaire consists of 24 questions for
employees and 15 ones for customers. The customer questionnaire consists of 15 questions
including 2 questions customer satisfaction, 7 questions for company image, 3 questions for positive
customer feeling, and 3 questions for customer-employee relations. The questionnaire was
developed in five-point Likert scale. In order to analyze the research data and test the hypotheses,
both SPSS and Smart-PLS were used. The sample size was determined 250 (including 150
employees and 100 customers).

Results and Discussion

Results of confirmatory factor analysis
The results of confirmatory factor analysis are indicated in table 1.

Table 1 The results of confirmatory factor analysis

Structures

Structures

Structures

Marketing Structures
factor

factor

factor

factor
Items

Items

Items

Items
Load

Load

Load

Load
0.553 X13 0.539 X1 0.912 A13 0.708 A1
Organizational Commitment Customer
0.503 X14 0.381 X2 0.851 A14 0.778 A2
0.642 X15 0.513 X3 0.790 A15 0.806 A3

0.602 X4 0.733 A16 0.802 A4

0.450 X5 0.856 A17 0.801 A5
0.635 X6 0.849 A18 0.750 A6
Customer Satisfaction

Customer Satisfaction

0.665 X7 0.819 A19 0.783 A7

0.627 X8 0.812 A20 0.795 A8
0.563 X9 0.783 A21 0.769 A9 Custo Internal
0.581 X10 0.445 A22 0.710 A10
0.515 X11 0.381 A23 0.796 A11
mer
0.612 X12 0.338 A24 0.886 A12

Based on the results of table 1, all of the questions of this study have acceptable factor
loading (except questions 23 and 24 of organizational commitment questionnaire and question 2 of
customer satisfaction). In order to measure validity of the questionnaire, construct validity of the
questionnaire was measured. When the coefficients are more than 0.7, the coefficients will be
acceptable and vice versa (table 1). For analysisanalysis study we use confirmatory CFA
H1: internal marketing affects customer satisfaction significantly.
The findings of first hypothesis revealed that internal marketing affects organizational
commitment significantly. The findings showed that the Beta coefficient of this hypothesis is 0.956.
This value indicates that about 95% of variations of organizational commitment can be explained by
internal marketing. Since the t-vale of this hypothesis is 2.217, it ca be said that the positive
relationship between internal marketing and organizational commitment is significant (p≤0.05).

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 Sara Bavarsad Shahri pour, Leila Andervazh

H2: customer orientation affects organizational commitment significantly. The findings of

second hypothesis showed that internal marketing affects customer orientation significantly. The
findings showed that the Beta coefficient of this hypothesis is 0.441. This value indicates that about
95% of variations of customer orientation can be explained by internal marketing. Since the t-vale of
this hypothesis is 4.785, it ca be said that the positive relationship between internal marketing and
customer orientation is significant (p≤0.05).
H3: internal marketing affects customer satisfaction significantly.
The findings of third hypothesis showed that customer orientation affects organizational
commitment significantly. The findings showed that the Beta coefficient of this hypothesis is 0.395.
This value indicates that about 39% of variations of organizational commitment can be explained by
customer orientation. Since the t-vale of this hypothesis is 3.875, it ca be said that the positive
relationship between customer orientation and organizational commitment is significant (p≤0.05).
Finally the findings showed that internal marketing affects customer satisfaction through
customer orientation significantly. The findings showed that the Beta coefficient of this hypothesis
is 0.499. This value indicates that about 49% of variations of customer satisfaction can be explained
by customer orientation. Since the t-vale of this hypothesis is 7.180, it ca be said that the positive
relationship between customer orientation and customer satisfaction is significant (p≤0.0). These
results are depicted in figure 1 and figure 2.

Figure 1: The Conceptual Model Of The Study With Path Coefficients

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Social science section

Figure 2: Results T-Statistics for Hypothesis Model

This study was aimed to investigate the effect of internal marketing on the customer
orientation in the insurance industry of Iran. For this purpose, Insurance Industry of Abadan City
was selected as case study. The statistical population of this study includes 250 members. For this
purpose, 250 questionnaires were distributed. The questionnaire consists of 24 questions for
employees and 15 ones for customers. The questionnaire was developed in five-point Likert scale.
In order to analyze the research data and test the hypotheses, both SPSS and Smart-PLS were used.
The findings showed that there is a significant positive relationship between internal marketing and
organizational commitment. Another part of our findings showed that internal marketing affects
customer orientation significantly. In addition our findings showed that customer orientation affects
organizational commitment significantly. The findings showed that internal marketing affects
customer satisfaction through customer orientation significantly.

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