A Literature Review of Required Adaptations for Successful Implementation of Frugal Innovations in Emerging and Developing Markets

Historically, developed market firms (DMFs) tended to develop sophisticated and state-of-the-art products for the developed world (Zeschky, Winterhalter, & Gassmann, 2014) where businesses and consumers are affluent and can afford to buy such premium products. The prevailing mindset for product innovation in these markets is based on assumptions of “affluence and abundance” (Prahalad & Mashelkar, 2010). Mainly because of its high price-point (the result of highly optimised product performance and richness in features), such products were mostly out of reach for businesses and consumers in emerging and developing markets. Over the past decade a myriad of studies have emerged on the needs of emerging and so-called base-of-the-pyramid (BOP) markets and the opportunities they offer product developers (Angot & Plé 2015; Davis, Plumblee, Brown, & Vaughn, 2018; Pervez, Maritz, & de Waal, 2013; Varman, Skålén, & Belk, 2012). As a result, DMFs are now increasingly targeting consumers in resource-constrained environments with frugal innovations. Baker and Nelson (2005) define a resource constrained environment as “an environment that provides new challenges without providing additional new resources”. For the purpose of this chapter, and based on the definitions of Zeschky et al. (2014), de Waal (2016), and Weyrauch and Herstatt (2016), we define FI as offering redesigned or newly designed products and services to resource-constrained consumers in emerging markets at highly reduced, affordable prices, at desired levels of performance, compared to the original premium product or service.