Dual Business Models: Exploring the Integration and Separation of Premium and Non-premium Products in Developed Markets

This PhD thesis explores how firms in developed markets simultaneously implement dual business models (DBM) to accommodate premium and non-premium segments within their domestic market. The thesis is driven by the need to understand how firms manage the tensions that arise from targeting two distinct customer bases with opposing value propositions. Recent research suggests that developed-markets firms offer premium products (i.e., highly performing, feature-rich, and expensive) obtained through a premium product innovation strategy to target a premium customer segment. Non premium products are obtained through a non-premium innovation strategy (i.e., focused on cost) and target a non-premium customer segment. The research questions (RQs) aim to unveil how firms in developed countries implement their BM elements when simultaneously accommodating premium and non-premium and why specific strategies are used over others. Additionally, the researcher assessed the impact of the firm's size to capture a holistic picture of the phenomenon. This thesis study is primarily embedded within the seminal research stream of organisational ambidexterity and other secondary literature streams, including business model innovation (BMI), resource-constrained innovation (RCI), and Porter's generic competitive strategies to build a suitable theoretical framework that allowed the researcher to address the research questions.

A qualitative research design with multiple case study research methods is employed. The empirical data includes semi-structured interviews with 21 management professionals supported by secondary data.

The findings indicate that firms employ integration and separation approaches dependent on contingencies such as industry, scale, and the potential tension between premium and non-premium BMs. The thesis theoretically enhances the comprehension of the dual BM by providing a set of frameworks capturing much of the BM transformation by refining the BM into its nine constituent building blocks. It offers managers insights into tactics to resolve tension within the BM and allows firms to create synergies. The study underlines the potential of non-premium innovations, such as Frugal Innovation, to grow into greater visibility in developed economies, providing important guidance for practitioners and policymakers alike