This article is an excerpt from EMeRG's larger syndicated analysis on the voice of customer report for Diagnostic Imaging Equipment in India. The article summarizes key need-gaps of diagnostic imaging labs and opportunities for OEM in Tier 2 and Tier 3 towns.

1. 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

2. 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.

3. “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

4. 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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