EXECUTIVE SUMMARY
Siemens Corporation is a worldwide manufacturer of ultrasound systems for cardiovascular, obstetrics, gynecology and radiology applications. Siemens Acuson P10 Handheld ultrasound device is the latest, most technologically advanced, ultrasound system available in the market; therefore, it will be a great medical equipment to export to Brazil. Brazil has 7,500 hospitals, clinics and other health care institutions, and the number is currently increasing. This makes it a relevant market for ultrasound systems. Brazil is the main destination for health care in all of Latin America; and patients from medical tourism are getting more in number. Every type of health care facility needs to have ultrasound equipment for their daily use. There is no alternative for ultrasound machine; therefore there always will be a need to acquire ultrasound systems. Since the size of ultrasound systems is shrinking, and the magnitude of the medical imaging tool is soaring to newer heights, there is a need to acquire new ultrasound equipment to improve the quality of health (Rako). Siemens new ultrasound system is smaller, faster and more useful than any other system on the market, whose introduction will be beneficial both for patients and the health care environment. Distribution will be fairly easy, with an internet retailer model, and sales can be boosted by direct sales approach. Expatriates will be sent to the country to recruit and train a sales staff. The staff will establish business relationships, empowering clients with access to an internalized online ‘store’ or console. Existing clients can interface through the web, placing new orders and support requests, while the sales staff can focus on expanding the client list. Siemens can a charge premium for its life saving and enhancing product, essentially to one the biggest purchasers, via the hospitals, the government itself. With a healthy public relations campaign, this product can be perceived as an invaluable tool in not only the medical, but in environmental and humanitarian efforts of the country as well. All these factors make the introduction of the P10 into Brazil a great opportunity.
CULTURAL ANALYSIS
Federative Republic of Brazil is both the largest and most populous country in South America, with a population of 201,103,300 of mixed ethnicity. It is the fifth largest country worldwide in terms of both area and habitants. The country of Brazil occupies roughly half of South America, with a total area of 8,514,877 square kilometers. Because of Brazil’s healthcare system, location and proximity to most of the Latin American countries, Brazil is the main medical tourism destination in South America, for a variety of health care services. Because the Brazilian Healthcare model has comprehensive coverage, anybody can have medical assistance in any of the hospitals in the national healthcare network free of charge. A large number of healthcare services are sponsored directly by the Brazilian government at over a thousand hospitals, where non citizens can receive free treatment (CIA Factbook).
According to The World Factbook 73.6 percent of the population is Roman Catholic, and 15.4 percent is Protestant. Religion has relevance for our product, because having the majority of the population either Roman Catholic or Protestant means that abortion is culturally not accepted in Brazil. Ultrasound technology is often used to monitor fetal health. During a pregnancy all women need to use an ultrasound to follow the growth of the fetus. Birth rate in Brazil by 2010 estimated at 18.11 births per 1000 people, and death rate of 6.35 deaths per 1000 people. The population growth rate is 1.17 percent. This is a factor in determining how great a burden would be imposed on a country by the expanding needs of its people for infrastructure, such as medical facilities and equipment. Family is the foundation of the Brazilian social structure. The nuclear family has strong ties to the extended family, which includes cousins, aunts, uncles, grandparents, godparents, and close friends. And due to the increasing of the aging population by 1.17 percent in 2010 estimates, the use of ultrasound systems becomes even more essential, for preventative healthcare and early diagnosis of disease for both, immediate and extended family members (CIA Factbook).
ECONOMIC ANALYSIS
The Brazilian economy already outweighs all the other South American countries and Brazil is still expanding its presence in world markets. It is one of the world’s largest economies, characterized by large and well-developed agricultural, mining, manufacturing, and service sectors. Brazil is receptive to new products and there is strong consumerism in the nation. Exploiting vast natural resources and a large labor pool, it is today South America’s leading economic power and a regional leader, one of the first in the area to begin an economic recovery. The Central Bank expects a 5 percent growth in 2010. Since 2003 Brazil has progressively improved its macroeconomic stability, by investing domestically, building up foreign reserves, reducing its debt profile, adhering to an inflation target, and committing to fiscal responsibility (CIA Factbook). In 2008, Brazil became a net external creditor and two ratings agencies awarded investment grade status to its debt. Consumer and investor confidence was invigorated and in the second quarter of 2009 the GDP regained positive growth. According to the World Bank classification for countries, Brazil, with a GDP of 2.01 trillion USD, in 2009, and a per capita GPD (PPP) of approximately 10,100 USD, can be considered as an upper middle income country and therefore classified as an industrializing country (CIA Factbook). Also, the World Bank sees the country as being aligned with the classification as one of the big emerging markets (BEM). Per capita income is constantly increasing along with the literacy rate (total population literacy rate is 88.6 percent). Due to its high population rate, large labor pool, its vast natural resources and its geographical position in the centre of South America, it bears enormous growth potential in the near future. Aligned with increasing currency stability, international companies have heavily invested in Brazil during the past decade. According to The World Factbook, in 2009 estimates Brazil had the 10th largest PPP worldwide and today has a well-established middle income economy with wide variations in levels of development. This strength in a well educated middle class, with expendable income, means more and more people will see ultrasounds of their fetus not just as a luxury, but as a need.
COMPETITIVE MARKET ANALYSIS
According to the search there are no ultrasound systems manufacturing companies in Brazil. Therefore, to fulfill the need of acquiring new ultrasound equipment for their 7,500 hospitals, clinics and other health care institutions, Brazil has to import. The World Factbook’s 2009 estimates shows that Brazil spends $127.7 billion on imports, out of which 16.12 percent come from the US, 12.61 percent from China, 8.77 percent from Argentina, 7.65 percent from Germany, and 4.3 percent from Japan. Since the US is the largest exporter to Brazil, and also because of Free Trade Area of the Americas (FTAA), the possibility is quite high that ultrasound systems will be imported from the US to reduce costs and strengthen trade.
It would be beneficial for Brazil to import new, innovative and energy efficient Acuson P10 Handheld ultrasound system from Siemens Corporation. Siemens is a worldwide manufacturer of ultrasound devises for cardiovascular, obstetrics, gynecology, and radiology applications (ThomasNet). The Siemens Corporation currently maintains leading position in technological markets and its aim is to develop the potential of their integrated technology company in line with their values to be responsible, excellent, and innovative, and the main focus on the customers. Siemens Corporation has a relative advantage in the market, because the corporate strategy of Siemens Corporation is derived from their vision to pioneer in energy efficiency, affordable and personalized healthcare systems and intelligent infrastructure solutions based on market and technology leadership. Because of demographic change in the population, urbanization, climate change and globalization, Siemens Corporation has created new and innovative forward-looking product, the Acuson P10 Handheld ultrasound device, which offers solutions to improve healthcare for an aging population and enhance medical infrastructure with mobility in urban areas. The Siemens Acuson P10 is the only device in market that is so small in size with its unique features, portability, and ease of use. This device revolutionizes assessment and examination protocols, enabling physicians and clinical personnel to make earlier, faster, and more accurate care decisions.
TARGET MARKET
The target market for ultrasound systems is all of the hospitals, clinics and other healthcare centers of Brazil. There are 7,500 health care facilities in Brazil and most of them work for Brazilian National Healthcare System (SUS – Sistema Único de Saúde) and are paid directly from the Brazilian Government (http://www.datasus.gov.br). The Ministry of Health is responsible for public health services, government hospitals (also known as Municipal Hospitals) and medical services. The average size of hospitals is about 70 beds. The number of the hospitals is currently increasing. Of the 7,500 hospitals, 1,500 are public hospitals and 3,000 are institutions, kind of community general hospitals, most of which are Catholic. And the rest of the 3,000 are private hospitals. Government-funded hospitals and clinics offer good medical services, and will need quality equipment just as much as privately held medical institutions. Most of the private hospitals in Brazil have excellent medical facilities and making Brazil one of the leading medical tourism destinations in South America. Brazil boasts ultra-modern facilities and state-of-the-art medical equipment and technology. São Paulo is one of the 47 world centers for technological innovation, recognized by the UN, and has world-class hospitals and clinics. Medical posts or clinics are known as Pronto Socorro in Brazil and are a good alternative if a hospital is too far away. They treat walk-in patients, offer a full range of services and are a good alternative to visiting a hospital for those who only have a minor ailment. Services and treatment are free. All of those health institutions are target market for our product.
The product usage rate is 7,500 hospitals, multiplied by the number of units, around two per hospitals, every five years as required for upkeep. Therefore Siemens should expect to sell a total of 15,000 units every five years.
MARKET ENTRY STRATEGY
According to the International Marketing textbook a direct sales approach is particularly good for high-technology items. And since an ultrasound system is high-technology equipment, the best market entry strategy for Siemens would be to export and conduct direct sales of ultrasound systems into Brazil. This can be achieved by establishing a central office in Sao Paulo, and several offices throughout Brazil. Siemens could have both local and expatriate managers and staff to conduct direct sales. Because of cultural and language barriers, it would be best for Siemens Corporation to work together with local agents to conduct direct sales to their particular target markets, that are all the hospitals, clinics and medical facilities in their proximity (pg. 321). No overhead costs are required for warehousing equipment, but the sales team will need to receive training and education on the product. Due to the fact that ultrasound systems are complex pieces of technology, with relatively niche uses, some medical professionals and technicians maybe required as part of the sales team. Once a sale is made, the equipment can be shipped directly to the medical facilities, with some onsite setup and support by staff, if required. Depending on how this strategy is received by the medical community, in terms of delays due to shipping, warehousing products locally may be required in the future.
Ultrasounds systems are logically sold in low volumes and are high ticket items. Therefore the main goal is to achieve a sale by gaining trust, educating the buyer, and providing quality service and support. Due to these reasons a direct sales approach would be best initially to keep costs low and maintain control over brand image, while gaining market share.
WORKS CITED
CIA: Central Intelligence Agency: The World Factbook. South America: Brazil. <https://www.cia.gov/library/publications/the-world-factbook/geos/br.html>
Metz, Rachel. US News: Science. GE Unveils Handheld Ultrasound Machine. Posted: October 21, 2009. <http://www.usnews.com/science/articles/2009/10/21/ge-unveils-handheld-ultrasound-machine.html>
Philip R. Cateora, Mary C. Gilly, and John L. Graham. International Marketing. New York: McGrow-Hill/Irwin, 2009.
Siemens: Annual Report 2009. How can we ensure sustainability while generating profitable growth? <http://www.siemens.com/investor/pool/en/investor_relations/e09_00_gb2009.pdf> pg 46-47
ThomasNet Connecting Industry: Siemens Corp. Company Profile. <http://www.thomasnet.com/heading.html?cov=FL&what=Ultrasound+Systems&heading=89750806&cid=10035100>
Dorland Healthcare Information: Latin American & Caribbean Hospital Database. <http://web.archive.org/web/20040501010230/http://www.dorlandhealth.com/db-lah.htm>
CIA: Central Intelligence Agency: The World Factbook. Country Comparison :: GDP (purchasing power parity) <https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html>
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