'Innovation for emerging markets' is the hot mantra nowadays among giant MNCs. Emerging markets are countries with a large population that has enormous domestic demand, a pretty closed economy, which gives stability, and has massive growth potential with great investment opportunities. Even in India we have global R&D centers established by MNCs to innovate for local needs. With a steady GDP growth, a growing middle class, and increasing spending power, certainly India too poses enormous opportunities for innovation.

The question now is how one can really cash in on the anticipated opportunity. However, there lie challenges for the same as the innovation has to be a need-based one to make the products work for emerging markets like India. Evidently, for most of such innovations, the primary component would be ‘cost’, as disposable income levels are far below in emerging markets compared to developed markets. Now the deliberation is on whether ‘cost’ is the only component that has to be considered while innovating for a market like India.

Well, ‘cost’ based innovation perhaps may help one to reach the consumer base that is at the bottom of the pyramid, which is obviously a pretty large population. However, there exists a tiny layer just above the bottom of the pyramid that may be called as emerging class whose aspirational levels are moderately higher than those of that at the bottom of pyramid.

For instance, consider the massive growth of mobile phone market. Even in India the smart phones or higher end phones, which are being sold between Rs. 12,000 and Rs.20,000 are in great demand. In fact, these are actually much higher price bands than in the US. There are buyers in India as well for the world renowned brands like Nike, Reebok, and more. Apple MAC is a dream machine for every gadget buff here. Even SAP products, which are immensely expensive, have buyers in India. These trends clearly suggest that there is a market for high end products in India, though it’s relatively a smaller one in size.

Emerging markets like India come in many flavors; at one end it’s still a developing nation with low literacy levels, low per capita income and other socio economical issues. On the other end it’s also an upcoming economic superpower, with a massive aspiring young and middle class population with great spending power. So it is palpable that innovators have to look into both the extremes and innovate accordingly, as they pose different requirements in terms of cost, quality, and brand value among other factors.