Listening to the Voice of the Patients: The Marketing Function, Market Orientation and Performance in Hospitals in Emerging Markets

The present study aims to explore to what extent hospitals adopt a market orientation as their corporate marketing strategy in an emerging-market context which poses many macro-level challenges for health care organizations due to its strong need for economic development, societal development, better quality-oflife (QOL), welfare, ethical practices among others. Hospitals that serve in these markets can benefit from a market orientation since a market-oriented strategy enables them to study understand and respond to their health care customers more effectively. Administrators from 400 private hospitals in Turkey were surveyed. A positive connection was found between the level of the hospital’s market orientation and the presence of a formal marketing department that serves as the informational bridge between the hospital and the society. The results of this study revealed that market orientation is positively related to general performance of the hospital. The present study also showed that a statistically significant difference exists between the general performance of the hospitals having a formal marketing department and of those not having one. Market-oriented private hospitals perform better compared to their less market-oriented counterparts. A formal marketing department that connects the hospital to its customers and the society at large plays a pivotal role in the development of market-oriented strategies and operations and improves hospital performance. Managerial and public policy implications of the research results were also discussed. Address for correspondence: Aykut Ekiyor Faculty of Economics and Administrative Sciences, Healthcare Management Department, Gazi University, Ankara, Turkey E-mail: [email protected], Telephone:+905333527445 INTRODUCTION Marketing remains a broad and dynamic field. Developments in the social sciences influence how we think about markets, customers, and competition; technological innovations change how organizations reach customers and organizational changes influence how marketing is practiced within firms (Shankar and Carpenter 2012). Marketing has evolved over the past 30 years in health care. Originally, it was viewed with great derision as little more than advertising. The narrow perspective of marketing as only advertising minimizes its contrubution. Marketing really brings with it an external perspective that adds a key value in organizational planning (Berkowitz 2010). Sidney Levy, who has been acknowledged by today’s marketers as one of the main contributors to marketing and consumer behavior thoughts in the twentieth century, “questioned the idea that marketing is primarily a narrowly defined business activity and that marketing functions are separate and independent from society” (Harris 2007). It has been observed that “managers in many types of organizations face the same strategic concerns about consumers, product positioning, competition, and the marketing environment” (Harris 2007). With the broadening of the marketing concept, marketing has been applicable to a variety of contexts such as nonprofit, art, entertainment, health care, charitable organizations, professions and political campaigns (Harris 2007). Marketing provides concepts and methods that help many types of businesses to be competitive and successful. © Kamla-Raj 2015 Ethno Med, 9(1): 25-41 (2015) 26 E. ASUMAN ATILLA, DILAVER TENGILIMOGLU, TÜRKAN DURSUN-KILIC ET AL. In spite of its apparent benefits, the adoption of marketing by health care institutions has been quite slow. The applicability of marketing concepts and methods in the health care context has still being questioned from an ethical perspective. Most of not-for-profit organizations such as hospitals exist to benefit the society or citizens and making profit is not among their primary objectives. However, hospitals just like other businesses work in a competitive and dynamic environment. For successful adaptation to change environmental conditions, hospital organizational cultures must incorporate the marketing concept to enhance flexibility and orientation toward the external environment (Arnold et al. 1987). In order to survive in a competitive health care market, hospitals need to utilize marketing methods and concepts to better serve citizens and the larger society. Marketing has a profound impact on the society through marketing systems. “Marketing alters society and the habitat in which it resides on an extensive and extending scale” (Varey 2013). The marketing concept has been blamed for causing over-production and over-consumption of goods and services that are damaging (Varey 2013), individuals and the society as a whole, environmental polution, and irresponsible use of scarce resources. Marketing has been criticized for being overly profit-driven and not considering primarily the benefits of the society. In spite of this negative perception of it, marketing offers knowledge and methods that can help health care organizations accomplish their altruistic, and societal goals. Marketing can serve the society’s interests in the health care sector by enhancing the Quality-Of-Life (QOL), a major dimension of the societal development. Kilbourne (2008) defines marketing, in its broadest sense, as “a provisioning technology, the function of which is to deliver quality of life to the collectivity so engaged”. The development level of nations is assessed by their success in enhancing and maintaining the well-being or quality-of-life of their citizens (Rahtz and Szykman 2008). Marketing has the potential to contribute to the QOL (for example, cost/standard of living, health care, economy, infrastructure, political freedom, social equality, culture and recreation, interpersonal relations, and environment) of the society through improving the health of people (Peterson 2006; Kilbourne 2008). Health care is a major component/determinant of QOL (Chance and Deshpande 2009; Keller et al. 2009) and is getting increasingly costly (Keller et al. 2009; Samli 2010). The health care dimension of the QOL of a society is related to life expectancy, calorie consumption, availability of physicians and nurses, hospital beds per 1,000 people, clean water access, infant mortality, and public health expenditures/country’s Gross Domestic Product (GDP) (Peterson 2006). Marketoriented health care systems can alter many of these variables in positive ways by incorporating the opinion of the health care customers into their strategic planning. Since marketing and marketing systems affect the economic and societal growth of a country, in emerging markets, businesses can be expected to be more inclined to adopt and utilize marketing concepts and methods. Especially businesses that operate in competitive and dynamic markets can view marketing as an effective tool to establish a competitive position in the consumer market. In such markets, businesses would be in a better market position if they adopt a corporate marketing strategy that is based on a market orientation. The results from the firm-level research suggest that market orientation improves firm performance (Narver and Slater 1990; Jaworski and Kohli 1993). Market orientation is a management philosophy that has been the foundation of corporate marketing management for decades (Narver and Slater 1990; Jaworski and Kohli 1993; Mitchell et al. 2010). There have been two widely-acknowledged perspectives on market orientation (Jaworski and Kohli 1996). These are (1) a behavioral/ activities/ process perspective (Kohli and Jaworski 1990; Day 1994), and (2) a cultural perspective (Narver and Slater 1990; Deshpande et al. 1993; Hurley and Hult 1998). According to Kohli and Jaworski (1990) who see market orientation as a process-based phenomena in organizations, market orientation focuses on “ongoing behaviors and activities in an organization”. Jaworski and Kohli (1996) also include customer and competitor intelligence generation, dissemination of this intelligence throughout the firm, and responsiveness to it. Market-oriented strategy development allow firms to incorporate the voice of the citizens into the product/service development process. The health care context in almost every society has some elements of subsistence marketplaces where the betterment of basic life circumstances LISTENING TO THE VOICE OF THE PATIENTS 27 is needed, human and economic considerations blur, and the social environment is complex (Viswanathan et al. 2009). The health care markets in many societies’ house communities who are economically and/or socially disadvantaged (for example, agricultural communities, unemployed populations, urban poor, illiterate people, ethnic/racial subcultures, etc.) are not fully developed. Market orientation, as a corporate marketing strategy, allows health care organizations to serve their regular markets as well as subsistence marketplaces (individuals, communities, entrepreneurs, etc.) not as commercial markets to sell their offerings to, but as communities to understand and learn from The University of Illinois at Urbana-Champaign-College of Business Website (The University of Illinois at Urbana-Champaign 2014). Health care organizations can examine, learn from and respond to their subsistence market places using market research. According to Viswanathan et al. (2009), purposive understanding of subsistence marketplaces lead to better addressing of customer needs and welfare as could be demonstrated by the following outcomes: Designing products that improve life circumstances, and developing multifaceted, product related means to enhance welfare, co-creating offerings with subsistence, buyers and sellers, and engendering trust in customer interactions and business practices. In emerging markets where there is a greater need for economic and societal development and the betterment of the QOL, the health care markets contain elements which are more in line with the characteristics of subsistence marketplaces. In both developed and developing societies, deeply-rooted economic, societal and health problems can be better understood and tackled with the help of market-oriented heath care establishments. The term, health marketing, here signifies the systematized application of the marketing principles within the very broad, heterogeneous, and complex field of health. Although many authors have praised the emergence of health marketing as a distinct field of research provided clear and integrative definitions. Indeed, health marketing refers to a number of realities, for example, marketing of the life sciences, social marketing, and marketing of health services, but few ultimately have these (Crie and Chebat 2013). Furthermore, from the economic perspective, according to Loubeau and Jantzen (1998), the dynamic nature of the health care industry forces health care executives to develop effective strategic plans in order to increase revenues, decrease costs and develop possible alliances with other health care providers. Health care executives increasingly demand current and reliable market intelligence to make better strategic decisions. They need a wide spectrum of market information originating from the society to make sound decisions. It is important for hospitals to understand consumer perceptions and the position of the institution in the marketplace, and develop and test new ideas, services and solutions (Loubeau and Jantzen 1998). Hospitals, like any other businesses, have customers that include patient, physician, or managed care organization that has a choice among providers (Loubeau and Jantzen 1998). Good market intelligence helps health care organizations understand the needs, wants, preferences, attitudes and purchase decision-making processes of their customers. Hospitals need to know how health care customers define and perceive quality, service, convenience and value, and what roles these features play in their purchase decision. At a broader level, hospitals need to address issues such as competitive position and vulnerability, expanding markets for existing products through alternative delivery systems, and hospital image, reputation and identity as perceived by the society (Loubeau and Jantzen 1998). Market intelligence is a key to the success of any businesses. On the basis of market intelligence gathered, hospitals can develop better solutions to customer problems. And not only individuals but also, collectively, the whole society can benefit from the market information gathered and used by hospitals. Chance and Deshpande (2009) argued that “in a bottom-up spillover model... in which satisfaction in different life domains aggregates to overall life satisfaction, increasing access to health care and medicines is an important step toward improving consumer well-being”. Market orientation enables health care organizations to satisfy their customers by instilling the customer’s voice in their offerings, processes, policies, and practices regardless of how they define their business contexts. Health care markets in this context display the typical characteristics of subsistence marketplaces with strong needs for economic and social development, improvement of the QOL, welfare, ethical business practices and so on. 28 E. ASUMAN ATILLA, DILAVER TENGILIMOGLU, TÜRKAN DURSUN-KILIC ET AL. Hospitals that serve in these markets can benefit from a market orientation since market orientation allows them to study, understand and respond to their health customers more effectively. Also, health care markets in developing countries may be very competitive and dynamic and in constant transformation. In order to survive and compete in a dynamic market, hospitals may prefer to pursue market-oriented management strategies and policies. There are two widely accepted perspectives on market orientation (Jaworski and Kohli 1996) in the literature: A behavioral/ activities/ process perspective (Kohli and Jaworski 1990; Day 1994), and a cultural perspective (Narver and Slater 1990; Deshpande et al. 1993; Hurley and Hult 1998). According to the behavioral perspective suggested by Kohli and Jaworski (1990), market orientation focuses on “ongoing behaviors and activities in an organization” Jaworski and Kohli (1996) which include customer and competitor intelligence generation, dissemination of this intelligence throughout the firm, and responsiveness to it. According to the cultural perspective suggested by Narver and Slater (1990), market orientation is “the organizational culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and, thus, superior performance for the business”. According to Narver and Slater (1990), market orientation has three important components which are customer orientation, competitor orientation, and interfunctional coordination (Slater and Narver 1990). This paper adopts a behavioral perspective on market orientation. Research on market orientation has emerged during the last two decades and received broad interest from marketing scholars. A growing body of research on market orientation have adopted a firm-level approach to market orientation and explored the relationship between market orientation and business performance in a single or a multi-industry context in the United States of America (U.S.A.) as well as in international settings (Deshpande et al. 1993; Slater and Narver 1994a; Greenley 1995; Pelham and Wilson 1995; Han et al. 1998). Much of the work on market orientation has been conducted in manufacturing settings (Kumar and Subramanian 2000). Few studies have explored market orientation as sustainable market orientation from a macro perspective (Viswanathan et al. 2009; Mitchell et al. 2010). The effect of market orientation on performance in the health care industry has been investigated by few studies (Naidu and Narayana 1991; Raju et al. 1995; Kumar et al. 1998; Wood et al. 2000; Wrenn 2002) mostly in the Western health context. These studies have generally found a positive relationship between market orientation and performance (Kumar et al. 1998; Kumar and Subramanian 2000; Raju et al. 2000; Wood et al. 2000; Wrenn 2002). However, it should be acknowledged that hospitals have still been quite slow and hesitant in accepting and adopting marketing concepts and methods. Most of the time, hospitals mistakenly view market orientation as public relations and advertising (Arnold et al. 1987). Although public relations and advertising are quite vital functions for hospitals, the studies that have been conducted suggest that the true scope of a market orientation goes beyond these functions and includes many other dimensions. Therefore, a better understanding of the scope and impact of a market orientation on hospitals, individuals and the society at large is quite important in today’s dynamic and competitive health care landscape and this paper aims to serve this purpose.