Customers in emerging markets require a particular type of innovation: frugal products and services that have been redesigned from scratch, are cheap, easy to use, economical and robust, and yet as effective as their possible models in industrialized countries and high-tech segments. But it is not easy for companies to develop such simple solutions and bring them to market. For the purposes of this publication, consultants, academics and businesspeople have analyzed the key factors at stake.

Multinational companies that wish to conquer new markets have little prospect of long-term success in emerging economies unless they follow certain clear guidelines when developing frugal products. The methods, thought processes and product characteristics that have proven effective in their home markets are often of very limited use in this new context.

The basis for any successful market entry is a systematic examination of the requirements of the market, the wishes of customers and any possible obstacles.

Before beginning the product development process, it is crucial for companies to identify the reasons, opportunities and potential risks associated with the intended change (burning platform). Next, they should formulate the strategic objectives for the frugal solution, its strategic intent. Only then should the company begin developing the product itself.

This publication provides a basis for market success by industrial companies. It proposes a systematic approach to frugal, developed jointly by Roland Berger and the Institute of Technology Management at the University of St. Gallen (ITEM–HSG).