GE Healthcare's low-cost EEG strategy for emerging Indian markets

GE Healthcare (A): Innovating Emerging Markets Read case study titled "GE Healthcare (A): Innovating Emerging Markets" Write a page paper: Determine (2) emerging trends external environment prompted General Electric (GE) Healthcare develop a strategy production marketing a low cost Electroencephalography (EEG) machine bottom pyramid markets (BOP).

GE Healthcare (A): Innovating for emerging markets

India's population of patients with serious heart-related conditions is rapidly expanding: as unfortunate as the statistic that over 80% of heart-related deaths now occur in the developing world may be, from General Electric's perspective this was an opportunity it could capitalize upon. There was clearly a need for new medical devices to screen for and treat these conditions. However, when developing a new low cost electroencephalography (EEG) device, GE was acutely aware of the fact that it would have to adjust its approach to the unique needs of the foreign marketplace it wished to enter: it could not simply transplant its business model wholesale into India.

India was attractive to GE in part because it cohered with the company's new initiative called Healthyimagination to improve the quality and reduce the costs of healthcare around the world (Singh 2011: 2). Domestic healthcare equipment manufacturers in India primarily competed upon cost although their quality was inferior. GE had provided some devices to Indian hospitals but only very large, affluent hospitals could afford foreign devices, thus limiting GE's ability to infiltrate the market (Singh 2011:2).

GE decided to treat the Indian market as separate from its other markets to be able to cater to the unique needs of this segment. It made India into an independent profit and loss center to highlight its importance (Singh 2011:3). The Indian market was special because of its large size and expanding demand -- coupled with its relative poverty and lack of access to healthcare amongst its sprawling rural population. The standard EEG was pared down, without eliminating its core features, to ensure both quality and functionality while radically reducing cost. The creative use of parts combined with local sourcing seemed to be an ideal way to realize this aim. U.S. physicians that tested the product found the technology to be acceptable and easy to use. These were critical concerns for a developing market, given that Indian physicians in a variety of contexts and locations would have to be able to use the technology.

Trends in the external environment

The developing world is becoming an increasingly important part of international commerce. A company such as GE cannot afford to turn a blind eye to a market as large and as powerful as India. In the past, GE has capitalized upon its ability to maximize international investments. The developing world is likely to be even more important to the finances of the company in the future -- once the immediate domestic market has been 'tapped out,' then the developing world is the next logical venue. The population of the developing world is growing rather than contracting, in contrast to most of the markets in the developed world. To suit the needs of this particular demographic demands a relatively lower price point, given the vast economic disparities that characterize this area of the world. GE stood poised to take advantage of this discrepancy between the needs of the Indian subcontinent and the currently available resources.

A second trend manifest in India is unmet demand and an increasingly unhealthy population. India has a substantial population of rural poor, who lack vital services as well as some technically sophisticated, westernized hospitals. Poorer citizens still need basic medical care but lack access to it in a meaningful way and have minimal funds and resources to obtain it. As India strives to enter the 21st century, it will wish to cater to these populations given that it cannot exist as an economically asymmetrical nation. There must be cost-effective efforts to provide healthcare to all of India and meet the varied health challenges within this particular context. The production and marketing of a low cost electroencephalography (EEG) machine in bottom of the pyramid markets (BOP) would seem to address both of these trends.

Significant internal barriers

GE faced some resistance within the organization because of taking this tailored strategy. GE had always pursued a generalist approach before, offering one standardized product globally vs. taking a country-by-country approach (Singh 2011: 7). GE also was forced to take a major risk in introducing the device, given that it had only done limited market research on the need for the product. Ultimately, the results of the chance it took were somewhat mixed: sales were confined to traditional markets of higher cost hospitals and GE did not become the leading purveyor of the device relative to Indian competitors.

However, despite these challenges, GE used its experience in the Indian market as a prototype for other developments, such as the Mac 800. The Mac 800 was significantly cheaper and smaller than most of GE's other EEGs, but larger and more expensive than the Mac 400 intended for India. The Mac 800 was marketed for rural clinics in China. Less price sensitivity due to government support of the healthcare sector created a much more receptive climate in China and demand for the device even was stimulated in the developed world for physicians looking for simple, small, portable devices. The relatively unpredictable nature of the success of this model indicates the relative lack of planning to bring such products to the forefront of foreign nations: GE's success was very much 'hit or miss.'

Conclusion

GE's mixed success regarding EEGs indicates the difficulty of planning a successful product launch in a new country. GE's reading of the likely needs of the Indian population was not astute enough to ensure there was real demand for its product. But the company was still able to capitalize upon the knowledge it had gained and use it to create an effective device in the medial market.