New Product Introductions for Low-Income Consumers in Emerging Markets

66 Pages Posted: 8 Oct 2019

See all articles by Arunachalam S

Arunachalam S

Indian School of Business (ISB), Hyderabad

S. Cem Bahadir

University of North Carolina at Greensboro

Sundar G. Bharadwaj

University of Georgia--Terry School of Business; University of Georgia - C. Herman and Mary Virginia Terry College of Business

Rodrigo Guesalaga

Pontifical Catholic University of Chile - School of Business

Date Written: April 27, 2019

Abstract

Facing growth pressures, firms attempt to target the large low-income consumer segment present in emerging markets. This multi-method study develops research insights regarding consumer-, retailer-, firm-, category- and country-level factors that enhance the acceptability, awareness, availability, and affordability of products that facilitate the low-income consumer adoption of and firms’ introduction of new products for low-income consumers. Study 1 uses a qualitative grounded-theory approach by interviewing company managers and low-income consumers in India and Chile. Study 2, empirically tests an integrated multi-level model of several category factors identified in Study 1, combined with country-level factors drawn from the literature, using a unique 12-year longitudinal panel dataset of new product introductions in 27 emerging market countries from Africa, Asia, Eastern Europe, and South America. The research identifies consumer aspirations, region-based versioning, visible packaging and the product demonstrations as critical motivating factors for adoption of products by low income consumers. Consumers’ knowledge of the product category, the concentration of branded products, availability of global brands, and the presence of traditional retail stores motivate firms to launch products for low income consumers in emerging markets.

Keywords: Emerging Markets, Low-Income Consumers, Consumer Aspirations, New Products, Multi-Method Approach, Qualitative research, Natural language processing, Topic Modeling, Multilevel model

Suggested Citation

S, Arunachalam and Bahadir, S. Cem and Bharadwaj, Sundar G. and Guesalaga, Rodrigo, New Product Introductions for Low-Income Consumers in Emerging Markets (April 27, 2019). Indian School of Business, Available at SSRN: https://ssrn.com/abstract=3460736 or http://dx.doi.org/10.2139/ssrn.3460736

Arunachalam S

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

S. Cem Bahadir (Contact Author)

University of North Carolina at Greensboro ( email )

347 Bryan Building
516 Stirling Street
Greensboro, NC 27402
27402 (Fax)

Sundar G. Bharadwaj

University of Georgia--Terry School of Business ( email )

105 Brooks Hall
Athens, GA 30602
United States

University of Georgia - C. Herman and Mary Virginia Terry College of Business ( email )

Brooks Hall
Athens, GA 30602-6254
United States

Rodrigo Guesalaga

Pontifical Catholic University of Chile - School of Business ( email )

Vicuna Mackenna 4860
Santiago
Chile

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