‘Price is the indicator of service quality’. It is an attraction as well as a repellent variable. Customers use price as indicator of quality depends on many factors including other information available to him.
When service cues to quality are readily accessible when brand names provide evidence of reputation of hospital, customer may use their cues instead of price. Otherwise they think that the price is the best indicator of quality. It should convey appropriate signal regarding quality. Pricing too low can lead to inaccurate inferences about the quality, pricing too high can set expectations that may be too difficult to match in the delivery. Price is used to judged quality because of the experience and credence properties of services as opposed to goods. Excellent hospitals like Mayo Clinic, Massachusetts General, TMH, and Sloan Kettering are a mega brands. They have a great brand reputation and can charge a premium based on sheer perception of quality because of socio-economic issues, poverty levels, government owned hospitals cannot think of profit objectives. It is a social marketing process of enhancing the well being of individuals.
Off late however the government has proposed to state government that those who are above poverty line should pay the cost for treatment. In private hospitals, where the profit is most important objective, premium can be charged. The price paid by customers depends on how he perceives the quality of service. E.g. Bombay hospital, Breach Candy and Jaslok they have a high reputation for quality services.
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