Reverse & Frugal Innovation

Reverse & Frugal Innovation

MGMT602 Mid-Term

Reverse & Frugal Innovation

MGMT602 Mid-Term

1. Other than price sensitivity, what are the starkest differences between the needs of customers in developing countries and the needs of customers in developed countries? Why is it essential for companies in the developed world to understand these needs?

Typically, multinational companies of developed countries attempt to move their established products to the developing world. However, the customers’ needs of developed countries are different from the needs of developing countries’. The articles referring the frugal and reverse innovation indicate that customers of developed countries need high-end products. On the contrary, most customers of developing countries need middle-class and below products.

The articles mention that the high-end market has little room for marginal profits and potential market growth. As the result, multinational firms seek new opportunities in the emerging markets in order to look for the future growths and profits. If multinational corporations plan to export their existing successful products to the developing countries, they need to consider this fundamental difference as a key factor in order to meet the customers’ needs. Meanwhile, if companies recognize the customers’ difference, the companies can get ready for challenges of local constraints and problems before loss investment and time. Therefore, it is essential for companies to understand the difference in customer’s need between developing countries and developed ones.

2. Can you meet the needs of your customers in developing countries simply by customizing your existing offerings? When is clean-slate innovation needed? Please elaborate as appropriate from your readings and experience.

Under the traditional thinking, multinational companies trend to directly generate developed innovations or technologies in the emerging markets. Further...