Bachelor thesis Inside-Out

(1)

Bachelor thesis

Inside-Out

Investigating the link between internal marketing and

service quality in Swedish retail.

_{Author: Ebba Svensson}

Supervisor: _{Christine Tidåsen} Examiner_{: Miralem Helmefalk}

_{Term: VT20}

_{Subject: Degree Project}

Level: _Bachelor

(2)

Abstract

This thesis is a qualitative research that provides an understanding of store managers perception of internal marketing on the Swedish retail market. It also describes how the store managers use internal marketing to guide their frontline employees to deliver high quality service. This research aims to highlight the importance of service deliverance in the retail sector. Due to the changes that are taking place within retail where globalization, digitalisation and automation are changing customers' views on trade, it is becoming increasingly important to differentiate themselves. More and more physical stores are finding it difficult to survive and many are forced to shut down.

This study therefore wants to highlight the use of internal marketing to be able to deliver high quality service at the encounter between the frontline employees and the customer in physical stores. Therefore, the study will give answers to the following questions: (1) How do store managers on the Swedish retail market perceive internal marketing? (2) How are internal marketing used in physical stores to work with service quality deliverance? To answer these two questions a meticulous examination of previous studies on the concepts internal marketing, employee satisfaction and service quality was made. A conceptual framework for the study was set to classify and analyse the findings of the study. The empirical findings consis data collected through semi-structured interviews with six store managers of three different retail stores on the Swedish market.

(5)

Keywords

Employee satisfaction, Internal marketing, Retail market, Service quality, Store managers

Acknowledgments

(6)

1. Introduction

1.1 Background

Globalization, digitalisation and automation are fundamentally changing the retail industry that is currently undergoing a structural transformation (HUI 2019). The prevailing view is that retail will change more in the next ten years than in the previous fifty. Under the year 2017 and 2018 the number of retail stores have decreased by six percent and there are some question marks about why stores are closing down (HUI 2019). These changes is not only affecting the stores but also the customers expectations of the industry and those who work within it. According to Handelsrådet (2010), service is one of the factors that is going to be crucial for a store's survival. This is also addressed by a several researchers that means that we are facing a paradigm shift where customer service will play an increasingly decisive role in the success of a retailer (_{Gummesson 2017; Grönroos 2015; Zeithaml, Bitner,} Gremler & Wilson 2017)_.

Under the undergone shift in the retail industry recent years the online shopping has become increasingly greater part of the business. Large parts of the industry are now in an international competitive environment, which also led to great competition in terms of prices (Svensk handel 2018). _{As a result of this changes a report made by} Svensk handel (2019) predict that the trend in the future may be that many retail companies will scale down their store areas and have fewer stores. The resources that are released through this can instead be used to have more employees in the store and their by utilize one of the physical retails advantages, the store employees who can give attention and advice and build and maintain relationships with the customer._The report also emphasizes that it is important to give customers a reason to go to the store and spend the extra time it takes to get to a physical store instead of going online.

(7)

Another more drastic change is currently ongoing that already has and will probably have a continues impact on the society. March 11, 2020, the WHO (World Health Organization) declared that the spread of covid-19 is considered a pandemic (Folkhälsomyndigheten a 2020), and is still going on at the time of writing. This pandemic outbreak has brought many different restrictions and have affected large sections of society and with it also the physical trade. There are now existing restrictions that all people must keep a distance from each other, whether they are indoors or outdoors and avoid places where people potentially gather, for example, retail stores and shopping centers. Retail is one of the sectors that has been affected fastest and hardest (_{Råman 2020).}

It is difficult to determine the long-term consequences at present, but the short-term effects are less people in the stores and their by less sales and in some cases, stores are forced to close down and there is a general concern as a result of the pandemic (_{Råman 2020). Even before this pandemic broke out, there were physical stores that} struggled to attract people and they are now facing even greater difficulties.

Nevertheless, it is not only the stores themselves that are exposed, but also their employees (Faxén 2020). This means that could be of great importance, now more than ever, to focus on the strength of a physical store but also to take good care of their employees and keep up the motivation during these times.

Internal marketing is a concept that is often_{highlighted as a solution for the task to} deliver high-quality service. Greene, Walls, and Schrest (1994) writers about internal marketing as the key to external marketing success. The authors further outline that being able to deliver qualitative service to the customer is considered a competitive advantage and that internal marketing is the key to deliver this customer service. A Swedish company that is successfully using internal marketing is IKEA and they believe that “every individual has something valuable to offer” (Dora 2018). IKEA view their internal marketing as a driver for corporate success and is used to encourage all individuals within the company to be innovative and successful and also for delivering strategic messages.

To continue, the advantages that retailers have and the digital world lacks is the possibility of the physical meeting between the frontline employee and the customer and that interaction can support the customer experience (Ohlsson 2019). Moreover, the employees have a responsibility to be the company's face outwardly and

(8)

This face-to-face interaction is a great opportunity that physical stores possesses, and also to be able to present the knowledge and value of the company (Grönroos 2015). The physical presence in a store can lead to that the customer feel more acknowledge and taken cared off. To continue this can lead to a more positive experience of the company when the employees represent the expected image of the company. _When customers purchases either a products or services from a company they are always left with a experience, whether it is bad, good or different. There is an increasing awareness of the need to deliver value to the customers in the form of experience (Berry, Carbone & Haeckel 2002).

Customer experience is something that has become a large part of many companies main focus and the employees are the one thing every different customer experience has in common. Whether they are making the products or delivering the service, employees are the ones defining the customer experience (DesRochers 2018).

Customer experience can be explained as the merger of everything a company offers, among them the quality of customer care and service features (Meyer & Schwager 2007). DesRochers (2018) goes on to explain the customer experience is what deliver and strengthen what is undertaken by the marketing and for making a great customer experience it comes back to the internal marketing.

A company that stands out when it comes to the ability of making customer experience is Disney World. In an article in Forbes, Blake Morgan (2020) writes about five things to learn from Disney’s way of making customer experience. One of them being the importance of involving every employee and that they have their focus on the customer. From the very first day as a new employee they get to learn that regardless which position they have, the primary goal is to create happiness. Nevertheless, to deliver a strong customer experience it starts with leadership and is achieved when all employees knows their role and impact (Morgan 2020).

However, if an organisation wants to deliver a total customer experience it is of great significance to recognize the signals that is being sent out to the customer. Moreover, that some of these signals is sent out by the employees in forms of behaviour, how they dress and how they speak, everything is signals to the customer saying

something about the organisation they work for (Berry, Carbone & Haeckel 2002). Moreover, customer experience is something that is defined by employees’

assumptions and direct actions, and is crucial for the organisations if wanting to create long-term success (Ind 2003).

1.2 Problem discussion

(9)

part it has been researched in relation to each other in the service industry and significantly less in other industries. Nor is it unusual for the studies to take a leadership perspective combined with the views of employees or customers. Which opens up the opportunities to look at these concepts from a more focused point of view, more specifically the view of store manager's.

Through the year’s different service strategies and theories has been created trying to find solutions to deliver high-quality service. The service market triangle (Grönroos 2015), service-profit chain (Heskett, Jones, Loveman, Sasser & Schlesinger 1994) and gap-model (Parasuraman, Zeithaml & Berry 1985) are some examples. This tree service theory has mainly been developed and research in the context of service companies and is in different ways connecting managerial leadership and service quality. However, even for the companies that would not classically be regarded as a company within the service industry the service delivery is crucial (Bitner, Brown & Meuter 2000).

Trying to win back a dissatisfied customer lost to competitors is very expensive (Carlzon 1985). Therefore, the only thing that is profitable, according to Carlzon (1985), is to provide such good service that customer´s stay. A lot of studies indicate that employees have a crucial role in this delivery of service quality and that this deliverance can be encourage by the company trough strategies and guidelines (see, for instanceAlzaydi, Al-Hajla, Nguyen & Jayawardhena 2018) Being able to deliver service quality is both complex and challenging and therefore there is reason for further studies in service quality in other industries as well.

There are many investigations about how companies should treat their employees so that they perform as well as possible in their tasks. The concept employee satisfaction is a central topic in these investigations. The satisfaction among a company's

employees is a main driver of company value, because they constitute a key element of the company's human capital (_{Green, Huang, Wen & Zhou 2019).}

Furthermore, having satisfied employees benefits the company performance by having more, loyal, motivated and productive employees (Edmans 2012). At the contrary, a lower level of satisfaction among the employees can result in lower confidence in leadership and that the employees are less likely to recommend the workplace outwardly (_{Jing, Keasey, Lim & Xu 2019).}

(10)

such as _{employees that stand in direct contact with the customers, the frontline} employees.

To begin, these investigations that target the frontline employees, is more common in company's only selling service then in retail companies. Ishaque and Shahzad (2016) examined a service company with in telecommunication in UK and the importance of frontline employees and their important role to achieve competitive advantages to the company by providing excellent service to the customers. In addition to this, _there have been several investigations in the service sector, both international and in the Swedish market with positive results. But this only shows these effects in the company's strictly selling service and can therefore not generally be applied to all industries. Since there are positive effects, there exist an aim to further investigate the frontline employees and their service performance in other industries. Especially in the Swedish retail market where there is few studies conducted specifically focused on frontline employees and service deliverance combined.

Good conditions are required for the employee to be able to deliver higher quality on the service. This type of conditions can be created by what Grönroos (2008) define as internal marketing, which aim to strengthen employee motivation and customer interest to ultimately improve the service that is delivered._{Today the concept of} internal marketing has been research material for about 40 years. Berry, Hensel and Burke (1976) were very early to propose internal marketing as a solution to the problem of delivering high service quality. In the earlier years the focus of the discussions has been on how it should be implemented and its outcomes (Rafiq & Ahmed 1993). _{As an empirical phenomenon internal marketing has been observed} repeatedly._{There have been several attempts over the years to look deeper into the} implementation of internal marketing, especially in those industries that were in significant need of service quality as truism, retail and banking (Huang 2019). It should be pointed out that it exist a great confusion in the literature what is meant by internal marketing, what is expected to be done, by whom and also for what reason (Rafiq & Ahmed, 2000). To continue, this has resulted in many different activities having been placed under the concept of internal marketing and it has made it difficult to implement and adapt the internal marketing in practice. According to Kaurav, Chowdhary, Prakash and Briggs (2016) it is possible to divide the different perspective of internal marketing in four different groups according to definitions. The first are those how view internal marketing as a synonym for human resources management, the second is viewing internal marketing as usage of marketing

(11)

first of the two latter mentioned and argue that internal marketing must precede external marketing because it makes no sense to promise excellent service before the company’s employees is ready to provide it.

It is equally interesting to research into the concept of internal marketing as a solution for high quality service and internal marketing as a source of competitive advantages. To begin with, it is observed that previous research on these relationships internal marketing and service quality has primarily been done in service industries around the world. These investigations have undertaken the focus on how to improve service quality through internal marketing to increase their customer’s satisfaction (Brooks, Lings & Botschen 1999). For a larger part, internal marketing has been investigated in European service companies and a great deal of focus has been placed on finding these relationships from the view of managers and employees (Huang 2019). Banking has been of particular interest to many researchers (see, for instance Rod, Ashill & Gibbs 2016), but also other service-driven organizations such as hospitals (see, for instance Edo, _{Llorens-Monzonís, Moliner-Tena & Sánchez-García 2015).}

Ahmed and Rafiq (2003), discuss the assumption that it is a greater chance of creating satisfied customers if one first make sure the employees are pleased by meeting their needs and motivating them to do the job as well as possible. The authors further discuss how companies should advert to their employees by working with the internal relations and that there exists a need for working with internal marketing to develop the company's opportunities. However, it is considered a further challenge to investigate the relationship between satisfaction and performance and how they are interrelated.

This is something that also is brought up by Huang (2019) how argue that it has been difficult to find sufficient evidence for the effects of internal marketing that is not only based on empirical analyses or studies. Additionally, studies have also been conducted in an attempt to prove the relationship between internal marketing and satisfaction in service context but with the same end result (Huang 2019). Ahmed and Rafiq (2003) does not present any concrete answer to their discussion regarding satisfaction and performance and believe that more research is needed to enable companies to gain a higher benefit from internal marketing.

A study that has been successfully demonstrated is that the implementation of internal marketing can increase satisfaction is a study conducted by _{Richardson and Robinson} (1986). This study was conducted in ten banks in USA where the result was a

(12)

what is expected both of the company and of the customers and that it is up to the companies to give their employees a reason to _{exert themself.}

Many researchers emphasize the relationship between employee satisfaction and service quality, but the question is whether there is an equal awareness of the relationships between these factors at a managerial level. _{When looking into the} Swedish retail market and the research that has been conducted in the subject for the past ten years, there are fewer studies researched on internal marketing and its effects on frontline employees performance in a retail setting. Moreover, the existing studies focus on the actual practice of internal marketing and how it affects the organization itself (see, for instance _{Gustavsson, von Wendel & Widèn 2018) and less is done on} its external effects as the deliverance of service quality.

This study will have its basis of the perception that if satisfying the frontline employees through internal marketing and make sure they understand their commitments, this will affect the quality of the service that is delivered to the

customers. To continue,_{when narrowing it down to investigate these relationships in} a Swedish retail setting, there might exist a need in highlighting the importance of service even if the service itself is not the primary product being sold. Therefore by examining how internal marketing is used by store managers in Swedish retails market it can contribute with highlighting the opportunities and benefits of having satisfied frontline employees that acts in unity with what the company wants to achieve. Additionally, the information that is represented in this paper can be found relevant to retail companies for understanding and reflect upon when meeting the changes that is happening with in the market.

1.3 Purpose

The purpose of this research is to contribute to the understanding in the use of

internal marketing to guide frontline employees’ to deliver high quality service on the Swedish retail market.

1.4 Research questions

(13)

1.5 Delimitations

The empirical research is limited to five retail stores in three retail companies located in the lower half of Sweden. The stores are located in the city of Halmstad, Kalmar, Karlskrona, Visby and Växjö. Therefore, the findings can not claim to show that this is how it appears in retail stores everywhere. Some of the participants that are

interviewed is selected by convenience sampling do to the current virus pandemic, Covid-19, mentioned in the background. Many of the respondents could not participate because of the prevailing circumstances. This will be described in more detail in the method chapter.

(14)

2. Literature review and conceptual framework

2.1 Internal marketing

2.1.1 Definitions

Internal marketing has its roots in service marketing (_{Gummesson 2008), but today it} is not just functional in service companies but can be applied to any type of

organisation (_{Rafiq & Ahmed 2000). As earlier mentioned the concept of internal} marketing has been researched for about 40 years. When it comes to describing what internal marketing is, Huang and Rundle-Thiele (2015) counted up to 43 definitions in 2015 and their are still no jointly agreement in the academic community when it comes to the definition of the concept. _{Berry,Carbone and Haeckel (2002) also} claims that it exist many different takes of internal marketing but they all have one common denominator namely that the customer also exist within the company, and that one should view the employees as a customers.

Berry, Carbone and Haeckel (2002) take on the definition is that internal marketing involves making a general climate within the organisation and creating job-products “_{that lead to the right service personnel performing the service in the right way”} (Berry, Carbone, & Haeckel 2002 s.69). In another study by Leonard Berry (1981) he also stated that the same tools that are used to draw customers also can be used to retain and attract the most suitable employees and that these employees should be viewed as ‘internal customers’. According to this approach should the jobs be seen as internal products and the employees as internal customers and that one should aim to offer job-products that meets the expectations of these internal customers as well as meeting the objectives of the organization.

Rafiq and Ahmed (2000) identify three main phases of internal marketing being with 1) employee satisfaction, 2) customer orientation and 3) strategy

implementation/change management phase. After carefully analysing these phases they stated their own definition of the concept. That internal marketing is: “_a

planned effort using a marketing-like approach to overcome organizational resistance to change and to align, motivate and inter-functionally co-ordinate and integrate employees towards the effective implementation of corporate and functional strategies in order to deliver customer satisfaction through a process of creating motivated and customer-oriented employees” _{(Rafiq & Ahmed, 2000, p, 461). To}

continue, this definition is containing five key elements that they found most relevant for a definition after analysing the earlier stated definitions.

(15)

Targeting marketing internal is at least as important as directing it external, if not even more important (Lewis & Varey 2000). Moreover, it is meaningless to make promises to the customer before all within the company is ready to provide it. Therefor, _{internal marketing can be used to drive engagement to the corporate goals} by creating a sense of shared responsibility to achieve successful results (Ahmed & Rafiq, 2003). Nicholas Ind (2003) also declare for the business benefits of internal marketing and focusing on selling the brand inside the company. The benefits is that it can lead to enhance satisfaction of the employees and in turn leads to loyal

customers_{that will generate profits to the company. Even better effects are achieved} when the internal marketing is done parallel with the external marketing, because then it will support the understanding of what is promised to the customer and thus also what is expected to be delivered (Ahmed & Rafiq 2003).

There needs to be a person responsible for the internal marketing in the company but should be implemented by all not just in one or certain parts of the company (_Joseph 1996). To successfully implement internal marketing honesty, openness and

conveying the underlying ideas and purpose are important (Papasolomou, Kitchen & Christofi 2017). It must be made clear why it is implemented in order to avoid complications and if not done correctly it can have completely opposite effects. Moreover, it can result in dissatisfaction and frustration among the employees if this is poorly executed. It must be borne in mind that employees are the backbone of an organization and that they experience the company culture on a daily basis.

Therefore, how these employees are viewed and treated has a direct impact on how they treat the company's external customers (Papasolomou, Kitchen & Christofi 2017).

To begin with, it is important to hire the right individuals to the right position (Nart, Sututemiz, Nart & Karatepe 2019). This is crucial for the design to be as natural as possible. An employee who falsifies his or hers interest in the job will most likely experience burnout and this will lead to negative results. In a study by Nart et al. (2019) one of the things being studied was how genuine emotions was linked to the work performance. The study concluded that by hiring people who have a genuine interest in the work can lead to higher service delivery and also more personal service.

To continue, for a company to function there are two important factors,

(16)

communicating the company's goals and visions to everyone within the company, this increases understanding of what is really important. Which in turn leads to motivation among the employees. Therefore, it is important to have a clear communication that reaches all parts of the company.

Every human wants to be treated as an individual and the most important part for a human is to feel and know that she/he is needed (Carlzon 1985). Therefore, the higher level of attention an organization gives its employees, the more

customer-oriented they tend to appear, in addition to that, their loyalty to the organization and the work itself increases (Alvar, Naimi, Nasr & Maymand 2018). Alvar et al (2018) further advance that to successfully lead an organisation towards higher levels of customer satisfaction it starts internally with increasing the quality level of the employees by providing occupational enrichment such as training, job security, rewards and influence. _{By turning the focus internal and ensuring the needs} and wants_{of the employees, it assists build internal trust and commitment towards} the company and trust is a crucial part in managing the internal marketing

successfully (Ahmed & Rafiq 2003). To continue, when internal marketing is

successfully used it can help manage and investigate relationships within and around the organisation that in some way adds value.

2.2 Employee satisfaction and frontline employees

In an examination of internal marketing orientation and its influence on the organisations performance by Tortosa, Moliner and Sánchez (2009), they partly determine that how the employees, that are in direct contact with the customers, interpret the internal marketing has a noticeably influence on the quality experienced by the organisations external customers. This is also supported_{by Gelb and}

Rangarajan (2014) study that shows this to be particularly true in

business-to-business context where transactions to a greater extent are based on mutual trust. Moreover, is also pointed out that all industries benefits from having employees who are good at creating trust and credibility for the company and the brand.

2.2.1 Employee satisfaction

Like external marketing focusing on customers wants and needs, internal marketing focusing on the employees requirements and fulfil them in such way that the

employee may be satisfied (_{Ishaque & Shahzad 2016). In a turbulent, unstable and} competitive environment, it could be seen as a competitive advantage to have

(17)

By creating employee satisfaction the opportunity to provide the external customers with good service quality increases _{(Ahmed & Rafiq 2003). In Rafiq and Ahmed} (1993) examination of the scope of internal marketing they states that the

implementation of internal marketing needs to be carefully controlled by reporting and training to achieve quality and customer-sensitiveness to the service that is provided. This contradicts the later study by Nicholas Ind (2003), who states that to deliver superior services the behaviour of the employees should not be set and fixed in a rulebook without the possibility of making decision based on a specific occasion. Furthermore, the author explains that it is more effective to give them the freedom to deliver personal response to the unique customer and that is what the customer is looking for and not something that is delivered by the book.

To create confidence to give employees this freedom and trust that the service can be deliver in unison with the company, a strong ideology in the company is important, and even more so that the employee actually understand and are committed to this ideology. In order to produce a strong ideology, it must be clearly designed, and it needs to be experienced and communicated to the employees in a relevant way (Ind 2003). There is also of importance with a common thinking and a shared

responsibility for the final service quality that is delivered (Ahmed & Rafiq 2003), which is also facilitated by the ideology that helps to give focus to what is important and expected by the employees (Ind 2003). _{What is motivating people to contribute} to the organisation's goals and future visions is a central question for all leaders. The answer to that questions according to Carlzon (1985) is to make them feel involved and keep them well informed. Thus, one can create self-esteem within the employee and this gives them the opportunity to find their own approach to their employment. Even more specifically, create a professional identity._{When a person is given the} freedom to take responsibility, resources releases that otherwise would not be available (Carlzon 1985). The author continue to explain that a person that do not have information can not take responsibilities, but a person that has information can not avoid taking responsibility.

2.2.2 Employee branding

Gelb and Rangarajan (2014), also agree on the importance of employee to understand the values and what the company represent. In their paper they are highlighting two ways of viewing employees, either element of the brand or as ´brand ambassadors´. It is most common that employees are preceded as element of the brand when in

(18)

Rangarajan 2014). _{The idea of brand ambassadors is something that is viewed} together with the concept of employee branding. Employ_{ee branding is a process} used to strategically transform the employees to brand ambassadors by influence their behaviours to be in alliance with the organisations brand image, but also by providing them with a positive job experience (Biswas & Chaudhuri 2018). Employee branding is most commonly used in the service sector where the product offered often is executed by the employees of the company and there for it is extra essential that the behaviour reflect the organisational values and brand deliverables (Biswas & Chaudhuri 2018).

Employee branding is drawn from theories of marketing and organisational studies and contributing to the transfer of the brand identity in to the employees work behaviour (Wallace, Lings, Cameron & Sheldon 2014). Furthermore, if this brand image is successfully transmitted to the employees it enable them to experience and understand what is desired to be delivered from the companies part. There are a number of examples of successful employee branding as a source of competitive advantage (Wallace et al. 2014). Mangold and Miles (2007) argue that if a company can successfully developing the employee brand it can lead to lasting competitive advantage. Moreover, companies can also benefit from higher quality of service and that its employees stay longer with the company.

2.2.3 Frontline employees within retail

According to Ackfeldt and Coote (2005) retail employees are often young and less experienced, they have multiple roles to fulfil and are evaluated by their

productiveness and the quality of their performance. _{Further, the frontline employees} might be the most critical link in the deliverance of high customer service (Brandy &. Cronin 2001). A study mand in a retail bank in Russia the findings was that; how the frontline employees are perceived by the customer is a significant driver for customer satisfaction (Rod, Ashill & Gibbs 2016).

Porricelli, Yurova, Abratt and Bendixen (2014) argue that many companies placing far too much focus, energy and resources on only considering external marketing as a success factor instead of focusing the marketing internal to support the retail

(19)

employees so they in their turn will take good care of the customers (Gelb & Rangarajan 2014).

In a study of how internal marketing is used in the food retail industry in UK it was noticed that frontline employees view their job as non-important and that they do not understand their part within the company. Therefore, it is important to ensure that everyone within the company understands their part and what they contribute to the company as a whole (Ozuem, Limb & Lancaster 2018). _{Frontline employees of a} company is spending a lot of time om serving the customer (Nart et al. 2019). This make them a valuable source to understand the needs and wants of the consumer. Therefore, the managers should take advantage of this and collect feedback and suggestions from the frontline employees.

To continue, this can be done by invite them to be involved in identifying the priorities of the company. This in turn can create a feeling of participation and

support their identification with the company. Moreover, it can also enable evaluation of their efforts by learning of their mistake and be motivated by successes (Nart et al. 2019). _{In conclusion, by investing time and money in the working environment and} continuous training, one can increase the sense of involvement and significance among the employees. Training can make them feel more important and valued but also make the employees more able and positive to deliver service (Ozuem, Limb & Lancaster 2018).

2.3 Service theory and service quality

2.3.1 Service theory

2.3.1.1 The service marketing triangle

(20)

Figure 2.1 _{The service marketing triangle (redrawn from: Zeithaml, Bitner &}

Gremler 2010)

On the left side of the triangle internal marketing and its critical part represented (Zeithaml, Bitner & Gremler 2010). It is representing the management’s engagement in enabling the execution of the service such as education, training, recruiting, motivating and reward. If not the employee that is delivering the service is founded and ready, the triangle will collapse and the company will fail to live up to what is promised. On the right side are the external marketing and the firms beginning of the service marketing. This side represents a company's activities to set up the customer's expectations. Lastly, in the bottom of the triangle is the interactive marketing

represented. Marketing that is happening in real-time, in the interactions between the employees and the customers. This is where the moment of truth occurs (Norrman 2011) and it is here that the promises are kept or broken (Zeithaml, Bitner & Gremler 2010). In this occasions people have a critical role and if the expectations of the service does not live up to expectations, the customers will eventually leave.

2.3.1.2 Service-profit chain

The service profit chain is a model that has been applied to analyse retail

(21)

Moreover, empirical findings have shown that the service quality offered by a company in fact has an influence on customer satisfaction. The principles of the service profit chain is that a customer that appreciate a companies offers are more likely to choose those companies than if a customer is not convinced by the companie (Bruhn & Georgi 2006)

Figure 2.2 Service-profit chain_{(redrawn from: Heskett et al. 1994)}

To continue, the service profit chain can assist managers to be given a clearer view of how the employee's contribution and performance influence the customer service deliverance and the business performance (Silvestro & Cross 2000). Further on, it is stressed that employee satisfaction and loyalty is generating customer satisfaction and that this relationship is a success factor for profitability and growth.

2.3.1.3 Gap-model

A well known model in service deliverance context is the Gap-model of service quality (Bruhn & Georgi 2006). With four internal gaps the model explains the determination of service quality. In addition to the internal gaps, we also have the heart of the model, the customer gap _{(Zeithaml, Bitner & Gremler 2010). The} customer gap is the difference between the customers expectations and the actual experience. The proposal the model gives is to meet the customer's expectations or exceed them to close this gap. The first internal gap is the one of the listening gap and is referring to the gap between the customers expectations of the companie and the companies understanding of this expectations _{(Zeithaml, Bitner & Gremler 2010).} By carefully listening to the customers and find out what they expect and also

listening to the employees upward communication this gap can be closed. Strategies like implementing customer surveys and hiring mystery shoppers to assess

(22)

Figure 2.3 _{Gap-model (redrawn from: Zeithaml, Bitner & Gremler 2010)}

The second gap is the service design and standards gap. According to Zeithaml, Bitner and Gremler (2010) it is not a guarantee to deliver quality service even though the first gap is successfully closed. Moreover, it is important to understand the total customer experience and also succeed in designing this experience to meet or exceed the customers expectations. This is done by carefully considering every moment the customer has contacted the company. Even if one have a clear guideline for how the service should be performed, it is difficult to standardize the performance of the employees _{(Parasuraman, Zeithaml & Berry 1985). The third gap is the performance} gap and the largest chance of closing this gap is to back up those standards with the right people, technology and systems _{(Zeithaml, Bitner & Gremler 2010). In}

particular, ensure that the employees are motivated and able to deliver qualitative service and perform in a customer-oriented way and here internal marketing plays a critical role.

“An organization that hires the right people and trains and develops them to deliver

service quality must also work to retain them”_{(Zeithaml, Bitner & Gremler 2010}

p.6)

(23)

for this gap not to exist, it is required that all communication platforms deliver a unison message. For example, websites, direct mail, mobile advertising and printed media but also the physical evidence in the store design and the company's

employees.

2.3.2 Service quality

Rafiq and Ahmed (1993) brings up the importers of using internal marketing to reach high quality on the delivered service and also that it should be carefully adapted to the customers needs._{There are several researchers that has claimed that it is in ´the} moment of truth´, in the interaction between the frontline employees and the customers that the quality of the service is primarily addressed by the customers (Normann 2011; Carlzon 1985; Grönroos 2008). The fact that the quality of service is determined in this moment of truth, it creates a focus that it all depends on the service meeting with the customer. Moreover, if the frontline employee does not perform successfully the chance is lost (Gummesson 2008). In this moments of truth the frontline employee and the customer is extradited to themselves and the direct impact is out of the company's control (Norrman 2011). To continue, the companies cannot directly control these service meetings but they have an invisible function that plays a big role in this meetings.

Voorhees et.al (2017) claims that customers do not make assumptions of companies delivered service based on a one-time experience, they make a merging of all meetings and that it is this merging that constitutes the perceived as the service quality. This can create both challenges and opportunities for companies, but those who manage to deliver a high service quality to their customers have a competitive advantage. The authors further explains that in industries with low switching cost, as the retail industry, can increase the chance of retaining its customers by delivering higher service quality compared to competitors.

2.4 Conceptual framework

As the theory has shown, there are many activities and concepts gathered under the concept internal marketing. Therefore, it is important to clarify the parts that will be of significance to this study. That has been done by drawing up a model showing all the concepts, their connections and context (see figure 2.4).

(24)

motivated frontline employees, feeling of importance, employee branding and three service theories.

To continue, the figure 2.4 shows that internal marketing can result in motivated frontline employees and make them feel important, which according to Nart et al. (2019) leads to satisfied employees. Having satisfied employees can make them advocates for the company throw employee branding (_{Biswas & Chaudhuri 2018),} that in turn also will have an affect on the service quality (_{Mangold and Miles 2007).} The service quality can also be guided thru the chosen service theories which in one way or another includes the need for internal marketing.

The synthesis of the theoretical concepts represented in this model will assist a comprehensive and founded analysis of the empirical result and to answer the

research questions. It will also enable a determination of the understanding of internal marketing and how it can be used to guide the service deliverance.

(25)

3. Method

s

3.1 Deductive approach

This research will take a deductive research approach. _{“Selecting approaches to}

research involves adopting a research philosophy, and an appropriate research approach and methodology”_{(Gray 2004 p. 33). The starting point of this study is}

drawn from previous knowledge and theories about internal marketing and its impact on service quality. When conducting a research, there are different approaches for the starting point, one can either take an inductive or a deductive approach or mix them both (Gray 2004). The deductive approach is starting from general premises or logical arguments about how something is perceived and it is common to test these premises against a number of hypothesis. Unlike the inductive approach that starts from observations or experiences of something and from these assumptions a general perception or belief is created (Walliman 2011).

According to the assumptions above the deductive approach will be most suitable for this research. Taking a deductive approach is often more common in quantitative research and inductive with qualitative research but not exclusively. Moreover, it is possible to use an deductive approach even thought the research method will be qualitative when aiming to view the relationship between theory and research (Bell, Bryman, & Harley 2019). This paper will use research question instead of hypothesis to investigate this relationship between the main concepts of this study, internal marketing, employee satisfaction, and service quality. In deductive research approach hypothesis (in this case research question) are developed to make sense of the

relationship between two or more concepts (Gray 2004).

3.2 Qualitative research method

The research question and purpose of this study require individual viewpoints to deliver relevant sample and good quality of data. Therefore, three retail chains with physical stores in Sweden have been selected and semi-structured interviews will be conducted of two store managers from each company. According to these choices a qualitative research method is used. _{Qualitative research methods means using words} as data in contrast to the quantitative research methods were data consists of numbers (Bell, Bryman & Harley 2019). In qualitative research the interest is located in founding out people experiences and the questions that is asked is about

(26)

In short, the research process has looked like this; the author has gathered

information on what is already known in the subject and, then empirical data was collected and analysed and then discussed in the light of what is already known about the subject. The aim of the qualitative study is to be able to describe something in a smaller scale and the individual person is in focus _{(Bell, Bryman & Harley 2019).} The qualitative method has an advantage when looking for specific relationships and contexts and when the context is important.

There are some issues related to qualitative research including that it is problematic to make generalizations to other settings apart from the one the study had been conducted from. Moreover, that the generalization of qualitative findings is rather directed at theory than at a population. In other words, the quality of the theoretical conclusion is crucial for the realization of the genre. It is also argued that qualitative research has a lack of transparency (Bell, Bryman & Harley 2019). Therefore, the chosen sample is carefully explained and the execution of the study will be pointed out as clearly as possible.

3.2.1 Types of data

“Data collection is the key point of any research project”_{(Bell, Bryman & Harley}

2019 p.11). When gather information, there are two types of data, primary and secondary data and it differs in ways of collecting them. In this section, an account of the respective data collection will be presented.

In this study the primary data has been collected through semi-structured interviews to provide the data needed to answer the research question. The primary data is thus derived from a qualitative research method and will consist of words and

descriptions. In contrast quantitative studies were numbers and volume is used (Gray 2004), this qualitative study will collect data after ´less is more´and try to collect data in order to understand relationships on a deeper level. Primary data is the data that has been collected closest to the event and are there by the closest one can come the truth _{(Walliman 2011). Primary data can be collected through, measurement,} observations, interrogation and participation. One should be aware that primary data is the data that takes most time consuming to collect and this is not always possible.

(27)

primary data can be secondary data, it can also be official statistics or administrative records for examples.

On the other hand has secondary sources been used. When primary data has been interpreted or processed in any way it is called secondary sources. Secondary sources may therefore have lost some of their validity. When using secondary sources, it is important to stay critical of the source and make an assessment of the information it contains (Williman 2011). To determine this on the used articles, only articles that is peer reviewed has been used in the literature review. Secondary sources has been collected in forms of books and academic journals articles related to the studies focus. In the introduction chapter up-to-date business resources has be used to highlight the need for this study.

The main topics of the academic sources are internal marketing, frontline employees, employee satisfaction and service quality. To ensure that the information in this paper is valid and relevant to the existing research area the secondary sources are balanced with both new and old studies and views on the subject. To continue, the reason for using slightly older sources are because many of the studies and reasoning about chosen concept lead to the same authors who is and has been well known and active in the subject, Christian Grönroos and Leonard Berry. Furthermore, the author believes that a good balance of the spread on sources will help see the relations between the past, present and future. This is also an advantage in order to get an overall picture of how internal marketing and service quality have been researched and developed over the years and it will give a solid ground to analyse the collected primary data off the study.

3.3 Research strategy

3.3.1 Semi-structured interviews

In qualitative research the interviews are often consisted of open-end questions and are often less structured (Merriam & Tidell 2016). For this research semi-structured interviews has been chosen. S_{emi-structured interviews are suitable to use when} examining a focused topic and aiming to collect someone's perspective on that topic (_{Hammarberg, Kirkman, & de Lacey 2016). Besides that this strategy is best suited to} answer the research question,_{this structure was chosen to give the correspondent} freedom to interpret and answer the question as unaffected as possible. Also to support the researcher not to lose the tread or the subject and ensure that all are included that is meant to be investigated.

(28)

depending on what the respondent answered. The questions for the interview were set in such way that it should not be possible to answer yes or no. The questions asked to the participants were more or less structured questions. By using a less structured alternative like semi-structured interview it can allow the respondent to define what is being investigated in unique ways. It is also allowing the researcher to be more flexible and the order of the questions does not need to be set ahead (Merriam & Tidell 2016). The interviews were conducted through Zoom with one person at a time. Moreover, in total six interviews were conducted with a time consumption of approximately one hour per interview. See figure 3.1 for operationalisation and appendix A (Swedish) and B (English) for the interview schedule.

3.3.2 Operationalisation

“Concepts themselves are abstract ideas that form the building blocks of hypotheses and theories”_{(Gray 2004 p. 6). In table 3.1 the main concept of this study been lined}

up with the respective interview question to clarify and ensure that everything is covered within the framework of answering the research question. Furthermore, to ensure that data collected through the interviews are made measurable. Through operationalisation one create operational inductions within the framework of the study. By operationalizing the underlying concepts for the study are made

measurable and it also creates the conditions for data to be collected only for what is supposed to be measured (Gray 2004).

In total, 25 interview questions were prepared to cover the main concepts; internal marketing, frontline employees, employee satisfaction, employee branding and service quality and also additional question (see appendix A (for Swedish) and B (for English). Additional question contains questions to get an overall introduction to the person being interviewed and are the first questions asked in the interview. The interview questions are written in Swedish and the interviews were also conducted in Swedish. This is because English is a second language for the correspondents and that it could potentially decrease the quality of the interview. The author believes that the collection of data in a language other than the mother tongue may have an impact on the result.

The interviews will later be transcribed into English before they be included in the study. The author is aware of that it might be a risk to translate the interviews and that is a risk that valuable data become lost in translation. Therefor, the author will be extra careful and also represent all the citation in both an English translation and then compliment with the original citation in Swedish right afterwards.

(29)

question

Additional questions

1-7 och 27

These questions provide information about the respondent current and previous career

commitments and also information about the company they work for. This can help create credibility to the answer that is given. It also gives some insight to their role as store managers..

Internal

marketing 8-14

To help determine the respondents

understanding of internal marketing and how it is used within the company the person work for. Also to observe the level of engagement in

Frontline

employees 15-18

To gain a understanding of how the

respondent views the frontline employees role in the company.

Employee satisfaction

19-20 To gain an understanding of how the respondent motivate and retain their employees.

Employee

branding 21-22

To observe the respondents perception of having employees that are representing the company beyond work responsibilities. Service quality

23-26

To gain an understanding of the respondents perception of service quality. Further, how important the respondent consider service quality that is delivered to the customer is.

Figure 3.1 _{Operationalisation chart (authors own contribution)}

3.3.3 Sampling

(30)

2016). In this study the major criteria was that the participant should work as a store manager for a retail company on the Swedish market.

There are two types of sampling procedures, probability sampling and

non-probability sampling (Walliman 2011). Probability sampling means that those selected are only selected by chance, unlike non-probability, where participants are more consciously selected (Gray 2004). Non-probability is used when it is hard to access the whole population (Walliman 2011) and when taking the samples, the results need to be interpreted and evaluated before they can be applied to a

population (Gray 2004). Purposive sampling is a type of non-probability sampling and is when the participants are selected to represent the wider population. The companies of the selected store managers for this study is; Mio, Systembolaget and Åhléns.

As mentioned earlier in the paper, at the time of writing, a pandemic and spread of the virus Covid-19 is on going. The retail industry is severely affected and many companies have a lot on their tables to resolve situations that arise as a result of this pandemic. This had a major impact on the sampling and the opportunity for

companies to contribute in this study. Therefore, this study contains three companies instead of six, which was the aim from the beginning. Instead, two store managers from each company were interviewed. The advantages of purposive sampling is that it is less expensive and there is no need for a list of all the population elements (_{Acharya, Prakash, Saxena & Nigam 2013). Purposive sample also brings with it} certain limitations, it can be difficult to defend the choices made when it comes to participants (Rai & Thapa 2015).This has been kept in mind by the author and has thus been transparent with the selections and on what grounds they are chosen. Furthermore, the other store manager at each company was selected through

convenience sampling. When choosing samples based on time, money location or, as in this case, availability of respondents it is called convenience sampling. The risk when choosing samples only by convenience sampling is that the result of the sample can be less content rich and have lower credibility (Merriam & Tidell 2016).

However, because the three companies are selected through purposive sampling and all participants are within the sampling frame of retail stores in Sweden, this should not be an issue for this particular study.

(31)

whom the author booked time for interview did not attend at the time. This complications also contributed to the case with convenience sampling.

From the beginning, the aim was to have one male and one female store manager from each company. But because of the difficulties of finding participants the author had to call the companies and choose those who had the opportunity and time to set up. At least it is 50/50 represented between female and male store managers if to look at the total sample. Below in figure 3.2 all the companies, store manager and city are presented.

Figure 3.2_{Companies and store managers and city (authors own contribution)}

3.3.4 Implementation of the interviews

After the company chose and the store managers said that they were interested in participating, everyone was sent an email with a document of information. This informational document contained the research topic, why this study is being made and its purpose. To continue, it also states that it is completely voluntary to

participate, how the interview is going to be designed and how the data is going to be handled and also that it was going to be recorded. Moreover, the participant

interviewed has the right to cancel the interview at any time and ask questions if there are any ambiguities and that the analysis an interpretation of the data will be provided truthfully. Lastly, that the participant will have access to the summary of the

interview before it is written into the paper and also where the study will be made public when completed. Why all of this is important to inform the participant of is closer discussed in ethical considerations.

When the participant had read through the information and still wanted to be a part of the study, a time for the interview were booked. The interview as mentioned

(32)

the first real interview for the study, a pilot test was done. This is to test the

questions, how the interviewee perceived the question and how the answer might be. This was also done so that the author would be well prepared before the data began to be collected.

When it was time to start interviewing and before the questions began to be asked, the participants were asked if they needed anything to be clarified. They were also asked if it was okay to use their real names and the company they work for in the study, which was something everyone of them agreed on. Then the recording was started and the questions were asked. When the interview was complete, the author thanked them for participating. The recordings of the interviews were later

transcribed in writing as preparatory to the analysis of the collected data.

3.4 Method of data analysis

Qualitative data are not straightforward to analyse do to the large amount of unstructured textual material (Bell, Bryman & Harley 2019). In quantitative data analysis there exist clearer rules of how to analyse, while the data analysis in

qualitative consist of general approaches. The purpose of this research is to describe store managers perception of internal marketing and how they use it to work with service quality among their frontline employees. After each interview, the author has transcribed the audio recording. From this dissertation, significant and interesting phrases, words and sentences were selected from each interview.

Content analysis is one of the most common approaches when analysing qualitative data (Gray 2011). This means that one draw conclusions about the collected data by objectively creating categories and classifications. Content analysis is more deductive to it approach and to achieve objectivity to this analysis process criteria of selection needs to be established. As mentioned before the interview question are designed to give answers in these concepts represented within the literature review and

conceptual framework. Thesis were also used to further categorise and classify the findings in the empirical data. Moreover, the data is also systemized according to the conceptual framework and when the collected data has been categorised and

classified. The challenging part of this process was to sort out what actually had a purpose and relevance for the study among the tremendous amount of text, when some of the answers hovered out of purpose. But when the volume of text had been reduced, the next step was the analysis itself.

(33)

always have control and know what one have. Analysis is the process that is used to answer the research question. Through the data analysis, one make sense of what was said by the respondents and what has been seen and heard by the researcher.

Therefore, the findings were wrote under these common and appropriate

sub-headings in the paper to clearly show what the different respondents expressed and how these relate to each other. These findings were then analyzed through the author's insights that emerged from the findings which then lead to conclusions that answered the research questions.

3.5 Quality of research

3.5.1 Saturation

Saunders et al. (2018) suggests that suratation should not be considered as something that is achieved or not. Instead, it should be considered which degree of saturation is achieved for the specific purpose and also how answered the selected research question(s) is. Given the scope and time aspect of the research, the author believes that the saturation has been achieved to such an extent that the analyzed data shows clear patterns and similarities in how respondents responded in the interviews. Furthermore, the analysed findings has reached a level of insights to state that the study has provided fruitful interpretations that can move the conversation of internal marketing and service quality forward.

Saturation is used in qualitative research to justify that the data collected and/or analysed is sufficient and that more material would be redundant (Saunders et al. 2018). It is impossible to know in advance when one will reach saturation. The point of suratation can be reached when the researcher start to acknowledge that the same answer is given to the questions that is being asked and nothing new is added. Moreover, it is first when the collected data is being analysed that it is possible to recognize that the data is saturated (Merriam & Tidell 2016).

3.5.2 Trustworthiness

As mentioned before it is important that the chosen method for the data collection is clearly stated and motivated, and is needed to be able to create reliability for the research (Walliman 2011). Reliability is about in which extend the study can be replicated with similar results (Gray 2004). The researcher also needs to convince the reader that the knowledge that is represented in the study has some validity

(34)

qualitative study there are four criteria to take into consideration; credibility, transferability that corresponds to the validity and dependability and confirmability instead of reliability.

The credibility in this research attempts to be substantiated with accurate

explanations regarding the approach of the study. The author has also been honest, open, sensitive and respectful when handling the presentation of the collected data. The transferability are fair in that the empirical findings have been presented in an early and honest manner. All the original collected data in form of audio recordings is saved and are available upon request to ensure the dependability of the research. Also descriptions and explanations of the approach and who have participated in the study in this method chapter help to increase dependability and the confirmability. That the approach and that all choices are described enables the study to be done in the same way again and then be able to get similar results.

3.5.3 Ethical considerations

It is important to uphold a good research practice and there is a number of principles to consider to ethically perform the research (Vetenskapligarådet 2019). These principles should provide researchers with guidance on practical ethical and intellectual problems. The principles are; honesty, reliability, responsibility and respect. Deviation from good research practice can mean diminished confidence in the research and lead to misleading results. This may also mean that those who participate in the research could be harmed.

It is important to protect participants right when conducting interviews (Ryan, Coughlan & Cronin 2009). Data that is collected during an interview is a person's understanding and perception of a certain topic and it is of importance to have respect for how this fact is handled and that the interview is based on common trust.

Therefore, it is important to clarify to the person who will be interviewed what the interview is about and what its purpose. It is also important to clarify these points in writing for those who participate along with other basic aspects such as rights and anonymity and also to have it signed with consent of the various aspects (Ryan, Coughlan & Cronin 2009). As mentioned earlier in 3.3.4, all the participants was informed of all the criterias above.

(35)

related to ethics when writing a scientific text (Carver, Dellva, Emmanuel & Parchure 2011). Plagiarism is considered as scientific dishonesty and is the most common ethical violation (Vetenskapligarådet 2017). Plagiarism is when the researcher uses research material in a conscious or unconscious way so that it is not clear that the material is in fact someone else's.

3.5.4 Sustainable considerations

(36)

4. Empirical findings and analysis

4.1 Companies and store managers

4.1.1 Mio AB

Mio (originally: “Möbelhandlarnas inköps förbund” the furniture dealers' purchasing association) is a furniture store that sells everything from beds and sofas to small ornaments. Mios business idea is to be the obvious choice when it comes to furniture and furnishings for the price- and quality-conscious customer and always deliver a positive customer experience (mio.se). They have about 70 stores in Sweden and majority of the store are franchisees. The store in Kalmar belongs to the Bro Möbler AB that has 13 Mio stores around Sweden. The store in Karlskrona is owned by Åsa Jobratt.

4.1.1.1 Magnus Khrinde, Kalmar

Magnus Khrinde started as store manager at Mio 2017 and has total responsibility for the Mio store in Kalmar. He has worked within retail since 1990, going from shoe salesman to department manager to store manager and regional manager. They are currently 30 employees in the store in Kalmar and 16 of them work as frontline employees. The vision of Mio Kalmar is to become the biggest in furniture in 2022.

4.1.1.2 Åsa Jobratt, Karlskrona

Åsa Jobratt was born into the retail industry, her father owned a furniture shop. She took over the family business over 20 years ago and the family company Lindahls Möbler AB became a Mio store in the 70s. At the time of the interview, the Karlskrona store had just achieved their goals and is therefore facing the task of setting up new ones. Currently the store has a total of 17 people working and all are working full time.

4.1.2 Systembolaget AB