CHAPTER 3: LITERATURE REVIEW The potential benefits of a competitive market environment for stimulatinge conomic efficiency, innovation, greater

productivity and economic growtha re now widely recognised (Ellis & Singh, 2010). Markets characterised bym ore competition, with more players, more dynamic entry and exit, andmore intense rivalry for customers (e.g. through price promotions, specialoffers, and marketing campaigns etc.) tend to deliver better marketoutcomes. The se outcomes include lower prices and better access toservices for consum ers (Ellis & Singh, 2010). The introduction ofcompetition or indeed even th e prospect of increased competition canhave a significant and immediate i mpact on prices and other outcomes thatare of interest to the consumer. According to Rivers and Saundra (2008), within the health care industry,co mpetition impacts several relational perspectives; with numerous studiesre porting the impact of increased competition. For example, several studiesh ave examined the relationships between competition and quality of healthc are (Zwanziger and Melnick, 1996); and between competition and patientsa tisfaction (Miller, 1996). These studies show that competition is capableof i ncreasing value for customers over time. Quality and processimprovements lead to decreased costs, which in turn results in increasedcustomer satisf action Customer service and sevice quality have become distinct components ofb oth product and service sectors and with the developments in informationt echnology many businesses find demanding and knowledgeablecustomers . The worldwide trend toward service quality was initiated in the1880s when businesses realized that a quality product, in itself, is notguaranteed to ma intain competitive advantage (Van der Wal et al., 2002).Many researchers r ecognize that service quality can bring an organization alasting competitive advantage (Lewis, 1989). Quality of services can be thedifference betwee n success and failure in both service and manufacturingfirms. Service quality, customer satisfaction and customer value have become th emain concern of both manufacturing and service organizations in the incr easingly intensified competition for customers in today's customer-centere dera (Wang et al., 2004). As a result, many organizations are payingincreas ing attention to improve service quality. In some manufacturingindustries "s ervice quality" is considered a more important order winnerthan "product q uality" (Ghobadian et al., 1994). In addition, service qualityimprovements le ad to customer satisfaction and cost management thatresult in improved pr ofits. Contemporary service sector firms are compelledby their nature to pr ovide excellent service in order to prosper inincreasingly competitive dome stic and global marketplaces (Sultan andSimpson, 2000). As service firms f ind themselves in an increasinglycompetitive and complex business enviro nment, they are inevitably drivento examine their service delivery processes critically. The focus of suchinternal analysis is ultimately about customer s atisfaction, and how bottom-line results can be actualized through deliveri ng quality services tocustomers via flawless interface platforms.

Service quality is commonly noted as a critical prerequisite and determinan tof competitiveness for establishing and sustaining satisfying relationships with customers. Previous studying suggests that service quality is animport ant indicator of customer satisfaction (Spreng and Mackoy, 1996).Attention to service quality can make an organisation different from otherorganisatio ns and gain a lasting competitive advantage (Boshoff and Gray,2004). In p articular, consumers prefer service quality when the price andother cost ele ments are held constant (Turban, 2002). It has become adistinct and impor tant aspect of the product and service offering (Caruana,2002). According to Brady and Robertson (2001) service quality helps tocreate the necessary competitive advantage by being an effectivedifferentiating factor According to Sureshchandar, Rajendran & Anantharaman (2002), in themo dern, highly competitive business world, the key to sustainablecompetitive advantage lies in delivering high quality service in the insuranceindustry tha t will, in turn, lead to satisfied customers. Customer satisfactionis consider ed a prerequisite of customer retention and loyalty, and can helpto boost p rofitability, market share and return on investment. In their study,Sureshcha ndar et al. (2002) examined in detail the relationship betweenservice quality and customer satisfaction in a competitive market and theyfound a positiv e relationship. In a study by Asoh and Rivers (2007), the nature of service quality, healthcare system costs and customer satisfaction in health care were examinedi n a competitive health care market. A model of the relationship amongthes e variables was developed. The model depicts customer satisfaction asan outcome measure directly dependent on competition. Quality of careand h ealth care system costs, while also directly dependent on competition,are considered as determinants of customer satisfaction as well. However differnces in the effect of competion seem to exist for variousind ustries, as shown in Baker and Taylor's (1997) study of the relationshipbet ween quality perceptions and satisfaction judgements in the formationof fu ture purchase intentions may be very different in health servicesettings rela tive to other service settings. They investigated Taylor andBaker's (1994) a ssertion that satisfaction judgements moderate the quality-purchase intenti on relationship by testing the research model in both for-profit and not-for -profit hospital settings. The results of this study firstsupport the growing v iew that satisfaction judgements are more closelyrelated to outcome behav iors than quality perceptions in hospital settings.The results further support the assertion that the formation of importantconsumer outcomes, such as future purchase intentions, appears to bedifferent for health services. Another potential source of variability in findings in competition studiesacro ss industries is highlighted by Scanlon, Chernew, Swaminathan & Lee(200 6) which investigated a range of data issues related to the measures ofheal th insurance competition used in empirical studies published from 1994-20 04. The literature relies exclusively on market structure and penetrationvaria

bles to measure competition. While these measures are correlated, thedegr ee of correlation is modest, suggesting that choice of measure couldinflue nce empirical results. Moreover, certain measurement issues such asthe la ck of data on the treatment of small firms, and omitted marketcharacteristi cs also could affect the conclusions in empirical studies.Importantly, other types of measures related to competition (e.g., theavailability of informatio n on price and outcomes, degree of entry barriers,etc.) are important, but t heir impact on market outcomes has not beenwidely studied. . REFERENCES Asoh, D. A., & Rivers, P. A. (2007). A research model of health-carecompe tition and customer satisfaction.Health Servicing ManagementResearch, 4, 244-252 Baker, T. L., & Taylor, S. A. (1997).Patient satisfaction and service quality in the formation of patients future purchase intentions in competitive health care settings.Health Marketing Quarterly, 15, Number 1, 1-16. Brady, M. K., & Robertson, C. J. (2001), Searching for a consensus onthe antecedent role of service quality and satisfaction: An exploratorycross-n ational study,Journal of Business Research, 51,1, 53-60 Boshoff, C., & Gray, B. (2004). The Relationships between Service Quality, Customer Satisfaction and Buying Intentions in the Private Hospital Industry .South African Journal of Business Management, 35, 4, 2737 Caruana, A. (2002). "Service loyalty: The effects of service quality andthem ediating role of customer satisfaction".European Journal of Marketing,36,7, 8, 811 - 828. Ellis, K., & Singh, R. (2010). Assessing the economic impact ofcompetition . .ODI research report commissioned by DFID Ghobadian, A., Speller, S., & Jones, M. (1994). "ServiceQuality: Conceptsa nd Models", International Journal of Quality & Reliability Management, 11,9, 43 - 66. Lewis, B. R. (1989). Quality in the service secto: A review.InternationalJour nal of Bank Marketing, 7, 5, 4-12. Miller, R. H. (1996). Competition in the health system: good news and bad news.Health Affairs Summer, 15,2, 312 - 320 Scanlon, D. P., Chernew, M., Swaminathan, S., & Lee, W. (2006).Competiti on in health insurance markets: limitations of current measures forpolicy an alysis.Medical Care Research Review, 63, 6, 37-55. Spreng, R. A., & Mackoy, R. D. (1996). An Empirical Examination of aMode l of Perceived Service Quality and Satisfaction.Journal of Retailing,72,2, 20 1 - 214 Sultan, F., & Simpson, M. C. (2000). International service variants: airlinepa ssenger expectations and perceptions of service quality.Journal ofService

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