IAME Conference – Copenhagen 2009

EXPLORING THE INTERNAL MARKETING

CONCEPT IN THE PORT INDUSTRY
THE CASE OF PIRAEUS PORT AUTHORITY S.A.

Dr. PARDALI Angeliki, Associate Professor

Mr. KOUNOUPAS Evangelos, PhD Candidate
Ms. ANAGNOSTAKI Christiana

Port Economics and Management Laboratory

University of Piraeus – Dept. of Maritime Studies
Website: http://maritime.unipi.gr/portlab
Email: portlab@unipi.gr
Presentation Target

Our Target:

To explore the internal environment of a Port

Enterprise in order to generate important internal
market intelligence, necessary for managerial
decisions that lead to increased competitiveness of
the port enterprise.
Methodology

• Literature Review on Port Marketing with a focus on

Internal Marketing

• Empirical Survey: Case Study of the Piraeus Port

Authority S.A.
Key Questions to be answered

• Why Port Marketing?

• Why Internal Marketing?

• How do we generate internal market intelligence?

• What are the Managerial Implications of the Internal

Marketing Concept?
Why is Port Marketing really necessary?

• For promotion, market research, customer service (UNCTAD

publications: TD/B/C.4/AC.7/14, UNCTAD/SHIP/494(11), UNCTAD/SHIP/494/ (13), UNCTAD/SHIP/464/ (32)

• To identify port competition, market orientation (Schulten

1991),

• For better pricing, market segmentation and niche

strategies (Muhler, Mester, Stutchey 1991)
• To deal
and Hecker 2007)
with hyper-competition in the port industry (Cahoon

• To enhance the role of the port within the Port Cluster (De
Langen 2003)

• To improve port/terminal competitiveness …

What offers competitive advantage to a Port?

• Location,
• Infrastructure and Superstructure,
• Competitive Pricing,
• Port Service/Product Quality, Only these 3
can be directly
• Efficiency of Port Management, controlled by
the port
• Ability to capitalise on chance Operator
(Pardali, A. 2007, pp. 467-469):
Designing is just the beginning

• Port Service/Product Quality,

• Efficiency of Port Management,
• Ability to capitalise on chance

… these are conceived by Port Management

… but implemented by the port workforce!!!

The importance of port employees
• Port employees are these who actually engage in direct
contact with the users (Wiegmans et al 2001),
• Constant exchange of information
• Comprehend user expectations and demands (Chlomoudis 2003, pp. 261).
• Quality of port labour is critical element in the port choice
procedure (Durvasula et al 2002, Tongzon 2008, Young – Tae et al 2008)
• Advantage derives from the combination of traditional port
critical assets with the intangible element (De Martino & Morvillo 2008)
The importance of port employees
• Industrial relation problems can cancel or downgrade
the overall terminal competitiveness.

• Culture affects adaptation to changes, ensures (or

averts) the continuity and the consistency of port labour
(Chlomoudis 2003, pp. 291).

• A competitive marketing strategy at the port operator

level should incorporate port workforce through Internal
Marketing strategies!
Easier said than done …
• “…experts tend to underestimate the practical
aspects of marketing management

• . …literature seems to focus more on “what

marketing is” and less on “how we do it”…

• Therefore, we need to identify the “real barriers

which block the implementation” of marketing
strategies (Piercy and Morgan 1991)
Can Internal Marketing be a solution?
IM involves:
 Planned use of marketing-like techniques internal to
the organisation
 Creation of a sensitive-to-change organisational
environment
• Helps in realizing the effective implementation of
marketing programs
• Develops a process of creating a customer
orientation and employee commitment (Ahmed & Raffiq
1993a).
Can Internal Marketing be a solution?

• “Employees as customers” and “jobs as products”

(Berry et al 1976, 1981, Sasser & Arbeit 1976).

• Create motivated and customer conscious

employees that will improve service quality (Gronroos 1983)

• Develop marketing programmes necessary to:

 understand the difficulties faced in customer servicing
 fully exploit employees’ potential for superior value delivery
 The Internal Marketing Concept

• Basic conceptual foundation:

Each organisation operates in two distinctive but
interrelated markets (Berry 1981).

• IM programs should be addressed to:

• Front-line personnel
• All the critical people/groups “without whose
support, cooperation and involvement” the external
marketing program will be ineffective. (Piercy 1994)
Internal Marketing Elements

• Product: Values, attitudes and behaviours

• Price: Cost of not engaging to other projects and the
adoption of new values
• Promotion: Communication media necessary to
promote new values - persuade the key-personnel
• Place: the process of organizational culture
alteration and alignment
Internal Market Segmentation

• Segments are the functions played by groups of

people, (Piercy and Morgan 1991)

• internal groups must be cohesive and formed on the

basis of shared commonalities (Rafiq & Ahmed (1995) .

• Grouping variables can be demographical data,

functional areas or advanced psychological
variables, such as beliefs, fears and motivators.
The Case Study: Piraeus Port Authority S.A.

• Piraeus is the most important port in Greece

• 24,000 ships,
• 19 million passengers
• 1.373.138 TEUs (2007)
• 619.000 Cars

• Dual role of Port Authority and Port Operator

• 35+ year concession is awarded to COSCO Pacific

• Strong opposition by the port workforce - in reduced
working hours, port congestion, lower traffic
volumes and increased customer dissatisfaction.
Research overview and Methodology

• Empirical survey is based on information directly from

the employees rather than Port Management.

Case Study Target:

• To discover the way basic assumptions of internal
marketing theories appear in the context of the port
industry
• To offer a new way of examining the port environment,
highlighting the importance of all levels of a port’s
workforce.
Survey sample and questionnaire development

The questionnaire investigates the issues of:

• employee motivation,
• trace communication content and flows as well as
• the bases for employee empowerment

under the paradigm of the internal marketing mix as

postulated by Piercy and Morgan (1994) and the
works of Rafiq and Ahmed (1993, 1995).
Survey sample and questionnaire development

• Questionnaire: A mapping instrument to assist in

Internal Market Intelligence Generation (Gounaris 2006).

• Sample: Stratified sample of 15% of employees in

all Organisational Units

• Descriptive statistics, cross-tabularation and

Pearson’s chi-square test used to identify goodness
of fit and test the independence among the sample
variables.
Case study findings and discussion

• Results indicate that employees can have different

needs from those of the organisation
• The “internal product” that the PPA S.A. is
promoting does not fit to the needs of its internal
market.
• Elements of a “them and us” culture can be traced
Case study findings and discussion

• Income is related to employees’ perception that

their wages are reflecting their work value, for an
aggregated 80% of respondents
• Corporate mission statement does not “sell itself”
internally:
 employees are in pace with job security and the positive
impact on national economy,
 they tend to neglect the customer/user satisfaction side of
the statement.
 Employee perceptions on Unit Importance
and need for special treatment

more important
8,0%
Ship Charging - than other units
10,3% different treatment
Discharging

25,3%
Equipment Service and 28,3%
Maintenance

8,9%
Container Terminal 11,7%

16,9%
Other Organisational
23,8%
Units

0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0%

Employee motivating factors
Motivating Factors Motivating
Not Motivating

Management Style and Methods

Flexible working hours
Job safety
Participation in decision making
Good relationships with Management
Good relationships with Colleagues
Adequate Training
Positive Promotion Perspectives
Satisfying Remuneration
Task rotation
Interest of job tasks

0 50 100 150 200 250

 Employee de-motivating factors
Demotivating Factors
Demotivating
Not Demotivating

Management Style and Methods

Inflexible working hours

Dangerous working conditions

Exclusion from decision making

Bad relationships with Management
Bad relationships with Colleagues

Inadequate Training
NegativePromotion Perspectives
Unsatisfying Remuneration
Stagnant Job tasks
Not Interest of job tasks

0 50 100 150 200 250

Are motivating & de-motivating factors critical for
all Organizational Units?
 Employee Communication Content Needs

Communication Content (%)

Other 4%
PPA financial status 48%
Port user needs 43%
Other organisational units functions 19%
Introduction of new technology 59%
Organisational goals 58%
Employee personal characteristics 37%
Developments in Port's Competition 50%
Training Programmes 62%
Improvement in working conditions 81%
Remuneration Changes 64%
Indutrial Relations 81%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Managerial Implications
• The port environment is compatible with the
theories of internal marketing,
• IM is a useful and comprehensive framework for
examining the internal environment of the port
enterprise
• Internal segmentation and marketing mix allows a
clearer understanding of the needs and behaviours
of the internal customers of a port.
Managerial Implications

• Disaccords between the strategic visions of

management and its workforce could be transferred
to customers and influence their perception &
expectations about port service quality.

• IM can highlight training needs that go beyond

employee everyday tasks, such employee market
orientation seminars.
Managerial Implications

• IM assists in understanding the differences of

employee perceptions on the special weight of their
tasks and its integration in the overall service
offering towards the customer.

• These differences that can cause interdepartmental

conflict can be mapped and effectively resolved
through specific internal communication campaigns.
Managerial Implications

• IM plans can facilitate the introduction and

management of change
• maximising the internal service quality
• allow employees to perform duties to their full
potential,
• increase motivation and
• lead to higher levels of service quality to port user.
Suggestions for Future Research
• Expand into a multiple case study

• Explore the formulation of internal marketing

strategies between Port Authorities and Terminal
Operators.

• Combine internal marketing with a measurement of

customer perceptions and expectations on the quality
of port services (INSERVQUAL)
Thank you very much for
your attention!!!!

PortLab – Laboratory of Port Economics and Management

Department of Maritime Studies – University of Piraeus
http://maritime.unipi.gr/portlab
portlab@unipi.gr