New Product Introductions for Low-Income Consumers in Emerging Markets

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