Frugal and reverse innovation - Literature overview and case study insights from a German MNC in India and China

Abstract

As the world is shifting its attention towards emerging giants like India and China, the big Western multinational companies [MNCs] are trying to get their foothold in this market. Instead of customizing the western world products to local markets, these companies are increasingly developing products from scratch for the local consumers. They are engaging in frugal & reverse innovations, by developing affordable products and solutions with “good enough” functionalities and minimum frills, and later on, introducing them to the developed countries. This paper focuses on how multinational corporations [MNCs] are establishing themselves in the emerging markets and their innovation strategies. The paper initially differentiates between frugal & reverse innovation and goes on to analyze the practices of a German MNC. The paper concludes that end to end localization, core value identification & a healthy portfolio mix of both kinds of innovations is necessary for success in emerging markets.