Case Analysis

GE Healthcare India(A): The marketing Challenge of Low-Resource

Customers
Submitted by-

Group no. 1, Section B, PGP-2, IIM Indore

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Q.1 Is Lullaby Warmer the right solution for the Indian market ?
Yes, Lullaby warmer may result as the right solution for the Indian market.
India has the worlds highest number of neonatal deaths (750,000 in 2013 alone)
and the mortality rate in rural areas is higher by 50% compared to cities. Many
of the deaths are associated with hypothermia. Newborn babies have a limited
ability to thermo regulate because of the absence of muscular contraction and
shivering. Maintaining a normal body temperature is critical for newborn
survival, particularly in premature infants.
Launch of Lullaby warmer may be successful in India due to the following
reasons:
Large Population
India has the second largest population, with 1.2 billion people and everexpanding middle class, which is why India is a market of unlimited potential.
India has one of the most privatized healthcare system in the world, with
government spending of just over 1.3% of the countrys GDP on public health,
ranking India among the lowest in the world.
High Demand In Rural India
India has a poor quality of healthcare facilities, which even diminishes more
when we move from tier 1 urban to a semi-urban or rural setting. This gives rise
to a higher demand for a better product in semi urban and rural India.
Infant Mortality And Neonatal Deaths
India is ranked 1 in neonatal deaths. In developing countries the average
neonatal mortality rate is 23 per 1000, compared to 4 per 1000 in high-income
countries. India has a graver situation with 31 deaths per 1000 children, taking
the number 1 position in the world.
Low Resources
As mentioned above public health centres in India has a poor quality of care
delivered with very little government spending in the sector. This gives rise to a
low resource business customer segment for GE Healthcare in India. These
public health centres lack an adequate supply of capital and appropriate
infrastructure such as steady supply of electricity. Adequate equipment and staff
comprises of another set of problems.
Acute Poverty

High treatment cost and out of pocket expenditure placed a heavy burden on
families, especially those close to the poverty line. There are around 540 million
rural poor with annual household incomes less than $2000 giving rise to
problems of acute poverty.

Q.2 What are the characteristics and needs of business

customers in low-resource settings?
As we know, GE currently sells 2 brands of baby warmers in India :
1) the premium brand Giraffe
2) the performance brand Lullaby Warmer, which is the biggest seller in terms
of units.
But, the low-resource business customers face various challenges such as
tough operating conditions for machine like electricity shortage / interruptions,
limited water supply, more heat & dust. Also, the lack of skilled workers,
operators & technicians. All these poor infrastructure & lack of structured
formats for delivery centres/ organized health centres in rural india, hint the
lack of resources for maintenance and service of these machinery too.
Usually most B2B companies focus on product innovation only (to enter a new /
emerging market). But to ensure success, companies must go beyond
mastering product innovation, they must develop unique commercial expertise,
because the interaction with the customer is not a straight-line process, for
example, the purchasing cycle of responding to product information then
providing a quote then payment, delivering and final set-up of the equipment.
Also, training about the usage of the equipment will also take time and energy.
So, companies must focus on their sales and distribution strategy to work out
an efficient plan to reach and serve these facilities to the clients/ B2B
customers.

Indias growth focus is shifting from big cities to semi-urban and rural areas but
serving low-resource business B2B customers in these settings is a formidable
but important task. The new product must have the following characteristics to
ensure it is successful in rural & semi-rural India:
1. Inexpensive
2. Durable
3. Portable
4. Safe
5. Effective
6. Hygienic

Q.3 Should GE go after this market ?

Yes, given the needs specified above and the capabilities of GE in terms of
developing new products given the new research facility, brings an opportunity
to cater to this segment. Additionally, the public expenditure is stated to grow
three times in real terms by 2018 on healthcare, with real life births not growing
at the same rate. (Exhibit 1,2)

Exhibit 1 : Public Health Expenditure

Year
2011
2012
2013
2014
2015
2016
2017
2018

GDP
$18,22,98,95,07,
290.05
$18,28,98,52,83,
085.00
$18,63,20,83,43,
557.81
$20,42,43,85,91,
343.98
$20,95,39,83,49,
095.54
$22,00,16,82,66,
550.32
$23,10,17,66,79,
877.83
$24,25,68,55,13,
871.72

%age
of
GDP
Real Terms
1.18 $21,42,01,26,7
%
10.66
1.18 $21,65,51,85,7
%
51.73
1.29 $23,97,94,91,3
%
81.59
1.41 $28,73,71,10,9
%
80.21
1.69 $35,37,87,05,7
%
26.13
2.03 $44,57,71,69,2
%
14.92
2.43 $56,16,72,33,2
%
10.80
2.57 $62,43,71,45,1
%
27.06

Assuming GDP growth rate of 5% YoY

Source: World Bank
Case Fact: %age will double between
2013-18

Exhibit 2: Live Births in Rural Areas

Year
No. of live Births In Rural Area
2011
10737462
2012
9599280
2013
10905920
2014
10763908
Source: Civil Registration
System, Census India

Exhibit 3
Neo Natal Deaths
Prevention of hypothermia can reduce
deaths by
Cost of one lullaby warmer
No. of PHCs with equipment
No. of PHCs with low weight management
equipment

Source: Case Facts

42.5/1000 live
births
18-42%
3000-4000$
28%
35%