Vol. 1, Issue 2, February 2014, pp. 78-87.

International Journal of Modern Management & Foresight

Journal Homepage: IJMMF.COM

INFLUENCE OF INTERNAL MARKETING ON

RELATIONSHIP MARKETING IN TOURISM INDUSTRY:
CASE STUDY: KERMAN TRAVEL AGENCIES
Abolfazl Tajzadeh Namin1, Mahsa Soltaani Moghaddam2*
1

Faculty Member of Allameh Tabatabayi University (PhD), Marketing Department, Allameh Tabatabayi
University.
2
* M.A student in Tourism Management, Marketing Department, Allameh Tabatabayi University.
[email protected]

Abstract
Today tourism is one of the most lucrative industries in the world. So many destinations
desire to have its advantages. Like other industries, importance of attracting and maintaining
customers is undeniable and makes it vital to work on relationship marketing. Relationship
Marketing focuses on establishing, maintaining and developing the relationships with
customers and other stake holders. Actually, it is marketing activities that are aimed at
developing and managing trusting and long-term relationships with larger customers. Many
factors may be effective in this process; one of them is internal marketing. So, this research
investigates the impact of internal marketing on relationship marketing in tourism industry.
The statistical society of this research constitutes employees of Kerman travel agencies and
the customers of these travel agencies. The first group ample size is 116 and the second one
is 121.This research is an applied one based on the aim of the study and from the aspect of
the manner of data collection is a descriptive research and of the correlation type. Regression
analysis based on SPSS software and Factor analysis and structural equation model by PLS
software are used to consider the relation between latent variable. Findings show the positive
impact of internal marketing on relationship marketing, and its components including trust,
bonding, reciprocity and empathy however, just the hypothesis of impact of internal
marketing on shared value and communication was not confirmed.
Keywords: Internal Marketing, Relationship Marketing, Tourism Industry, Travel Agency

Namin, A.T., & Moghaddam, M.S(2014)

1. Introduction
In competitive business context, customers are rare products that companies and sellers pay
much to obtain hem, because they know customer is the first and last way to succeed. If the
company be the best in his field but there is nobody to receive its product (good or service),
and pay for it. This company or organization may lose the competition very soon. In recent
two decades, main changes occur in marketing environment which leads to changes in
marketing thoughts. As the markets grow and the customers became rare resources, the
Concept of Relationship Marketing was introduced as a new idea. Today relation versus to
transaction becomes a norm in many industrial economies (Flambard-Ruaud, 2005).
Relationship Marketing emphasizes on establishing, developing and maintaining successful
relationship with customers. It was first introduced by service industry and is considered as
the alternative to traditional marketing concept which focuses mainly on transactional or
attracting new customers. Relationship marketing shifts marketing towards maintaining longterm relationship with customer (Seng, 2006). At the center of the relationship marketing
paradigm is the notion that making the most out of existing clients is essential for long-term
profitability. Retaining clients by developing relationships with them is crucial to establishing
and maintaining a competitive advantage in the market (Flambard-Ruaud, 2005).There are
some requirements to implement relationship marketing. One of the most important is people
who the customers are directly faced to. Actually, the employees have key roles in success or
failure of the organization. The motivated and satisfied employees are essential for the
organization, because this valuable resource makes differentiation. Employees make an
organization alive by providing creation, vision and motivation. They are preparing the
necessary labor to production or services. Employees are of the main organization resources
or in some opinion they are the most important. Employees, who are job dissatisfied, cannot
do their best for the customer and they are not efficient (Tavakoli and Beheshti pour, 1389).
The relationship of internal marketing and relationship marketing in turbulence tourism
environment is a good help for organizations which want to have better financial performance
by long term relationship with customers and maintain present customers.
The urgent for any business to survive is recognizing customer need, trying to fulfill it, and
finally make the customer loyal by making differentiation. To do this, it is necessary to use
modern tools. Relationship marketing is a useful strategy. Relationship marketing by
focusing on recognizing customer needs makes competitive advantages (Gummesson, 1999).
For good services, organizations need good employees and by training and motivating, make
them more developed. All these factors became scientific in internal marketing concept.
Especially, in tourism industry, this is a service industry and customers face employees
(specifically front office employees) repeatedly. To better understanding of the relation
between these two marketing strategy (internal marketing and relationship marketing),
present research concentrate on tourism industry and the case study of Kerman travel
agencies.
79

Namin & Moghaddam (2014)

2. Literature Review
Grnroos (1994) do the research of From Marketing Mix to Relationship Marketing:
Towards a Paradigm shift in Marketing and noted that just regarding marketing mix is not
enough in this era and proposed shift to relationship marketing; he continued that internal
marketing is a prerequisite for external marketing. Flambard-Ruaud(2005) attempted to
bridge the gap in existing literature as no adequate conceptual framework exists as yet. It
aims to contribute to the knowledge of the reasons for the emergence of relationship
marketing in Western economies and makes a brief comparison of the study of relationships
in Western and Eastern literature so as to identify how culturally-based relationships are
formed. The purpose of Frost, Nordlof and Svensson (2009) in their thesis on Relationship
Marketing in the Travel Industry is to analyze how Stockholm based travel agencies
understand and use relationship marketing and how it is perceived by customers. From the
interviews with the companies they found that the main efforts of relationship marketing that
the companies are involved in are delivering personalized travel and high service quality to
customer. It was found in the interviews with customer that their view on what makes good
service is similar to that of company views. What is most important to customers is that the
perceived quality matches, or exceeds, the experienced one.
2.1. Relationship Marketing
Traditional marketing theory was mainly focused on transactions and had no attention to
maintain customers. The globalization of business and the evolving recognition of the
importance of customer retention and market economies and of customer relationship
economies, among other trends, reinforce the change in mainstream marketing (Grnroos,
1994).
The increasing importance of strengthen the relationship with customer to establish a
profitable and ongoing business is obvious. In this context, the concept which attracts
attentions is Relationship Marketing. Companies build long-term relationship with their
customers which lead to satisfaction for parties involved (Frost et al., 2009).
Relationship Marketing stresses on building and management of relationship in a social
context. It means a change in focuser from products and firms as units of analysis to people
and organizations(Flambard-Ruaud, 2005). Establishing and maintaining long-term and
profitable relationships have traditional roots. Scholars researched on selling history between
1840 & 1950(Skalen, 2010) and showed how sellers were differentiated by their repeated
sales. They minded their customers and consider them so valuable, while there were some
sellers by non-repeated sales who just pay attention to gains. They did not know the value of
the customer after the end of the transaction (Skalen, 2010).
Long-term relation approach should be considered as important as attracting new customers.
Many companies make mistake in concentrating only on attracting new customers instead of
present customers (Dehdashti & Fayazi, 2011).

Namin, A.T., & Moghaddam, M.S(2014)

2.2. Internal Marketing (IM)

The Internal Marketing was first introduced by Berry et al. (1976). The IM refers to the use
of marketing perspective for managing an organization human resources. The main concept
of internal Marketing is to count employees as internal customers, and job as a product, a
product that should satisfy the needs and requirements of customers (Mousavi Davoodi and
Kaur, 2012).
In other words, the main logic in internal marketing is to accept this point that it should be
behaved with employee like internal customers (Gummesson, 2000). Kotler and Armstrong
(1991) viewed internal marketing as the building of customer orientation among employees
by training and motivating both customer-contact and support staff to work as a team (Ting,
2011).
Grnroos (1994) asserted that without active and continuous internal marketing efforts, the
interactive marketing impact on customers will deteriorate, service quality will suffer and
customer will start to defect with negative effects on profitability as a result. Gummesson
(2000) suggested that internal marketing is a strategic operation that combines marketing and
human resource management in order for first-line service personnel to provide the best
service when interacting with customer.
Barnes, Fox and Morris (2004) suggested that marketing has traditionally concentrated on
external customers but in recent years has begun to emphasize the need to understand internal
customers and the relationships with the organization and external customers. By satisfying
the needs of its internal customers, the organization becomes a whole with its employees; in
turn, want to satisfy the needs of the external customers.
Internal marketing, which is derived from marketing management in the service industry,
emphasizing that organizations should treat, value and respect employees from an internal
customer's perspective to attract, develop, motivate and retain qualified employees (Ting,
2011).
2.3. Importance of IM
The key concept in IM is "employees as customers". The logic of this is that by satisfying the
needs of internal customers, an organization should be in a better position to deliver the
quality desired to satisfy external customers (Ahmed & Rafiq,2003). Kale (2010) reveals the
importance of internal marketing by stating that recruiting and retaining quality employees in
a service establishment requires designing job products that attract, develop, and motivate the
appropriate type of employees. This application approach requires an understanding of the
internal customers aspirations, attitudes, and concerns. Consequently, such understanding
develops market research, experience, and constant communication across all levels within an
organization (Tag-Eldeen & El-Said, 2011).
81

Namin & Moghaddam (2014)

3. Methodology
3.1. Hypothesis
Internal Marketing has a direct and positive influence on Relationship Marketing in Kerman
Travel Agencies. There are some minor ones:

H1: Internal Marketing has a direct and positive influence on trust.

H2: Internal Marketing has a direct and positive influence on empathy.
H3: Internal Marketing has a direct and positive influence on communication.
H4: Internal Marketing has a direct and positive influence on shared value.
H5: Internal Marketing has a direct and positive influence on bonding.
H6: Internal Marketing has a direct and positive influence on reciprocity.

This research is an applied one according to the purpose of the study and it is descriptive
correlation type in terms of nature and methodology. Employees of Kerman Travel
Agencies and their customers constitute statistical population of this research. According to
these two population and based on the numbers of questions, using 5q<n<15q(Raminmehr
&Charstad, 2013:123, Abdolvand & Ghafari ashtiani, 2009) 150 questionnaires for each
population were distributed. For customers 121 and for employees 116 questionnaire were
returned and analyzed. Model used for Relationship marketing is developed by Sin et al.
(2002) and for Internal Marketing the standard questionnaire of Foreman & Money (1995)
is used. Statistical Package for the Social Sciences (SPSS) software and Partial Least
Squares (PLS) software were used for data analysis, model validation and testing
hypotheses. Descriptive statistics were used for analysis of demographic data. Kolmogorov
Smirnov test (KS test) was used for data normality.
To assess reliability, Cronbach's alpha test, Spearman Brown test, split-half method, and
composite reliability coefficient were used. For evaluation of validity, convergent validity
(AVE) was used. For investigation of relation among variables, regression was used. For
investigation of relation among variables, Variance-Based Structural Equation Modeling
(VBSEM) or Partial Least Squares (PLS) were applied.
3.2. Questionnaire Reliability and Validity
In this work the standard questionnaire of Foreman & Money(1995) which is used in many
marketing researches, is used to evaluate Internal Marketing variable. Foreman & Money
suggested three factors for internal marketing including Vision, development and Reward.
Cronbachs alpha coefficient for this questionnaire was obtained as 0.954 by SPSS
software, suggesting high and acceptable reliability. For relationship marketing, the Sin et
al.(2002) model was used in designing the author-made questionnaire. This model consists
of six factors; trust, empathy, communication, bonding, reciprocity and shared value.
Cronbachs alpha coefficient reported as 0.958, representing acceptable reliability.

Namin, A.T., & Moghaddam, M.S(2014)

Convergent validity was used for evaluating questionnaire's total validity. Convergent
validity means that the collection of indices determines the main construct. In order to
evaluate convergent validity, Average Variance Extracted (AVE) is used in Smart PLS
software. Value of this coefficient varies between 0 to 1, values larger than 0.5 are accepted.
Minimum AVE as 0.5 denotes adequate convergent validity. It means one latent variable
can account for over half of scattering of its indices in average.
Table 1. Convergent validity coefficient for the model's latent variables
AVE
0.7889
0.7288

Aspects
Internal Marketing
Relationship Marketing

As it is observed in Table 1, AVE is larger than 0.5 for the model's latent variables. Thus it
can be said that convergent validity for variables of the questionnaire is in optimal level.
3.3. Hypotheses Testing Based on Regression
Main hypothesis was evaluated in two ways, one through multivariate regression based on
SPSS software, and the other way is based on path coefficients and t-statistics using PLS
software. Minor Hypotheses were evaluated through SPSS software, results of which are
given in the following.
Table 2.Hypotheses Testing (Results obtained from regression analysis)
Hypothesis

Correlation
Coefficient

Adjusted Coefficient
of Determination

T-statistics

Results

Influence of Internal
Marketing on
relationship Marketing

R=0.671

R2.adj=0.414

3.509

approved

Influence of Internal
Marketing on trust

R=0.840

R2.adj=0.686

5.995

approved

Influence of Internal
Marketing on empathy

R=0.673

R2.adj=0.417

3.527

approved

Influence of Internal
Marketing on
communication*

R=0.541

R2.adj=0.245

2.490

approved

Influence of Internal
Marketing on shared
value

R=0.461

R2.adj=0.160

-2.012

rejected

83

Namin & Moghaddam (2014)

Influence of Internal
Marketing on bonding

R=0.615

R2.adj=0.336

3.017

approved

Influence of Internal
Marketing on reciprocity

R=0.701

R2.adj=0.458

3.812

approved

*According to PLS software, communication factor load is not acceptable (less than 0.4), so
it is excluded from the model.

4. Results
In order to confirm and investigate model variables and its constituents and provide final
model for relationship between Internal Marketing and Relationship Marketing and its
components, PLS software was used. According to Fig 2, values on the measurement model
relationships (relation of the indices with aspects) suggest factor loads and values on
structural model relationships (relation between aspects) denote path coefficients.

Fig 1. Factor loads and path coefficients of variables and model constituents

Factor load should be larger than 0.6, if it is smaller than 0.4 it is considered as small and it
should be excluded from index set. Considering analysis results, factor loads of constituents
of internal marketing including vision, reward and development are0.855, 0.950 and 0.962
respectively, which are larger than acceptable level (0.4), thus role of three factors as
internal marketing constituents was confirmed.

Namin, A.T., & Moghaddam, M.S(2014)

Considering review of related literature, bonding, communication, empathy, reciprocity,

shared value and trust were identified as indices of relationship marketing with factor loads
as 0.912, 0.814, and 0.263, respectively, 0.716, 0.341, 0.849, 0.795, -0.666 and 0.819. So,
exception for shared value and communication, which factor loads are less than acceptable
minimum (0.4) and were excluded from the model, other constituents showed acceptable
factor load.
4.1 Main Hypothesis Testing Based on structural equations modeling analysis
Internal Marketing has a direct and positive influence on Relationship Marketing in Kerman
Travel Agencies. In order to investigate this hypothesis, related path coefficient was
calculated in PLS software as 0.354. This coefficient suggests positive and significant
influence of internal marketing on relationship marketing and regression analysis results by
SPSS software are confirmed. Also, t-statistics for influence of internal marketing on
relationship marketing was reported as 2.35, which is larger than its threshold (1.96), thus
direct and positive influence of internal marketing on relationship marketing is confirmed.

5. Conclusion
General finding in this work suggested that internal marketing in Kerman Travel Agencies is
a determinant factor for quality of relationship marketing. In other words, companies which
comprehend the importance of internal marketing and are committed to implement that,
succeed in building- long term and permanent relations with customers. Scientific researches
(Seng, 2006, Frost et al., 2009, Ting, 2011, Flambard-Ruaud, 2005) show the more the
employees are satisfied and maintained, the higher satisfaction is made for customers.
Internal marketing support the relationship with external customer, indirectly. Thus, this
research findings is supported by other researches of this scope. Based on SPSS and PLS
software, analysis results confirmed the positive and direct influence of internal marketing on
relationship marketing in Kerman Travel agencies. The hypotheses of the influence of
internal marketing on shared value and communication were not confirmed, the reason may
be the mal-function of agencies in recognizing customers values and finding systematic
approach to communicate with customers.
The results of PLS software showed that vision, development and reward explain internal
marketing well; and also choosing trust, empathy, bonding and reciprocity as relationship
marketing constituents was correct.
Research findings indicate to experience effective relationship marketing, an agency should
be careful about marketing its employees, who are the internal customers with many needs.
Employees should get attention by employers to be satisfied and also to satisfy the external
customers. The employees behavior, specially the first-line ones, is a kind of product for
external customers and affects the relationship period. As a result, for tourism-related
organizations which are service oriented typically, human resource and its efficiency is more
important.
85

Namin & Moghaddam (2014)

References
Abdolvand, M., & Ghafari Ashtiani, P. (2009). Assessment effective factors on oral
advertisements in service market (case study: Arak banks). Journal of Management
Research, Vol.81, pp 35-51.
Azar, A.,Gholamzade, R., & Ghanavati, M.(2012). Path-Structural Modeling in Management,
application in PLS smart software. Tehran: Negah-e Danesh.
Ahmed,P.K., & Rafiq,M.(2003).Commentary Internal Marketing issues and challenges .
European Journal of Marketing ,Vol.37, No.9, 1177-1186.

Barnes,B.R.,Fox,M.T., & Morris,D.S.(2004).Exploring the linkage between internal

Marketing,RM and Service quality:a case study of consulting organization . Total quality
management and business Excellence,Vol.15(5/6), pp 593-601.

Dehdashti Shahrokh, Z. & Fayyazi, M. (2011).Marketing Management in Tourism Industry,

Tehran: Mahkame.
Flambard-Ruaud, S.(2005) .Relationship Marketing in emerging economics, Some lessons
for the future, vikalpa,vol.3.No.3,53-63.
Foreman, S.& .K., & Money,A.H.(1995) . Internal Marketing:Concepts,Measurement and
Application .Journal of Marketing Management,Vol.11, Issue 7, pp755-768.
Frost, E., Nordlof,J.,& Svensson, M.(2009) .Relationship Marketing in the Travel Industry:A
two sided perspective .Jonkoping International Business School.

Ghiyasvand, A. (2011). Statistics and SPSS software application in data analysis. Tehran:
Laviye.
Gronroos, C. (1996) .Relationship Marketing:Strategic and Tactical Implications .
Management Decision, Vol.34, Issue 6,5-14.
Gronroos,C .(2000) .Service Management and Marketing: a customer relationship
management approach, England: John Wiley&Sons,ltd.
Gummesson, E .(1999) .Total Relationship Marketing:Exprimenting with a synthesis of
Research frontiers . Australian Markeing Journal,Vol.7, Issue.1., 72-85.

Namin, A.T., & Moghaddam, M.S(2014)

Kale, H .(2010) .Internal Marketing: An antidate for macau's labor shortage .Gaming
Researc&Review Journal, Vol.11, Issue 1,1-11.
Mousavi davoodi, S.M. & Kaur,R. (2012).The Link between Internal Marketing&Human
Resource
Management,
Arth
prabhand:Journal
of
Economics
and
Management(APJEM),Vol.1, Issue 2, 2278-0629.
Ndubisi, N.(2007) .Relationship Marketing and Customer Loyalty .Marketing Intelligence
and Planning,Vol.25.98-106.
Rahnama, A., Alaei.A., & Ariana, A.(2012). Evaluation of Relationship Marketing
Dimension effect on degree of customer's loyalty of Insurance Industry in Iran .Journal of
Basic and Applied scientific Research, Vol.2, Issue 2, 1842-1848.

Raminmehr, H., & Charsetad, P.(2013).Quantitative Research Method Using Structural

Equation Modeling (lisrel Software).Tehran: Terme.
Seng, H.(2006) .Internal Marketing and customar loyalty: Mediating effect of Relationship
Marketing .Research report for the degree of Master Business Administration.
Sin, L.Y.M., Tse,A.C.B., Yau,O.H.M., Lee, J.S.Y & Chew,R.(2002).The effect of
relationship marketing orientation on business performance in a service-oriented
economy .Journal of service marketing,Vol.16, Issue.7. 656-676.
Skalen, P.(2010) .Managing Service Firms:The Power of Managerial Marketing.New York:
Routledge.
Tag-Eldeen, A.& El-said.O.A(2011) Implementation of Internall Marketing on a sample of
Egyptian five-star hotels. Antolia-An International Journal of Tourism & Hospitality
Research, Vol.22, No.2, 153-167.

Tavakoli, Gh. & Beheshti poor, B.(2010).Excellence Model,EFQM2010. Tehran: Rasa.

Ting,Sh.,Ch.(2011) .The effect of Internal Marketing on organizational commitment:Job
involvement &Job satisfaction as mediators .Educational Administration
Quarterly,Vol.2., pp 53-382.

87