Innovation Management Business & Marketing Essay Paper (Essay Sample)

INNOVATION MANAGEMENT
by [Name]
Course
Professor’s Name
Institution
Location of Institution
Date
Disruptive innovation
Disruptive innovation is whereby a service or a product takes root in simple applications initially at the lower tier of a market and then rises up the upper tier eventually outpacing existing competitors. Christensen (2019) argues that as companies innovate faster than the evolution of the needs of their customers; most organizations find themselves producing services or products that are too complicated and too expensive for many customers. Historically these sustaining innovations have helped these companies to succeed in their higher tier markets –most of them initially charged higher prices for the most sophisticated and the most demanding customers at the top of the market thus ending up making supernormal profits. However, by applying such strategies, companies end up exposing themselves to disruptive innovations at the lower market. This kind of innovation makes it possible for a whole new consumer population at the lower market to access a service or a product that historically was only available to the consumer population that had a lot of skill and money. Traits of disruptive business during their initial stages are smaller target markets, lower gross margins and simple products and that may not be as attractive as the solutions that are existing in the markets compared to traditional performance parameters. Since these lower tiers of the market seem to offer less attractive gross margins, they create space at the lower market tiers thus making it possible for new disruptive competitors to emerge.
The adoption of frugality in emerging markets was first reported by Carlos under “frugal engineering” (Rao, 2013). Since then, frugal innovations have been developed mostly in developing economies. Such innovations have been realized in conditions deemed not conducive for innovation in the developed economies. Generally, the genesis of frugal innovation has its roots in China and India where improvisations have been sought widely for living under frugal conditions. The concept of frugal innovation as argued by (Radjou, N. and Euchner, 2016) refers to how multinationals and entrepreneurs are capitalizing on new improvisations in emerging markets. (Dutta and Benavette, 2011) Argue that frugal innovations involve the customization of products and services at high volumes and low prices in and for emerging economies. It can, therefore, be argued that these improvisations are not restricted to technological advancements but also include product innovations and incremental processes mainly aimed at the bottom or the middle of the income pyramid.