CASE ANALYSIS

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

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

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 ever-expanding 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.

Is Lullaby Warmer the right solution for the Indian

market ?
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.

What are the characteristics and needs of business customers

in low-resource settings?

Indias growth focus is shifting from big cities to semi-urban and rural areas but serving lowresource 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: Inexpensive, Durable, Portable, Safe, Effective, Hygienic As we know, GE currently sold
2 brands of baby warmers in India : 1 ) the premium brand Giraffe
2) the
performance brand Lullaby Warmer (more sales)

Low-resource business customers face various challenges such as :

Tough operating conditions for machine

Electricity shortage / interruptions
Limited water supply
Comparatively more heat & dust
Lack of skilled workers, operators & technicians
Poor infrastructure

What are the characteristics and needs of business customers

in low-resource settings?

GE 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, GE 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.

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
%
age
of
healthcare, with real life births
not
growing
at
the
same
rate. (Exhibit
Real
Terms
Year GDP
GDP
1,2)
2011 $18,22,98,95,07,290.05
1.18%
$21,42,01,26,710.66

xhibit 1 :
ublic Health Expenditure

2012
2013
2014
2015
2016
2017
2018

$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

1.18%
1.29%
1.41%
1.69%
2.03%
2.43%
2.57%

$21,65,51,85,751.73
$23,97,94,91,381.59
$28,73,71,10,980.21
$35,37,87,05,726.13
$44,57,71,69,214.92
$56,16,72,33,210.80
$62,43,71,45,127.06

Assuming GDP growth rate of 5% YoY

Source: World Bank

Should GE go after this market ?

Exhibit 2: Live Births in Rural Areas
Year
2011
2012
2013
2014

No. of live Births In Rural

Area
10737462
9599280
10905920
10763908
Source: Civil Registration
System,
Census India

Exhibit 3 Case Facts

Neo Natal Deaths

42.5/1000
live births

Prevention of hypothermia can

reduce deaths by
Cost of one lullaby warmer
No. of PHCs with equipment

18-42%
3000-4000$
28%

No. of PHCs with low weight

management equipment

35%