Developing Disruptive Products for Emerging Economies: Lessons from Asian Cases: Four Asian Firms Show How Disruptive Innovations Tailored for Emerging Markets Can Drive Global Success

Abstract

The rapid economic development of China, India, and other Asian countries, coupled with the fact that the majority of their populations cannot afford foreign products designed for the developed world, has made these emerging nations fertile ground for developing and testing disruptive innovations--affordable, products that meet consumers' basic needs at a relatively low cost (Christensen 1997). The potential mass markets in this so-called of the pyramid (BOP) (Prahalad 2004) have caught the attention of companies from around the world, including both local players and multinational companies like General Electric and Philips. Developing disruptive products for such markets offers tremendous opportunity for these companies to establish a strong foothold in emerging contexts (Hart and Christensen 2002). The possibilities for reverse innovation--creating disruptive products that are initially targeted to emerging markets but can be taken global over time, reversing the usual progress of innovation from developed nations to emerging markets--are also attracting multinational corporations to emerging markets (Immelt, Govindarajan, and Trimble 2009). The challenges faced by firms in adapting to a disruptive innovation approach have been well documented by Clayton Christensen (1997). Multinational companies from developed countries face additional challenges entering emerging markets because their experience in their home markets have generally not prepared them to meet the aggressive price/performance ratios required by emerging contexts. Further, these companies might not be sensitive to some of the demands emerging from the resource constraints in these nations (Immelt, Govindarajan, and Trimble 2009). However, multinational companies seeking to implement a reverse innovation approach can look for inspiration and direction to local firms that have successfully marketed disruptive products for their home economies and then taken those same products to the global market, selling their low-end, good-enough products to niche markets in developed nations. Given the region's well-developed RD one is from India. Although both of these countries have attracted tremendous attention for their growth potential, typical consumers at the bottom of the pyramid in these markets face resource constraints for which disruptive products can offer a potential solution, including low purchasing power, small living spaces, water and power shortages, and increasing fuel costs. The four companies we highlight created opportunities by addressing these constraints, creating disruptive innovations that made their products accessible to these bottom-of-the-pyramid consumers. These examples demonstrate how other companies can profit by being alert to the constraints, and other cues to consumer needs, and transforming them into disruptive products. Markets for Disruptive Innovations It is widely accepted that a disruptive innovation approach that emphasizes the creation of good-enough products to meet basic consumer needs is a sound strategy to reach resource-constrained consumers in emerging markets (Hart and Christensen 2002). Disruptive innovations typically result in products that may seem inferior compared with established technologies, in that they may not offer a wide range of features, or they may be smaller or made of less expensive materials. However, these products are characterized by other features, such as low cost, small size, or simplicity of use, that make them accessible and attractive for a lower-end market or niche market. …

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 31 citations exist upstream.