Frugal innovation in developed markets – Adaption of a criteria-based evaluation model

Abstract

This paper establishes a criteria-based evaluation model to better understand frugal innovations and the reasons they are either successful or unsuccessful in developed markets. The three criteria for frugal innovation introduced by Weyrauch (2018) form the basis for the evaluation model. In order to analyze products and services while also including user-related factors, certain dimensions and tools were combined with the criteria set defined by Weyrauch, which resulted in the presented evaluation model. Furthermore, this study acknowledges that frugal innovation in developed markets differs from frugal innovation in developing markets, especially concerning usability, quality, and price difference. Therefore, the term “second-degree frugal innovation” is introduced to refer to frugal innovation in developed markets. Three different case studies are analyzed with the adapted evaluation model. The results show that the success and/or failure of frugal innovations, as well as the definition of frugal innovation itself, is highly dependent on the market in which it is launched. This paper can also benefit practitioners as it provides tools such as value analysis to optimize the use of the evaluation model and it contributes to the existing knowledge in the area of frugal products and services in general.