Concept of innovation in low-income market.
| Autor | Nogami, Vitor Koki da Costa |
I Introduction
The concept of innovation is conventionally associated with technology, modernity, electronics and high-tech products (Kuczmarski, 2003; Prahalad, 2012). Consequently, the idea of high production and development costs is frequently associated with this concept, thus reflecting higher prices to the consumer. However, investigating and practicing innovation go beyond the activities in laboratories spread across universities, large companies and technology centers (Burns & Stalker 2000; Nogami & Veloso, 2017).
In other words, studying innovation beyond technological perspectives is a task for the marketing and innovation area (Viswanathan & Sridharan, 2012). This paper investigates this concept also from a socially constructed perspective, considering the risks and uncertainties that surround the decision-making process of low-income consumers living in a poor environment lacking basic infrastructure for day-to-day life (Kuczmarski, 2003; Prajogo & Ahmed, 2006; Rogers, 2003). For this study, we focused on the Brazilian low-income market, comprised of consumers that do not have high purchasing power to take advantage of products and services involving high technology standards. Thus the aim of this paper is: to discover what is the concept of innovation built in the low-income market; consequently, we conducted a multi-method study in order to uncover how the low-income market understands and adopts innovation.
Despite the low purchasing power of low-income consumers, their participation in the consumption of goods and services has increased in Brazil due to several factors, namely: access to information and education, increased income, public initiatives such as social welfare programs and specific tax reductions for the industry, strengthening of the emerging market in the global scenario, and especially access to credit (Barki & Parente, 2010; Hamilton, 2009; London, 2016; Prahalad, 2005). Within this potential market context, companies have been increasingly seeking to develop products and services for this market segment, especially those involving the concept of innovation (Anderson & Markides, 2007; Corsi & Di Minin, 2014; Hang, Chen, & Subramian 2010; Viswanathan & Sridharan, 2012).
In contrast to macro level approaches (economic, government, global) or midlevel approaches (market, business strategy, institutional context), our approach begins at the micro level (consumer, individual, user). Once understood what happens at the micro level, it is possible to develop business strategies for the midlevel, and also broad guidelines for the macro level (Viswanathan, 2011).
Previous studies about innovation and low-income markets (also known as bottom of the pyramid--BOP) have focused on product development and business management. This approach has resulted in prescriptive papers on multinational companies' management, both in developed and developing economies. Scant attention has been given to understand the adoption of innovations by BOP consumers (microlevel). This is what we call bottom-up approach rather than top-down approach, in other words, we focus on individual market reality to generate insight to create impactful solutions (Viswanathan, 2016).
Understanding the adoption of innovations by BOP customers can generate information needed by several institutions seeking to disseminate products, services and ideas that could have a positive impact on this market segment. Understanding how the low-income market understands innovation is an initial step to propose solutions for this segment (Viswanathan & Rosa, 2010). "Therefore, the theoretical gap we intend to fill consists of a contribution of the study to advance the theory of innovation in the low-income market, initially focusing more on the consumer than on marketing management. The contribution consists of the better understanding of the market and consumer's lifestyle, to overcome environmental constraints and to provide well-being, and to insert innovation elements in this market context (Viswanathan, Sridharan, Gau, & Ritchie, 2009). Therefore, our analysis focuses on the consumer and all the elements of the environment that shape the market (Medeiros, Vieira, & Nogami, 2014).
In addition, this study academically contributes in other domains. Firstly, the use of a multi-method study involving a research with different approaches and different market agents brings a fresh perspective to the subject, which is not common. This allowed us to more fully understand how innovation is formatted in the low-income market. Secondly, we advance the innovation theory by studying innovation in the low-income market. The term 'innovation' is commonly associated with advancement, technology and modernity. However, these elements are not directly found in the concept of innovation for the low-income market (Brem & Ivens, 2013; Brem & Wolfram, 2014; Corsi & Di Minin, 2014; Hall, Matos, & Martin, 2014; Nogami, Vieira, & Medeiros, 2015b). Therefore, the study of innovation in the low-income market context allowed the advancement of knowledge in this field. To achieve the above objective, the empirical object chosen for the study was the Brazilian home appliance market.
The literature review that supports our research is divided into three parts. First, From Technological to Social Concept of Innovation. Second, From Radical to Incremental Concept of Innovation. Third, Low-Income Market in Brazil. This research was divided into four studies involving different methods. First, a Delphi survey was carried out with 126 professors of Marketing and Innovation. Second, we conducted 13 indepth interviews with home appliance industry and retail professionals. Third, we conducted 2 focus group with low-income consumers. Forth, we conducted a survey with 390 low-income consumers, ending the data collection effort. The first three studies focused on investigating how the low-income market understands the concept of innovation, so we investigated this concept with professors, industry and retail professionals, and consumers. Once the focus is the innovation in the low-income market, it is necessary to collect data from these different actors, not only from the consumers. The fourth study aimed to search specifically the phenomenon of the adoption of innovation by low-income consumers.
2 From technological to social concept of innovation
From the point of view of technology, S&T (Science and Technology) tend to disregard the social, political and cultural scenario, supporting more linear development in search of universal and inexorable truths (Dagnino, 2008). Innovations are differentiated only between more advanced technology (cutting edge, latest, high tech) and less advanced (obsolete, inefficient, outdated). It does not cease to be an evolutionary concept ("Technological Darwinism"), since only the most suitable, efficient and productive technologies survive, and the others are abandoned and forgotten by the market and science (Dagnino, 2008).
Technological determinism is supported in the design of technologies that have autonomous functional logic, which can be performed without reference to society. Technology is understood as social only because of the purpose it serves. According to the deterministic approach, the fate of society depends on a non-social factor (technology), which influences it with no reciprocal influence. That is, progress would be an external influence that falls on society, rather than an expression of values and socio-cultural changes of itself (Anderson & Billou, 2007).
For this perspective, the relationship between technology and the social environment is unidirectional: while social changes are the result of the technological development, the latter would follow an autonomous process, in accordance with its own principles and interests, as if technology was developed separately from the social context, as a type of extrinsic factor that has its own dynamics (Christensen, 1997; Kuczmarski, 2003). In other words, society depends on technology, but technology does not depend on society. Therefore, for an innovation to be considered as such, it must have something literally new, which has not been yet discovered, performed or previously used by anyone, anywhere.
On the other hand, the concept of innovation analyzed by a socially constructed approach considers the social, cultural, historical and human context in which innovation occurs. In this approach, it is necessary to incorporate a relationship with other areas of knowledge, moving towards multi and interdisciplinarity (Viswanathan & Sridharan, 2012). Innovation in its broadest sense underpins both the technological and social aspects. In the same sense, to understand the meaning of innovation, economic factors and the macroeconomic environment involve the development of a concept of innovation. Going further, in relation to technologically, economically and financially advanced countries, it is possible to notice the innovative capacity of an organization not only by an economic bias, of investing technology, research and development, but also through a social, cultural, human and political approach, to broaden and deepen productivity, socially taking advantage of the material and non-material resources available (Viswanathan & Sridharan, 2012).
Focused on the social context, this approach argues that for something to be innovative, it must take the meaning of novelty into account, that is, what is the meaning of innovation, the degree of intensity in the innovation, and especially, who regards it as innovation (Prahalad, 2012; Viswanathan & Sridharan, 2012). In other words, rather than setting limits to what is really new technologically speaking, this approach is concerned with the social benefits that an innovation may cause, even though it may not be such a radical innovation (Antioco & Kleijnen, 2010; Lee & Na, 1994; Varadarajan, 2009). It is noteworthy that...
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