Micro-environment influences on pricing strategy in Saudi private sector hospitals: an empirical investigation

Abstract

Marketing management’s job is to build and maintain a strong and long run relationship with target customers by creating value, satisfaction, and loyalty. As a result, marketing success requires building relationships with competitors, suppliers, patients, and third party payers, which combine to make up the hospital’s value delivery network. Therefore this research investigates the influence micro environment factors have on the pricing strategy in private hospitals made by the hospital managers. This study proposes and tests a four factor micro environment model that explains the considerable variation in pricing strategy in the hospitals. These factors include competitors (C), suppliers (S), patients (P), and third party payers (TPP). In order to explore this issue, a triangulation method was used to collect primary data through a questionnaire, which was administered in the private sector hospitals in Jeddah city in Kingdom of Saudi Arabia (KSA) and, via in-depth semi- structured interviews with hospital managers and experts in the health services in KSA. The researchers were targeted 19 out of 34 hospitals in this research as representative’s sample rather than whole population. A purposive sampling strategy was used to choose the participants in this research. In total, 122 senior managers (including general managers, administrative managers, medical managers, public relation managers, nursing manager, and out patients clinic managers) participated in this study. The results confirm significant differences in the influence of micro environment factors on pricing strategy. Furthermore, the results show that the hospitals might benefit further by placing more emphasis on an integrated pricing strategy and recognising the micro environment influences on their hospitals. The results also highlight several implications for future research in health services marketing and fill in several gaps in the existing literature on health services marketing.