GE Lullaby: India1

GE wasn’t having the luck it expected in India.

The company saw an opportunity in the country, along with several other emerging
markets, after the 2008 financial crisis.2 So it overhauled its Indian operations and
doubled down on reaching the country’s large underserved population. With the nation
seeing steady increases in overall economy—GDP grew by 8.5% over the 2010-2011
fiscal year—the strategy should have been paying off.

But GE’s efforts in India to market and sell its usual range of healthcare systems—sleek,
high-technology, expensive devices with lots of features, and complex digital displays—
were failing.

The company decided to change its strategy.

In 2010, the U.S.-based conglomerate launched more operations on Indian soil and
began researching the country. Executives visited hospitals to study the conditions
faced by medical devices—dusty air, irregular power supplies, an untrained healthcare
workforce, extreme temperature variations, and humidity.

The results of GE’s research suggested a reformat of its products to meet the needs of
local customers. One result was the Lullaby Warmer Prime (Figure 1), a simply
branded, rugged, reliable and easy-to-use version of the product it sells in the U.S. to
help newborns adjust to room temperature after birth.

The Lullaby went on the market at just 25% of the price of a unit with more features sold
in the States and began gaining traction. In its first year, it sold 1,500 units, half to
healthcare centers in small, rural towns and villages in India. "We're targeting the bottom
of the pyramid because that's where the masses exist," said Ravi Kaushik, GE
marketing director for maternal infant care, at the time of the product release. "I have the
technology, and I need to get it to the lowest market."3

According to Raja Venkataraman, president and CEO of GE South Asia, the Lullaby
exemplified GE’s new strategy in India. “Unlike others who just import and distribute, we
are focused on making products locally in the market at affordable prices and
technology without the bells and whistles, without compromising clinical outcomes.”4

1 © 2017 by Vikas Mittal, Collaborative for Customer-Based Execution and Strategy™. Shea Gibbs assisted in writing this case.
This document is licensed to only be used by permission from The Collaborative for CUBES™. No parts of this case may be copied, reproduced,
electronically transmitted, or stored in a retrieval system without permission. For rights and permissions contact: info@ccubes.net
2 Bahree, M. “GE Remodels Businesses in India,” Wall Street Journal, April 26, 2011.
3 Bahree, “GE Remodels.”
4 Kumar, A. “India is key focus of GE’s low-cost healthcare products,” Two Circles, December 8, 2009.
1
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Marketing Management - Grewal & Singh (Summer 2018), Indian School of Business.
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GE sells the Lullaby in more than 70 countries.5 Newer versions, introduced in 2013,
were offered at prices that were further reduced to beat local competitors in India and
other developing countries.

Figure 1. The GE Lullaby Warmer Prime

Source: GE India

Healthcare in India

Healthcare, including the natal-care sector, is a large and growing market in India.

Widely considered underserved by healthcare providers, the industry grew to $81.3

billion by 2013 (Figure 2). The sector is now projected to grow by 17% CAGR through
2020. In 1990, the Indian healthcare market was growing at an 11% clip.6

And with 27 million babies being born in India every year—35% of those being
premature—products like GE’s Lullaby had an ideal target segment in smaller, rural
communities.7

India currently has an infant-mortality rate of 5.5%. The infant mortality rate in the U.S.
stands at 0.63%. Reliable, rugged, low cost, and easy-to-use products like the Lullaby,

5 Kumar Sharma, E. “GE launches new low-cost infant warmers,” Business Today, December 13, 2000.
6 Kalnad, N., Bose, N., and Menon, H. "India’s great healthcare challenge, also an opportunity," Hindustan Times, June 7, 2017.
7 Kumar Sharma, “GE launches.”
2
This document is authorized for use by Marketing Management Student, from 4/23/2018 to 6/3/2018, in the course:
Marketing Management - Grewal & Singh (Summer 2018), Indian School of Business.
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which are far more commonly used (about 80% of Indian hospitals employ them) than
incubators, stood to improve the quality of newborn care throughout the country’s
underserved areas. 8

Figure 2. India’s Healthcare Sector Compound Annual Growth Rate

Source: Hindustan Times

GE and the Market

The Lullaby Warmer Prime was introduced to the Indian market in May 2009 at $3,000.
To push the price down from the $12,000 product marketed in the United States, GE
eliminated an LCD screen, adjustable mattress, and equipment and software related to
monitoring a baby’s vitals—pules, weight, etc.9

From 2009 to 2010, GE administrators said orders from Indian customers increased by
50%.10 In a 2013 interview, GE South Asia director Ashutosh Banerjee said nearly
14,000 baby warmers were sold per year in India, and that number was forecast to grow
significantly. All premature births in the country, nearly 9.5 million babies, use a warmer.

8 Bahree, “GE Remodels.”

9 Bahree, “GE Remodels.”
10 Bahree, “GE Remodels.”
3
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GE had the capacity to make only 5,000 warmers per year in 2013, Banerjee noted.
Almost 40 other companies manufacture similar products that are available in India.11,12

Going Forward

The success of the Lullaby Warmer Prime in India was undeniable, and based largely
on matching product features to customer needs. Along with a resuscitator, MRI scanner
and several other products, the warmer represented a watershed moment for GE’s
performance in the country.

"We were in India not doing as well as we wanted to do commercially," John Flannery,
GE's president and chief executive in India, said. Chairman Jeffrey Immelt agreed. "[We]
came to the conclusion that part of the problem was that we just weren't very local"13
Today, GE’s facility in India exports the Lullaby to 72 different countries, including Brazil,
Dubai, Egypt, and African nations.

Exhibit 1. Select Facts

2009: Price of GE Lullaby Warmer Prime INR 193,245

(USD $3,000)
2009: Price of GE baby warmer in the United States INR 772,980
2009: Sales of GE Lullaby Warmer Prime in India 1,500 units
2013: GE’s annual manufacturing capacity in Bangalore 5,000 units
2013: Cost of manufacturing unit USD 50 million
2013: Products launched in India in 2013 10
2013: Total baby warmer units sold in India 12-14,000 units
2013: Babies born in India annually 27 million
2013: Premature births needing warmers 35%
2013: Number of countries where Lullaby is exported from India 72
2013: Price of GE Lullaby Warmer Prime/Lullaby Resus INR 80,000
2013: Gross profit (worldwide) 27.71%
2013: Net income (worldwide) 11.53%

11 Kumar Sharma, “GE launches.”

12 Kumar Sharma, “GE launches.”
13 Bahree, “GE Remodels.”
4
This document is authorized for use by Marketing Management Student, from 4/23/2018 to 6/3/2018, in the course:
Marketing Management - Grewal & Singh (Summer 2018), Indian School of Business.
Any unauthorized use or reproduction of this document is strictly prohibited*.