What Frugal Products are and Why they Matter: An Abstract

Abstract

Frugal innovation is on the rise (Levänen et al. 2016). Practitioners and academics increasingly acknowledge the promising potential of developing frugal products for both emerging and industrialized countries. However, the frugal innovation literature still lacks a universal conceptualization of product frugality, an adequate operationalization, and an investigation of the anticipated consequences of product frugality, for example, in the form of high adoption rates. Our study addresses these gaps in the current literature.

In this multi-method study, we develop a comprehensive conceptualization and operationalization of product frugality using a systematic literature analysis, expert interviews, consumer interviews, and consumer surveys. Applying established procedures of index construction to a large and diverse set of consumer data from the USA, the U.K., Germany, India, and South Africa (n = 2,398), we develop and validate an index of product frugality. Our results depict product frugality as a formative construct with four dimensions: cost of consumption, sustainability, simplicity, and basic quality. We define product frugality as a set of product characteristics that particularly appeals to consumers who, by necessity or choice, value products with low cost of consumption that, at the same time, are sustainable, simple, and offer basic quality. For example, the TATA Nano as a very simple and no-frills economy car that is highly fuel efficient and reduces the usage of raw material over the entire product lifecycle is a frugal product. In contrast, the Smart Fortwo, as an economy car manufactured by the Daimler AG is not a frugal product. The Smart Fortwo starts at US$ 13,000, offers a long list of infotainment features and configuration packages, and does not pay particular attention to a conscious usage of resources such as raw materials or fuel.

Our findings provide important implications for theory and practice as we generate a common understanding of product frugality that acknowledges the multi-dimensional nature of this construct. Nomological examination of our index reveals that product frugality increases consumers’ willingness to generate word of mouth. Our research proffers guidance for managers seeking to explore the potential of frugal products in addressing consumers’ need for higher value products while minimizing environmental impact.