As medical device manufacturers look to penetrate the Tier 3 towns in India, EMeRG looks

at some of the key need-gaps of Diagnostic Centers across the country…

NEED-GAP 1: Transparent purchase process Over 88% of the diagnostic center owners interviewed by

EMeRG feel that multinational OEMs headquartered in

metropolitan cities have a propensity to take their

customers in small towns for granted. Since they find the

OEMs less empathetic to them post installation, the

owners prefer negotiating as many terms (servicing,

accessories etc.) as possible at the point of purchase.

Customer Perception Insight May, 2015

Diagnostic Centers in Tier 3 Towns, India

“They are proactive earlier during the demo and

negotiations. Once sold, they have this tendency

to forget us. These days they completely lock

the machine. You can’t do servicing of the

equipment or even sell it to someone without

the consent of the company. So you end up

running around your vendor…” OWNER,

DIAGNOSTIC CENTER, TIER 3 TOWN, WEST

ZONE

Key need-gaps include: Need for trusted service engineers: The honesty exuberated during various transactions especially

related to spare parts plays a key role in relationship building. Lack of technical knowhow of the

equipment makes the owner paranoid about the authenticity of a spare part replacement. A transaction

is considered fair if a deep sense of goodwill is generated with the company’s representative.

Need for transparency on hidden costs: Diagnostic center owners expect the OEM to inform them of all

the possible future scenarios where additional cost might be incurred. They appreciate it when the

OEMs act as trusted partners and advise them on implications of various decisions.

“I bought this 1.5T MRI recently and negotiated the price. They said they will do the RF

cabinet, but they never spoke of the paneling cost. I was not aware of this. It finally cost

me INR4-5 Lakhs to get it done.” OWNER, DIAGNOSTIC CENTER, TIER 3 TOWN, SOUTH

ZONE

Need-Gap 2: Benefits in the total cost of

ownership

Owing to the lack of geographic proximity and past

experience, diagnostic center owners like to negotiate

most future costs at point of purchase. Since the price of

maintenance contract goes up each year, owners prefer

negotiating the percentage increase each year for about

4-5 years.

“Each year, contract price goes up by 8-10%.

So I have started negotiating now when I buy

the equipment. I buy the equipment only if

they agree to let’s say 5% increase on the CMC

price every two years…” OWNER, DIAGNOSTIC

CENTER, TIER 3 TOWN, WEST ZONE

Need-Gap 3: Unbiased technical comparison of equipment specifications

With limited access to experienced Biomedical Engineers and other technical staff, finding technical advisory is a

challenge in Tier 3 towns. As a result, owners of diagnostic centers do not adequately evaluate or compare the

technical specs of the shortlisted brands. Consequently, most purchase decisions are strictly based on the

recommendations of senior radiologists in the town (or from similar peers in metropolitan cities) or based on

existing relationship with a dealer. There is an untapped demand for an unbiased “rating system” that compares

some of the basic technological features of various brands of medical imaging equipment.

“We tried hiring a BME here. He was well qualified but couldn’t cope up with the expertise needed for

radiology equipment. Eventually he started functioning as a technician” OWNER, DIAGNOSTIC

CENTER, TIER 3 TOWN, NORTH ZONE

Need-Gap 4: Easy and prompt access to capital

A large majority of the established diagnostic centers in Tier 3 towns interviewed by EMeRG wish to take their

business to the next level by installing high-end technologies. However being capital intensive, making a hefty

down payment remains a challenge. Most financing options offered by medical imaging OEMs are perceived

to have higher rates of interest (usually 11-12% or above). Consequently, owners look towards bank loans with

relatively cheaper rates of interest. Once negotiated, the owner typically pays an advance to the OEM.

However, most owners in Tier 3 towns mention that despite the advance payment, the equipment is not

booked. The OEMs usually ask for a written assurance about the bank loan getting cleared. Owing to the

bureaucratic procedures involved in the bank loan approval, there is further delay. Once approved, the

equipment shipment and installation takes more time adding to the dissatisfaction of the customer.

“Once I have paid 15-20% of the price as advance, it

means I am a serious customer. The supplier would still

not take me seriously. They did not book my MRI despite

the advance. Bank approval takes 2-4 months. They will

not start the shipping process till the loan is sanctioned.

It may take forever to get my MRI installed here.”

OWNER, DIAGNOSTIC CENTER, TIER 3, WEST ZONE

Financing options from

OEMs at interest rates

comparable to other banks

Provision of a quick loan

approval if the bank loan

isn’t sanctioned

Provision of pre-closure of

loan at acceptable amounts

Immediate booking of the

equipment post payment of

advance

KEY REQUIREMENTS

Need-Gap 5: OEMs to provide Marketing and

Promotional Advisory

Beating competition in Tier 3 towns is a critical management

challenge for most diagnostic center owners. In the majority

of tier 3 towns where 64-slice CT and 1.5T MRI are still

considered state-of-the-art, owners wish to install such

equipment to beat competition and attract (and / or retain)

the best radiologists in town. However, the owners perceive

that purchasing a high-end technology doesn’t directly have a

positive impact on patient flow. The influx of patients is

driven by referrals from doctors who often need to be paid a

high referral charge. Furthermore, diagnostic centers aren’t

capable of marketing and promoting themselves with their

limited workforce, expertise and time. As a result, diagnostic

center owners looking to install high-end radiology

equipment expect their OEMs to partner them in the

promotion. Owing to its emotional appeal, 4-D ultrasound can

be readily promoted in Tier 3 towns. However, the same

connect and improved diagnostic confidence achieved

through higher configuration of CT/MRI scanners cannot be

easily communicated to patients or GPs. Diagnostic center

owners need their imaging equipment supplier to help them

with various marketing strategies and advisory on other

communication channels.

KEY MANAGEMENT CHALLENGES FOR

DIAGNOSTIC CENTER OWNERS, TIER 3,

INDIA

Getting patient referrals: Several

doctors (GPs) may charge a referral fee

for referring their patients to the

diagnostic center

Beating competition: Despite having

high-end technologies, a diagnostic

center may not get a higher patient load

if the competitor next street pays more

referral charges to the doctor

Attrition of technicians and clinical staff

Maintaining high uptime of equipment

especially during failure of spare parts

Promotion and marketing

communications to doctors and

patients

Ask EMeRG

The above snapshot is an excerpt from our larger syndicated analysis on the voice of customer report for Diagnostic Imaging Equipment in India. Our in-depth primary research and ethnography based analysis will help you answer a multitude of questions. What are the needs-based customer segments for medical imaging equipment

in tier 3?

What are the key motivators for purchase of medical equipment in diagnostic

centers?

What are the financials (annual turnover, investments, spent on disposables /

accessories) of a diagnostic center in tier 3?

What are the current satisfaction levels w.r.t. design ergonomics, clinical

benefits, and after-sales support of the existing brands?

What price points are favored by Diagnostic center owners in Tier 3?

What is the customer perception of various medical equipment brands?

What should be your value proposition for customers in Tier 3?

How satisfied is your customer (installed base) in tier 3?

?

For in-depth customer insights, custom research needs, and installed base surveys for your Medical device propositions please visit www.emerg-inc.com or write to us at letsspeak@emerg-inc.com. EMeRG offers the FIRST OF ITS KIND ethnography based CUSTOMER CENTRIC reports for emerging markets. Each syndicated VOC (voice of customer) report includes: Needs-based customer segmentation

Ethnography based Need-gap analysis

Challenges and motivators for various user types

Purchase process mapping

Medical device servicing and after-sales issues

Customer perception for procedures, therapies and corresponding product categories

Design recommendations based on ethnographic studies

Value drivers by customer / hospital type

Market opportunity by customer / hospital type

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