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Case Study-1

MedicaPlus Diagnostics Center, a premium health service provider, faced a surge in customer complaints despite its dynamic pricing strategy and luxury branding. An internal audit revealed multiple service quality gaps, including poor communication and inadequate staff training, leading to dissatisfaction and a decline in customer retention. Competing diagnostic centers with transparent pricing and better service offerings have further threatened MedicaPlus's market position, prompting a need for reevaluation of its strategies and service delivery processes.

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Mhamad Chouman
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9 views

Case Study-1

MedicaPlus Diagnostics Center, a premium health service provider, faced a surge in customer complaints despite its dynamic pricing strategy and luxury branding. An internal audit revealed multiple service quality gaps, including poor communication and inadequate staff training, leading to dissatisfaction and a decline in customer retention. Competing diagnostic centers with transparent pricing and better service offerings have further threatened MedicaPlus's market position, prompting a need for reevaluation of its strategies and service delivery processes.

Uploaded by

Mhamad Chouman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Case Study: Service Breakdown at MedicaPlus Diagnostics Center

MedicaPlus Diagnostics Center is a mid-sized health service provider operating in a highly


competitive urban market. Known for its premium pricing, sleek facilities, and cutting-edge
diagnostic equipment, MedicaPlus established a strong reputation among middle- to upper-
income clientele. The center positioned itself as a leader in delivering accuracy, speed, and
service excellence, striving to offer a luxury healthcare experience that stood apart from
traditional diagnostic labs.
To optimize profits and reduce operational inefficiencies, MedicaPlus introduced a dynamic
pricing strategy. Diagnostic service prices varied based on the type of test, peak usage times, and
forecasted demand. This revenue management approach aimed to encourage off-peak utilization
of expensive testing equipment and reduce bottlenecks during rush hours. Simultaneously, the
marketing department launched a campaign branding MedicaPlus as a “five-star diagnostics
experience,” emphasizing sophisticated ambiance, personalized care, and local celebrity and
influencer endorsements.
Despite these investments in service innovation and branding, MedicaPlus began to experience a
surge in customer complaints. Clients reported long waiting times even when they had confirmed
appointments, unclear pricing structures, and frequent miscommunication about service
packages. There were complaints regarding delays in test result delivery and unprofessional
behavior from front-desk staff. More troubling was the growing sentiment that the experience
fell far short of the luxurious image portrayed in marketing materials.
Alarmed by the rising discontent, MedicaPlus management conducted an internal service quality
audit using the SERVQUAL model. The findings revealed service failures across all seven gaps
of the model. The knowledge gap was evident in the lack of up-to-date market research, leading
management to assume that customer expectations remained static. In truth, newer competitors
had emerged, offering faster, more accessible services at lower prices with digital booking
options that appealed to younger and tech-savvy patients.
The policy gap was traced back to decisions made at the senior management level without
sufficient input from frontline staff. While the dynamic pricing model made sense on paper, it
confused many customers, especially those not informed about fluctuating fees. This also fed
into the delivery gap, as staff members, inadequately trained and often overworked, failed to
deliver the promised level of service. Receptionists were unaware of the details of ongoing
promotions, and nurses could not keep pace with the appointment schedule, further increasing
wait times and customer frustration.
A major communication gap also became apparent. The marketing campaign's promises about
fast test results, exceptional customer service, and premium care did not match the operational
realities. Customers increasingly felt that they were being misled. This disconnect also
contributed to the perception gap. Having paid a premium price, many customers expected a
high-touch, error-free experience but felt neglected and dissatisfied.
The sixth gap, the service delivery versus external communication, was particularly damaging to
the brand. Discrepancies between marketing messages and the actual service led to negative
reviews and eroded trust. Lastly, there was a clear gap between service delivery and customer
understanding. Automated pricing notifications and appointment scheduling features were
difficult to understand for elderly patients or those unfamiliar with mobile apps, resulting in
widespread confusion and accusations of hidden fees.
Compounding these challenges was the entry of two new diagnostic centers within a distance of
MedicaPlus. These competitors offered transparent flat-rate pricing, app-based scheduling,
guaranteed 24-hour test results, and even at-home testing services—all without the luxury
branding but with consistently positive reviews. While MedicaPlus continued to rely on its
legacy image and premium positioning, it was rapidly losing ground to these more agile,
customer-responsive entrants.
Now facing declining revenue, poor customer retention, and reputational damage, MedicaPlus
must re-evaluate its positioning strategy and pricing model. Management is debating whether to
overhaul its service delivery processes to better align with customer expectations, reposition its
brand, or continue pursuing a high-end image in a market that may no longer value such a
proposition.

Discussion Questions
1. Which specific SERVQUAL gaps most critically impacted MedicaPlus, and why?
2. How could better internal communication reduce this case's policy and delivery gaps?
3. Evaluate how MedicaPlus’s pricing and revenue management strategies contributed to
customer dissatisfaction. What alternatives could be considered?
4. Was MedicaPlus’s positioning strategy aligned with its service capabilities? Why or why
not?
5. What steps should MedicaPlus take to realign its brand communication with the actual
service experience?
6. How could MedicaPlus use customer feedback to close the knowledge and perception
gaps?
7. Given increasing competition, what immediate strategies should MedicaPlus adopt to
strengthen its market positioning?
8. How can service staff training play a role in minimizing the service delivery gaps
observed?

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