The prevalence of cost-focused innovation in the development of products for low income markets

Abstract

Cost-focused innovation is perceived as the primary approach that Western companies should adopt when entering emerging markets, as their standard approaches are usually unsuitable for these environments. Although many of the principles of cost-focused innovation are relevant to these markets, companies should be weary of blindly copying previous entrants with regard to how they develop products for these markets. Each industry and product set will need to deal with a different set of factors, especially in developing environments that are constantly evolving. The aim of this research study is to gage the prevalence of a cost-focused innovation approach in developing products for emerging markets. A quantitative approach was used in order to determine if there is statistical evidence that confirms that a cost-focused innovation methodology is prevalent in designing products for low income markets. The mobile phone industry was selected for investigation as handset manufacturers have successfully created mobile phones for both developed and developing markets. The major findings were that cost-focused innovation is not significantly prevalent in developing mobile phones for low income markets. Furthermore, there is evidence that suggests that a combination of innovation approaches may be used to counter the traditional trade-offs between price and functionality in order to create low cost, high value products for both developing and developed markets.