From “Premium” to “Good Enough”: Frugal Innovation in the Emerging Markets

Frugal engineering means developing simple products for emerging markets and is becoming increasingly important for many companies. Frugal products are not cheap or inferior, they are simplified and yet qualitatively robust. But how can frugal products be developed successfully?

A company that wants to successfully enter the emerging markets normally has to adapt and customize its products to often completely new market conditions. The customers there are demanding and price-cautious at the same time. They require the high quality of industrialized countries, yet they are not ready to pay for this quality.

Frugal is not cheap or inferior, but simplified and good enough.

Frugal engineering does not mean slimming the complex Western products to make them cheaper. How can for example a high-end European fridge-freezer machine be simplified for the Indian market, if there is neither enough space nor sufficient power supply in the narrow Indian kitchens? A lot of high-end products are simply not implementable in the emerging markets.

But how to develop products tailored to the emerging markets? The word “frugal” means “simple, but good”. In the industry it means designing functionally reduced and thus lower-priced, but qualitatively robust products. Frugal is not cheap or inferior, but simplified and good enough.

Local knowledge as innovation management fundament

The strategy of frugal engineering is to innovate in the target market on the basis of the local knowledge. The most important aspect is to identify the basic conditions and local customer needs through monitoring and active on-site participation. To understand the utility of a product it is absolutely essential to have access to the field, to approach local customers systematically and to be constantly present on-site, and thus receive the necessary insights.

Frugal: Functional, Robust, User-friendly, Growing, Affordable, Local.

Fundamental requirements for frugal products

For the construction of frugal products one should keep in mind the acronym that displays six main requirements for the frugal products:

  • Functional: The product has to come with high-graded functionality. It cannot include any unnecessary extras or superfluous knickknacks and has to satisfy all fundamental needs in its basic functions. Its functional scope can be considerably limited, but it has to be tailored exactly for the key demands of local customers.
  • Robust: The product developed for the emerging markets has to be highly resistant, low-maintenance and robust against climate factors, dust and poor infrastructure.
  • User-friendly: The product has to be comprehensible, uncomplicated and easy to operate in both its composition and functioning.

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