The perceived influence of the elements of internal marketing on the brand
image of staffing agencies in South Africa.
CANDICE NATALIE BURIN
920303971
Dissertation
Submitted in fulfilment of the requirements
for the degree
MCom
in Marketing Management
in the
Faculty of Management
at the
University of Johannesburg
JOHANNESBURG
Supervisor:
Dr HB Klopper
May 2008-05-31
Co-supervisor:
Prof M Roberts-Lombard
ABSTRACT
Staffing agencies are known to operate in a highly competitive industry, have high
employee turnover and generally have brand images that are not very prominent in
the South African marketplace. Staffing agencies are highly under-researched
considering the various obstacles they face. When clients choose to purchase a
service product they are purchasing a bundle of intangible benefits based on the
performance of people and the activities of employees to be specific. As a result, it
becomes important to attract, retain and motivate the best employees in order to
deliver the best service. Exceeding customer expectations, through providing
exceptional service quality, results in a positive brand image of the organisation
which customers are likely to share with others.
This study follows a descriptive research design. Literature concerning internal
marketing and brand image will be provided. The study makes use of two samples, a
client and employee sample from the Kelly Group, a leading staffing group. Two
questionnaires were designed based on the theoretical literature provided within the
study and disseminated to the two samples. The questionnaires made use of a set of
statements relating to the theory and a 5-point Likert scale that allowed respondents
to select from five options ranging between strongly agree to strongly disagree.
Various statistical analysis procedures were used to accomplish the objectives of the
study including factor analysis, multiple and multivariate regression techniques.
The primary objective of the study is to determine the influence of service quality on
the perceived relationship between internal marketing and the brand image of the
South African staffing brands and staffing subsidiaries of the Kelly Group. The study
will further seek to determine how the different elements of internal marketing
influence the brand image of employees and clients of selected staffing agencies in
South Africa. The elements of internal marketing mix, namely product, price,
promotion, distribution, people, processes and physical evidence will be separately
observed in terms of their influence on the brand image dimensions, namely brand
consistency, brand trust, brand satisfaction and brand commitment. The influence of
the dimensions of service quality, namely reliability, responsiveness, assurance and
empathy on the dimensions of brand image and the influence of service quality on
ii
the elements of internal marketing will be explored in order to determine service
quality’s influence on the relationship between internal marketing and brand image. A
framework to manage internal marketing, service quality and brand image in an
integrated manner was determined.
The conclusion and findings of the study were found to support the objectives of the
study and the results of the statistical analysis were found to accept the hypotheses
of the study. Various recommendations for staffing agencies were given based on
the findings of the statistical analysis. These recommendations included the need for
staffing agencies to monitor service quality gaps and that the internal product was
highly influential to service quality and therefore staffing agencies need to provide a
competitive internal product to employees. Internal distribution was found to be highly
influential towards the responsiveness, assurance and empathy of a service and
therefore staffing agencies need to focus on creating higher levels of internal service
quality and teamwork within their organisations. Physical evidence and tangibles
were found to be influential towards assurance and empathy of service quality and
the importance of a modern open-plan staffing environment and a professional
employee dress code were identified. Internal promotion was found to be influential
to the responsiveness of a staffing agency’s service and therefore the need to
segment employees to determine how much information and how frequently
information needs to be communicated to each group of employees was mentioned.
The importance of staffing agency’s considering the use of new media such as social
networking websites, intranets and wikis was identified as most staffing agency
employees work at the client’s premises.
Brand consistency was found to be critical in obtaining brand trust, satisfaction and
ultimately commitment and that brand consistency is highly influenced by the service
quality offered by a staffing agency. Staffing agencies could achieve consistency
through attracting, hiring and training the correct type of employees to be consistent
with the organisation’s values. The empathy of the service provided by staffing
agencies was considered highly important to all brand image dimensions of brand
consistency, brand trust, brand satisfaction and brand commitment therefore staffing
agencies need to have employees that show a sincere concern for their clients.
Clients further perceived empathy as highly influential towards brand satisfaction,
iii
which is important in order to gain brand commitment which ultimately leads to
improved economic performance of the staffing agency. Staffing agency’s need to
care about their employees and their professional development in order for
employees to care about the staffing agency’s clients. Clients also perceived that
brand trust and brand commitment were highly influenced by the responsiveness of
the service. It was identified that staffing agencies need to attract, satisfy and
communicate with their employees to deliver on client expectations. Assurance was
the most influential service quality dimension influencing brand image but due to it
having a kurtosis value over 1, this recommendation should be considered within
caution. Staffing agencies need to consider an internal marketing approach as a
means of curbing employee churn which will lead to higher levels of assurance.
Staffing agencies need to ensure there is continuous knowledge renewal amongst
employees. In order to create enthusiastic employee behaviour staffing agency
managers need to recognise the supremacy of training as a marketing instrument.
Middle managers should be used as trainers and motivators who build their
employees capabilities and confidence.
Staffing agencies should consider the internal price their employees need to pay to
work for the organisation and avoid psychological contract violation. Staffing
agencies could offer with flexible working options for their employees to increase
their satisfaction. In order for employees to know what to do, how to do it and how to
do it on a consistent basis requires the staffing agency to ensure that the internal
marketing mix elements of internal processes and internal promotion are used
effectively. The management of a staffing agencies need to provide basic scripted
processes and technological processes to increase employee empowerment and
service quality and reduce costs.
Staffing agencies need to consider the importance of internal marketing in attracting
and maintaining talented and knowledgeable employees. Internal marketing
influences the superiority and consistency of the service quality provided by
employees and experienced by clients and ultimately leads to the staffing agency
having a stronger brand image, which ensures future economic performance and the
sustainability of the staffing brand over the long-term.
iv
DECLARATION
I, Candice Natalie Burin, declare that this dissertation is my own, unaided work. Any
assistance that I have received has been duly acknowledged in the dissertation. It is
submitted in fulfilment of the requirements for the degree of Master of Commerce at
the University of Johannesburg. It has not been submitted before for any degree or
examination at this or at any other university.
..............................
............................
Candice Burin
01 September 2010
v
ACKNOWLEDGEMENTS
The love and continuous support of many facilitated me to complete this study
successfully. I would like to acknowledge the contribution of the following
people:
My two mentors Dr HB Klopper and Prof M Roberts-Lombard from the
Department
of
Marketing
Management
at
the
University
of
Johannesburg for guiding me, being patient with me, supporting me and
mentoring me.
Various business leaders for taking the time to see me and for assisting
with their valued contributions. I would like to pay special thanks to:
 Denise Thomas (Previous Executive of Strategic Solutions at
Kelly)
 Kim Meszaros (Marketing Manager at Kelly)
 Mike Stopforth (CEO of social networking company: Cerebra)
 Tracy Czakan (Group Marketing Director of the Kelly Group)
My collegues and leadership at work for providing me the time and
support to complete my study effectively.
My mother, father and loving boyfriend for their support and sacrifices in
allowing me to spend time on this study.
Finally, I would like to thank God for making all this possible.
vi
AFFIDAVIT
vii
TABLE OF CONTENTS
Page
ABSTRACT
ii
DECLARATION
v
ACKNOWLEDGEMENTS
vi
AFFIDAVIT
vii
LIST OF TABLES
xvi
LIST OF FIGURES
xvii
LIST OF APPENDICES
xviii
CHAPTER 1
PROBLEM STATEMENT, OBJECTIVES AND METHOD OF STUDY
1
1.1.
INTRODUCTION
2
1.2.
BACKGROUND
4
1.3.
PROBLEM STATEMENT
5
1.4.
OBJECTIVES
7
1.4.1. Primary objective
7
1.4.2. Secondary objectives
7
1.5.
HYPOTHESES
9
1.6.
THE SIGNIFICANCE OF THE STUDY
10
1.7.
LITERATURE REVIEW
11
1.8.
RESEARCH METHODOLOGY
14
1.8.1. Research design
14
1.8.1.1. Secondary research
14
1.8.1.2. Primary and quantitative research
15
1.8.1.3. Descriptive research design
15
1.8.1.4. Population and sampling
16
1.8.1.5. Questionnaire and survey design
18
1.9.
19
DATA ANALYSIS
viii
1.10. LIMITATIONS OF THE STUDY
20
1.11. DISCUSSION OF CONCEPTS
21
1.12. ORIENTATION OF THE STUDY
23
CHAPTER 2
THE STAFFING INDUSTRY IN SOUTH AFRICA
25
2.1.
INTRODUCTION
26
2.2.
THE STAFFING INDUSTRY: AN INTERNATIONAL PERSPECTIVE
27
2.2.1 The economic landscape and employment
27
2.2.2 The skills shortage conundrum
28
2.2.3 Age discrepancies in developed economies
29
2.2.4 Employee mobility
30
2.2.5 Candidate empowerment
32
2.2.6 Flexibility and security
32
2.3.
33
THE SOUTH AFRICAN STAFFING INDUSTRY
2.3.1. The National Economic Development and Labour Council (NEDLAC) 38
2.3.2. Business Unity South Africa
40
2.3.3. The Confederation of Associations in the Private Employment
Sector (CAPES)
40
2.3.4. The Association of Personnel Service Organisations
42
2.3.5. Staffing agencies
44
2.4.
48
THE KELLY GROUP IN SOUTH AFRICA
2.4.1. Background of the Kelly Group
48
2.4.2. The services of the Kelly Group
50
2.4.3. The staffing brands of the Kelly Group
52
2.4.4. The competitive advantage of the Kelly Group
56
2.5.
57
CONCLUSION
ix
CHAPTER 3
LITERATURE REVIEW: A PERSPECTIVE ON INTERNAL MARKETING
59
3.1.
INTRODUCTION
60
3.2.
INTERNAL MARKETS AND INTERNAL MARKETING
61
3.2.1. The internal market
61
3.2.2. Internal marketing
64
3.2.2.1.
65
3.3.
Defining internal marketing
THE MANAGEMENT OF INTERNAL MARKET RELATIONSHIPS
68
3.3.1. Internal environmental analysis
69
3.3.1.1.
The purpose of internal marketing
70
3.3.1.2.
The creation of an internal marketing environment
72
3.3.1.3.
Knowledge renewal in an internal marketing environment
73
3.3.1.4.
Organisational structure and internal marketing
74
3.3.2. Internal market segmentation
75
3.3.2.1.
Defining internal market segmentation
76
3.3.2.2.
Reversing organisational hierarchy
76
3.3.2.3.
Types of internal customer segments
78
3.3.3. Organisational structure
81
3.3.4. Organisational culture
84
3.3.4.1.
A description of organisational culture
85
3.3.4.2.
A management perspective on organisational culture
85
3.3.4.3.
An employee perspective on organisational culture
86
3.3.4.4.
The different components of organisational culture
87
3.3.4.5.
An internal marketing view of organisational culture
87
3.4.
THE INTERNAL MARKETING MIX
89
3.4.1. Internal products
89
3.4.1.1.
Training opportunities
91
3.4.1.2.
Providing careers not jobs
91
3.4.1.3.
The disadvantages of job-products
93
3.4.2. Internal price
94
3.4.2.1.
Opportunity cost
94
3.4.2.2.
Psychological cost
96
x
3.4.2.3.
Emotional cost
97
3.4.3. Internal promotion
98
3.4.3.1.
Describing the term “internal promotion”
98
3.4.3.2.
The importance of internal promotion as a communication tool
99
3.4.3.3.
Advertising
100
3.4.3.4.
Personal selling
102
3.4.3.5.
Sales promotion
102
3.4.3.6.
Public relations
103
3.4.3.7.
New media
104
3.4.4. Internal distribution
107
3.4.4.1.
Internal client service
107
3.4.4.2.
The working environment
108
3.4.5. People
111
3.4.5.1.
Employee empowerment
112
3.4.5.2.
Human resource rewarding
116
3.4.6. Internal processes
119
3.4.6.1.
Management’s role in internal processes
120
3.4.6.2.
The role of technology in internal processes
121
3.4.7. Physical evidence
124
3.4.7.1.
The physical work environment
124
3.4.7.2.
Physical evidence during the client interaction
126
3.4.7.3.
Physical evidence’s influence on internal interactions
127
3.5.
SERVICE QUALITY AS A COMPONENT OF THE INTERNAL
MARKETING PROCESS
129
3.5.1. Service quality standards
129
3.5.1.1.
A description of service quality
130
3.5.1.2.
Service quality perspectives
130
3.5.1.3.
The different dimensions of service quality
131
3.5.2. Service quality monitoring
133
3.5.2.1.
Describing service quality monitoring
133
3.5.2.2.
The process of service quality monitoring
134
3.5.2.3.
The importance of internal service quality
135
3.5.2.4.
The service-profit-chain and the virtuous circle model
135
3.5.3. The linkage between the elements of the internal marketing mix and
xi
the dimensions of service quality
3.5.3.1.
The link between the internal product and the dimensions of service
quality
3.5.3.2.
140
The link between internal price and the dimensions of service
quality
3.5.3.3.
140
The link between internal promotion and the dimensions of service
quality
3.5.3.4.
140
141
The link between internal distribution and the dimensions of service
quality
142
3.5.3.5.
The link between people and the dimensions of service quality
142
3.5.3.6.
The link between internal processes and the dimensions of service
quality
3.5.3.7.
143
The link between physical evidence and tangibles and the
dimensions of service quality
3.5.
143
CONCLUSION
144
CHAPTER 4
LITERATURE REVIEW: A PERSPECTIVE ON BRAND IMAGE
146
4.1.
INTRODUCTION TO SERVICE BRAND MANAGEMENT
147
4.2.
DEFINING THE CONCEPTS „BRAND‟ AND „BRAND MANAGEMENT‟
148
4.3.
THE EVOLUTION OF MODERN BRAND IMAGE
152
4.4.
CORPORATE IDENTITY, CORPORATE IMAGE AND CORPORATE
4.5.
REPUTATION
158
“BRAND IDENTITY” AND “BRAND IMAGE”
164
4.5.1. Brand identity
164
4.5.2. The factors composing brand identity
165
4.5.3. Brand image
168
4.6.
170
KEY BRAND IMAGE BUILDING CONSTRUCTS
4.6.1. Brand consistency
170
4.6.2. Brand trust
173
4.6.3. Brand satisfaction
174
xii
4.6.4. Brand commitment and loyalty
175
4.6.5. Linking key constructs
176
4.7.
THE ROLE OF EMPLOYEES IN BRAND IMAGE MANAGEMENT
178
4.8.
INTERNALISING THE BRAND
179
4.9.
BRAND VALUES‟ INFLUENCE ON BRAND IMAGE
180
4.9.1.
Functional versus emotional values
181
4.9.2.
Brand values‟ connection to brand identity
181
4.10.
COMMUNICATION‟S INFLUENCE ON BRAND IMAGE
183
4.10.1. Corporate Communication
183
4.10.2. The importance of consistency in brand communications
183
4.10.3. The need for Integrated Marketing Communications (IMC)
184
4.10.4. Internal communication
185
4.10.5. The connection between communication and brand image
186
4.11.
CULTURE‟S INFLUENCE ON BRAND IMAGE
190
4.11.1. Culture defined
190
4.11.2. Aligning employees with culture
191
4.11.3. The connection between culture, brand values and image
192
4.12.
197
HOW INTERNAL MARKETING AFFECTS BRAND IMAGE
4.12.1. The difference between internal marketing and brand management 197
4.12.2. Internal marketing‟s impact on the brand image
198
4.13.
200
CONCLUSION
CHAPTER 5
RESEARCH DESIGN AND METHODOLOGY
201
5.1.
INTRODUCTION
202
5.2.
THE RESEARCH PROCESS
202
5.2.1. Step 1: Identify and formulate the problem or opportunity
203
5.2.2. Step 2: Determine the research objectives
204
5.2.3. Step 3: Research design
204
5.2.3.1. Quantitative research data
204
5.2.3.2. Descriptive research design
205
xiii
5.2.4.
Step 4: Conduct secondary research
206
5.2.5.
Step 5: Select a primary research method
206
5.2.5.1. Data gathering technique
207
5.2.5.2. A self-administered on-line questionnaire
208
5.2.5.3. Covering letter
209
5.2.5.4. Questionnaire
212
5.2.5.5. The choice of scale
213
5.2.5.6. Pre-testing of the questionnaire
219
5.2.5.7. Validity of the questionnaire
220
5.2.5.8. Reliability of the questionnaire
222
5.2.6.
Step 6: Determine the research frame
223
5.2.6.1. Target population
224
5.2.6.2. Sampling frame
225
5.2.6.3. The sampling unit
226
5.2.6.4. Sample size
227
5.2.7.
Step 7: Data gathering
228
5.2.8.
Step 8: Data analysis
228
5.2.8.1. Editing of data
229
5.2.8.2. Coding of data
229
5.2.8.3. Processing of data
229
5.2.8.4. Statistical analysis of data
230
5.2.8.5. Sampling errors
240
5.2.8.6. Response errors
240
5.2.8.7. Non-response errors
241
5.3.
ETHICAL CONSIDERATIONS
241
5.4.
CONCLUSION
242
CHAPTER 6
RESEARCH RESULTS AND INTERPRETATION
243
6.1.
244
INTRODUCTION
xiv
6.2.
MEASUREMENT OF RESEARCH OBJECTIVES AND HYPOTHESES
244
6.3.
DISCUSSION OF THE EMPIRICAL FINDINGS
248
6.3.1. Factor analysis and the validity of the questionnaire
249
6.3.2. The reliability of the questionnaire
252
6.3.3. Respondent rate and sample descriptive
253
6.3.4. Normality and linearity of the data
265
6.3.5. Multiple regression results
271
6.3.5.1.
Relationship 1: The relationship between the seven elements of
Internal marketing and the four dimensions of service quality using
multiple regression
6.3.5.2.
271
Relationship 2: The relationship between the four dimensions of
service quality and the four dimensions of brand image using
multiple regression
6.3.5.3.
286
Relationship 3: The relationship between the seven elements of
Internal marketing and the four dimensions of brand image using
multiple regression
296
6.3.6. Multivariate regression results
313
6.3.6.1. Relationship 1: The relationship between the seven elements of
internal marketing and service quality using multivariate regression
analysis
314
6.3.6.2. Relationship 2: The relationship between the four dimensions of service
quality and brand image using multivariate regression analysis
316
6.3.6.3. Relationship 3: The relationship between the seven elements of
Internal marketing and brand image using multivariate regression
317
6.4.
SUMMARY CONCERNING THE STATISTICAL HYPOTHESIS
321
6.5.
CONCLUSION
322
CHAPTER 7
CONCLUSIONS, IMPLICATIONS AND RECOMMENDATIONS FOR
FUTURE RESEARCH
323
xv
7.1.
INTRODUCTION
324
7.2.
OVERVIEW OF THE STUDY
324
7.3.
CONCLUSIONS (MAJOR FINDINGS) AND RECOMMENDATIONS
FOR SECONDARY OBJECTIVES
327
7.3.1. Secondary objective (a)
327
7.3.2. Secondary objective (b)
329
7.3.3. Secondary objective (c)
331
7.3.3.1.
Development of an integrated framework
331
7.3.3.2.
Relationship 1
335
7.3.3.3.
Relationship 2
344
7.3.3.4.
Relationship 3
350
7.4.
LIMITATIONS AND DIFFICULTIES OF THE STUDY
359
7.5.
AREAS FOR FUTURE RESEARCH
359
7.6.
FINAL CONCLUSIONS
360
REFERENCES
362
xvi
LIST OF TABLES
Table 2.1: The different services offered by the Kelly Group
50
Table 2.2: The different staffing brands within the Kelly Group
52
Table 3.1: Definitions of the term “Internal Market”
63
Table 3.2: Definitions of the term “Internal Marketing”
66
Table 4.1: Definitions of the term “Brand”
148
Table 4.2: Definitions of the term “Brand Management”
150
Table 5.1: The differences between online and offline survey methods
207
Table 6.1: KMO and Bartlett statistics for the employee sample
251
Table 6.2: KMO and Bartlett statistics for the client sample
252
Table 6.3: Results of the Cronbach alpha test
253
Table 6.4: Sample realisation rate
254
Table 6.5: Various descriptive and the estimated standard error for
the employee sample
258
Table 6.6: Employees’ perceptions of the most important considerations
when selecting and remaining with a staffing agency over
the long-term
259
Table 6.7: Various descriptives and the estimated standard error for the
client sample
262
Table 6.8: Clients’ perceptions of the most important considerations when
selecting and remaining with a staffing brand over the long-term
Table 6.9: Skewness and kurtosis summary
263
265
Table 6.10: Summary of Kolmogorov-Smirnov and
Shapiro-Wilks p-values
267
Table 6.11: Regression of the elements of internal marketing on
Service quality
272
Table 6.12: R2 for the final regression model of the elements of internal
marketing on the dimensions of service quality
Table 6.13: Regression of service quality on the dimensions of brand image
284
287
2
Table 6.14: R for the final regression model of service quality on the
dimensions of brand image
293
Table 6.15: Multiple regression of brand image on the elements of
internal marketing
297
xvii
Table 6.16: R2 for the final regression model of brand image on
the elements of internal marketing
310
Table 6.17: Multivariate regression for four dependent elements of
service quality and seven independent variables of
internal marketing
314
Table 6.18: Multivariate regression for the four dependent elements of
brand image and four independent variables of
service quality
316
Table 6.19: Multivariate regression for four dependent elements of brand
image and seven independent variables of internal marketing
Table 6.20: Summary concerning the statistical hypothesis
xviii
319
321
LIST OF FIGURES
Figure 1.1: The three key relationships explored in the study
6
Figure 1.2: Choice of population and sample
16
Figure 2.1: Rapid growth of registered staffing agencies in South Africa
37
Figure 2.2: The structure of the staffing industry in South Africa
38
Figure 3.1: Proposed conceptualisation of internal market orientation
62
Figure 3.2: The redefined internal market domain
77
Figure 3.3: The types of internal organisational customers
78
Figure 3.4: The evolution of organisational structure
82
Figure 3.5: The Virtuous Circle
136
Figure 4.1: How brand image used to be
153
Figure 4.2: The brand image circumvented due to the Internet
155
Figure 4.3: The new brand management model
157
Figure 4.4: Clients become part of the brand culture
158
Figure 4.5: The link between corporate identity, image and reputation
159
Figure 4.6: Factors composing brand identity
165
Figure 4.7: The connection between communication and brand image
186
Figure 4.8: The connection between communication, culture and brand
values to brand image
193
Figure 5.1: Steps in the research process
203
Figure 5.2: Target population, sample units, sample elements and actual
sample size of the study
224
Figure 7.1: Proposed statistical model for the study based on KMO statistics
332
Figure 7.2: A summary of the relationships between the primary and
secondary objectives, the questions in the questionnaire, the
main and major findings, and the recommendations of the study
xix
358
ANNEXURES
Annexure A: Employee questionnaire cover letter
401
Annexure B: Client questionnaire cover letter
402
Annexure C: Employee questionnaire
403
Annexure D: Client questionnaire
411
Annexure E: Histograms for employee and client data
417
Annexure F: Box and whisker plots for employee and client data
422
xx