Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 12 COMPETING THROUGH INNOVATION
The broader implications are interesting. A number of influential global companies, 
such as General Electric and Procter & Gamble, are adopting strategies of ‘reverse innova-
tion’ – that is, turning products created for the emerging markets into low-cost products for 
developed world customers (Govindarajan and Trimble, 2012). The new approach is also 
known as ‘trickle-up innovation’. GE, for example, has created a portable ultrasound busi-
ness, stemming from products originally designed for China, which has achieved growth 
rates of 50–60 per cent a year in its early stages (BusinessWeek, 2009).
In another example, consumer goods company Nestlé is bringing sales and packaging 
techniques pioneered in emerging markets to improve its position in problematic markets 
in Europe. Marketing innovations developed in countries such as Thailand and Russia are 
being applied in stressed European markets including Greece, Spain and Ireland, to famil-
iarise less affluent consumers with Nestlé brands. Innovations include smaller packs of 
Nescafé instant coffee and ‘refill’ coffee packs, and Maggi soup powders sold in individual 
units (Simonian, 2010).
It is clear that emerging markets are not only providing multinationals with faster growth 
prospects, but also new products, services, manufacturing methods and business processes. 
For example, Pulpy is a drink developed by Coca-Cola’s Chinese offshoot, which is being 
launched in eastern Europe after a successful entry to Latin American markets. Similarly, 
Levi Strauss, makers of Levi’s jeans, has brought its Denizen brand of jeans, nurtured in 
China, back to its home US market. A mobile payment system that has revolutionised busi-
ness and banking in sub-Saharan Africa is being brought to Europe by Vodafone. These are 
examples of emerging markets spawning new products with global potential. While once 
business solutions flowed only from the West to the East, they are now flowing from East 
to West as well (Wagstyl, 2011).
The underlying point is that the model that companies such as GE have followed in the 
past – developing high-end products for the home market and adapting them for export – 
does not work as growth slows in the developed markets. The goal is to develop products in 
markets such as China and India, and then distribute them globally to tap into value-based 
segments across the world (Immelt et al., 2009).
Indeed, some argue that the real revolution in business is doing more with less. For 
example, Radjou and Prabhu make a compelling case for ‘frugal innovation’, learning from 
the emerging markets where engineers move away from plentiful resources in a rich market 
to constrained resources and value-hungry customers (Radjou and Prabhu, 2015). When 
Renault found its expensive cars were outsold in India by the $6,000 locally produced Lada, 
they created the no-frills $6,000 Logan. Designed for India but now selling well in Europe, 
Renault developed a line of low-cost vehicles that today constitutes nearly half its global 
sales. A similar view is adopted by Charles Leadbeater in his work on ‘shoestring innova-
tion’, emphasising reuse and recycling in low-cost innovation (Leadbeater, 2014). Frugal 
innovation has produced ultra-cheap laptops, mobile phones, refrigerators and even ECG 
machines (Coy, 2015).
Radjou and his co-authors use the Hindi word jugaad to describe the approach of entre-
preneurs in India and other emerging markets, where innovation is driven by finding oppor-
tunities in scarcity and developing smart ways to make more from less. They argue that 
businesses in the richer Western world have lost their innovation edge and executives should 
study and learn from jugaad innovation. The focus should be on simplicity, not endless new 
product features (Radjou et al., 2012).
The globalisation of innovation suggests new approaches and models from which to 
learn. Certainly, it is likely that radical innovation will lie at the heart of strategic thinking 
in many companies, and the new context is global. Indeed, as we noted earlier, the most 
important innovations may be in how we change the ways in which we work, organise 
and manage (Mol and Birkinshaw, 2007) – the issue is not just a new product, but a new 
business model.
We turn attention now to the innovation process – or new product development – within 
a company.

---

337
NEW PRODUCTS
12.2 
New products 
Studies that compare new product successes with failures are consistent in their observa-
tions of the key factors that influence a new product’s success in the marketplace. Getting 
to grips with these factors helps executives to understand successful product innovation. 
For example, one interesting method of categorising the new products that firms produce 
is as follows: 
●